Investments

What Are Good Oil Stocks To Buy

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 9 minute read

You probably rely on oil more than you give it credit for. If you’re concerned about rising oil costs, your worries aren’t limited to the price of gas or your energy bill. Plastic, a vital component in many pharmaceuticals, lubricants, and rubber products, is produced from fossil fuels.

Oil is used for more than simply getting you from point A to point B and keeping you warm; it’s a multibillion-dollar industry that likely plays a role in almost every aspect of your life. After all, you’re making use of an oil product every time you interact with a device that has plastic parts or step foot onto an asphalt pavement.

Not surprisingly, given the oil industry’s status as one of the world’s largest and most lucrative marketplaces, many of its top players are also among the best stock market bets.

Best Oil Stocks to Invest In

Stocks in the top oil firms in the world have always been hot commodities on Wall Street. Some of the largest corporations in the world are energy stocks. These large corporations are also excellent choices for dividend investors because of their track records of providing attractive payouts.

A case can be made, and it’s not without merit, that equities in the sector are now cheap and ready to stage a significant comeback.

The spread of the coronavirus caused a dramatic drop in crude oil prices as people remained home instead of traveling. However, consumer attitudes have shifted, and people are no longer willing to allow COVID-19 dictate their daily life or prevent them from taking occasional vacations.

Demand for crude oil and its numerous derivatives is increasing as a result of the economic recovery.

Should you seize the first available opportunity to purchase an oil stock, given that these equities are often undervalued? No! It’s true that not every oil company is the same, just like there isn’t one single best stock in any sector. If you’re still interested in giving the industry a shot, though, we’ve included a list of some of the most reputable companies.

  1. Chevron

A Market Leader With a Strong Financial Footing and Enticing Dividend

The name Chevron is certainly familiar to you. With a market worth of over $191 billion, it is undoubtedly one of the largest oil businesses in the world. More than 7,800 gas stations are run by the corporation, making it one of the largest gas station chains in the world.

In addition to running a very profitable chain of gas stations, the corporation is involved in every stage of the oil industry value chain, from exploration to production to refining. Natural gas production is another important industry for the country.

Therefore, it is not surprising that the firm has a healthy financial standing. Because of the company’s leadership position, it was able to generate the cash flow that allowed it to survive the recent pandemic as well as multiple economic downturns.

Chevron may have started off producing fossil fuels, but the company is aware that its time has come and gone. The firm has invested significantly in the study and development of alternative energy sources. As of right now, it’s generating enough renewable energy to supply over half a million residences and workplaces.

  1. Exxon Mobil

The Oil Industry’s Lasting Legacy Engaging with the Clean Energy Movement

The energy industry is full of behemoths, and Exxon Mobil is only one of them. Most Americans have filled up at an Exxon Mobil station at least twice, just as they have at Chevron. There is no way to escape the brand with over 12,000 stores nationwide.
That’s why the firm has been able to amass a $235 billion market worth and become an industry giant.

Exxon Mobil is a multinational oil and natural gas company with operations spanning exploration, production, refining, and distribution.

Additionally, the firm has no intention of being left behind by the global renewable energy movement. It has signed various pacts with companies that create alternative fuels.

Also, it is making significant investments in the research and development of renewable energy technology, with a particular focus on hydrogen fuel cell energy, which has the potential to lessen the environmental impact of electricity generation, provide clean transportation fuel, and generate only water as a byproduct.

  1. ConocoPhillips

One of Alaska’s Largest Oil Companies Extending to every corner of the earth and expanding at a rapid rate

Though you might not recognize the name, ConocoPhillips plays a significant role in the oil and energy industries despite not being a household brand. It has more than 1.3 million acres of undeveloped territory under exploration leases, making it the largest oil producer in Alaska.

Additionally, the firm is among the state’s most prolific generators of natural gas. The firm has more than one location in Alaska. ConocoPhillips is a key participant in the oil industry in Texas, the most productive state in the United States, and is involved in oil exploration and production throughout the Lower 48. In addition to these locations, it also operates in Asia, Canada, the Middle East, Europe, and North Africa.

  1. Devon Energy

A Proven Performer in the U.S. Oil and Energy Market

Devon Energy is another multibillion dollar oil and natural gas business that has expanded to employ over 4,000 people in several countries. While some of the other companies on our list may have their sights set internationally, Devon is committed to maintaining a strong presence in the domestic market. The energy firm is now a dominant participant in the Texas oil sector, with a primary concentration on onshore oil exploration and production.

Even the company’s output is respectable. About 300,000 barrels of crude oil, 125,000 barrels of liquified natural gas, and 920 million cubic feet of natural gas are produced by the firm per quarter.

Devon Energy’s apparent lack of ambition to seize sustainable energy prospects is the company’s lone potential negative for investors. The corporation claims on its website that gasoline and diesel fuel will account for around 75% of overall usage in transportation until 2050, and that renewable energy isn’t anticipated to replace gas in power generation until 2045.

So, the corporation claims it will keep pumping out oil and gas to meet global demand, putting off any thought of making the switch to sustainable energy until it becomes more pressing. However, in today’s economy, DVN is among the greatest investments available.

