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The Zacks Analyst Blog Highlights: Pioneer Natural Resources, Diamondback Energy, Callon Petroleum, EOG Resources and ConocoPhillips

Zacks Equity Research

For Immediate Release

Chicago, IL – December 2, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Pioneer Natural Resources Company PXD, Diamondback Energy, Inc. FANG, Callon Petroleum Co. CPE, EOG Resources, Inc. EOG and ConocoPhillips Company COP.

Here are highlights from Friday’s Analyst Blog:

U.S. to Become Net Oil Exporter in 2020: Shale Drillers to Gain

Advanced techniques like hydraulic fracturing and horizontal drilling have made U.S. shale operations extremely efficient. Explorers are now capable of producing more oil with the deployment of lesser rigs. Thus, despite the recent signs of moderation in American oil production growth, the country is poised to become energy-independent by next year.

Shale Drillers to Back US’ Energy Independence

Conservative capital spending by U.S. oil explorers have slowed down drilling activities across the country’s major shale plays. With a drop in rig count, shale resources have been witnessing a decline in crude production growth. In fact, the growth in production will continue to decelerate since most of the analysts are predicting a curtailment in future drilling programs.

Despite the slowdown, the overall production volumes of crude in America will be growing in the coming years. According to the U.S. Energy Information Administration (EIA), from a record annual average volume of 11 million barrel per day (Bbl/D) in 2018, the United States will increase average crude production to 12.3 million Bbl/D in 2019. Also, the annual average U.S. production volumes of the commodity in 2020 will rise to 13.2 million Bbl/D, as estimated by EIA.

Precisely, the prolific shale plays in the United States, especially the Permian Basin, will continue to contribute to the country’s crude production and hence has paved the way for America’s energy independence. EIA added that from an average net import volume of 520,000 Bbl/D of crude oil and petroleum in 2019, the United States will report net export volumes of the commodities at an annual average of 750,000 Bbl/D in 2020.

Oil Industry’s Future Lies With America

Analysts not only expect America to become a net exporter of oil in the years to come but also anticipate the United States to be among the few exporting countries to primarily contribute additional crude volumes to the global energy market. Meanwhile, OPEC projects production decline in its volumes for oil and other liquids over the next five years. OPEC estimates production of liquids at 32.8 million Bbl/D in 2024, suggesting a decline from the current level of 35 million Bbl/D.

Thus, in the production race for crude oil, the United States will be surpassing OPEC despite the slowdown in America’s shale drilling activities. Precisely, when OPEC is planning to curb its annual average crude production to stabilize oil prices amid the global supply glut, the United States has decided to increase its production share in the global energy market.

Shale Drillers in Focus  

America’s intention to continue to contribute additional oil worldwide despite low crude prices reflects the shale drillers’ operational efficiencies. Thus, it is worthwhile to track prospective oil explorers with footprint in prolific shale plays in the United States that include Permian basin, Eagle Ford and Bakken.

We have shortlisted five U.S. shale drillers, each carrying Zacks Rank #3 (Hold), that investors should keep an eye on. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

With the divestment of its Eagle Ford resources, Pioneer Natural Resources Company has become a pure-play Permian stock. The company has estimated more than 20,000 drilling sites in the nation’s most prolific basin which is likely to provide the company with decades of oil production.

Diamondback Energy, Inc. is a pure-play Permian player with presence across more than 394,000 net acres in the Permian. With more than 7,000 drilling locations in the basin, the company is expected to continue to ramp up its oil equivalent production.

Callon Petroleum Co. — is solely focused on the Permian Basin. The company boasts an impressive footprint (86,000 net acres) throughout the region. The company entered the basin in 2009 with around 8,800 net acres and has been strengthening its hold in the region since then.  

In the Delaware Basin — part of the larger Permian basin — and Eagle Ford, EOG Resources, Inc. has identified a total of 8,400 undrilled premium locations that are likely to contribute the company with incremental oil production volumes.

ConocoPhillips Companyderives significant volumes of oil from the Eagle Ford, Bakken, and Permian areas.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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