  1. Pioneer Natural Resources

The Largest Owner of Cline Shale Acreage

Pioneer Natural Resources is another multi-billion dollar oil and energy conglomerate. While the firm is just one of several that extract oil and gas from Texas’s Wolfcamp Shale Formation (which includes the Cline Shale), it is far more productive per acre than its competitors.

Pioneer is the largest landowner in the Cline Shale at the moment, and it produces hundreds of thousands of barrels of oil annually.

The corporation employs cutting-edge technology to improve internal operations rather than following the same methods as conventional oil and energy companies. The business was able to cut horizontal drilling times by seven days per well by implementing these technology innovations to improve operational efficiencies.

Unfortunately, similar to Devon, Pioneer doesn’t appear to care much about the shift toward renewable energy. Although the firm is committed to sustainability, its website provides no information regarding its investments in renewable energy sources. The corporation, on the other hand, claims that its emphasis on operational savings is a viable strategy for doing business in the conventional oil and gas sector.

Pioneer’s potential future problems stem from the company’s lack of interest in the renewable energy industry. Meanwhile, the firm is a promising investment prospect.

  1. Royal Dutch Shell

A Dividend Investor’s Dream, With Huge Payouts

Royal Dutch Shell is a household name in the United States because to its chain of over 6,000 gas stations under the Shell brand. The company is one of the most actively traded on the market, with an average of about 5 million shares changing hands every trading session, and a market valuation of more than $154 billion.

The corporation is well-known for operating a thriving chain of petrol stations, but it does much more than that. It is also involved in the worldwide discovery, extraction, processing, and distribution of petroleum and petroleum-based products, as well as natural gas.

Moreover, Shell is aware that the global perspective on energy is shifting, and that it must evolve with the times if it wants to keep its leading position. Thus, the firm is making two substantial investments in renewable energy:

  • Infrastructure. Shell is making substantial investments in solar and wind energy, paving the way for the creation of big renewable power facilities and the development of new technologies.
  • Transportation. The business is also involved in the development of environmentally friendly modes of transportation, such as electric car charging and battery technology, fuel cell technology for the development of hydrogen fuel cell vehicles, and renewable fuels for internal combustion engines.
  1. Schlumberger

Suppliers of Essential Materials and Technologies for the Global Oil and Energy Industry

When it comes to Schlumberger’s mining activities, the company seems unconcerned. Instead, it supplies tools, technology, and strategies to make the energy development process more effective. By managing logistics and establishing more effective procedures for its clients, Schlumberger frees oil producers to focus on, well, producing oil.

In addition to establishing a respectable reputation, the corporation has amassed a market capitalization of over $39 billion.

In the field of renewable energy, Schlumberger is rapidly rising to prominence. The corporation is committed to decarbonizing the process because of the many applications of oil and the certainty that oil production will be required for decades, if not centuries, to come.

It plans to have zero emissions from its operations by the year 2050, and it’s collaborating with some of the world’s most prominent oil exploration and production firms to help them do the same.

To achieve this goal, the organization is assisting customers in adopting electric equipment and providing cutting-edge technology that have lower energy requirements. As the globe moves toward renewable energy sources, Schlumberger is well positioned to play a significant role in a new and exciting market.

  1. Marathon Petroleum

Significant Clean Energy Investments from a Major Oil Company

In the United States, you can find a Marathon gas station just about anywhere. They may be found from coast to coast, and there are more than 6,900 of them. However, Marathon is more than simply a convenience store chain; the oil company it symbolizes is worth almost $37 billion. It engages in oil and gas extraction. It also transports oil and petroleum products around the country and engages in the refining of raw energy materials.

Marathon Petroleum has no plans to lag behind the global movement toward sustainability. Comparing its actions to those of other oil companies, it is making some of the greatest investments in green energy you will find.

In terms of renewable fuels, the corporation is among the top producers worldwide. The firm now produces 184 million gallons of renewable fuel annually at its Dickson site in North Dakota and is aiming to transform the refinery in Martinez, California into a renewable fuel production facility capable of generating roughly 730 million gallons of renewable fuel annually.

That doesn’t even take into account the company’s numerous other investments in green energy initiatives, such as the Cincinnati Renewable Fuels Biodiesel factory.

  1. Phillips 66

Strong Growth and Dividends; Major Oil Industry Player in the Midstream and Downstream

Though Phillips 66 appears to be a newer firm on this list, it has a far longer history than most investors realize. The firm was formed in 2012, when ConocoPhillips spun off its downstream and midstream assets.

Midstream and downstream assets, such as pipelines and other infrastructure for transporting crude oil and refineries for processing it into gasoline, diesel fuel, and other finished products, are managed by Phillips 66, a spin-off company from ConocoPhillips.
Although the corporation’s assets were split off in a spinoff, the roots of Phillips 66’s business go all the way back to the formation of the parent company in 1875.

Bottom Line

A bet on the oil industry is probably a good one. Not only do these stocks have a history of providing attractive dividends, but the recent downturns in the sector have laid the ground for a robust rebound.

Nonetheless, as is the case with any investment, it is wise to conduct one’s homework before purchasing oil stocks. After all, not every stock in a given market segment will grow in value.

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