Oil prices surged to three-year highs above $75/barrel today on strengthening market demand and a bullish outlook. OPEC+ producers are reported to be upbeat regarding current and future market conditions, and the cartel is expected to raise total oil production by 500,000 barrels per day in August.
The rising demand for crude oil in the United States has caused oil inventories to decline over the past six weeks as the country’s recovering industrial and manufacturing activities build up steam.
The global oil and gas industry is expected to grow at a 25.5% rate year-over-year to $5.87 trillion in 2021. Given this backdrop, we think shares of oil extraction companies Whiting Petroleum Corporation (WLL) and SandRidge Energy, Inc. (SD) could generate significant returns in the near term.
Whiting Petroleum Corporation (WLL)
WLL is an independent oil and gas company that acquires, develops, and produces crude oil, natural gas, and natural gas liquids. The Denver-based concern is the largest independent exploration and production company in the United States.
WLL’s revenues increased 44.8% sequentially to $307.39 million in its fiscal first quarter, ended March 31. Its non-GAAP net income was $107.89 million representing a 94.3% improvement from its prior quarter. The company’s non-GAAP EPS increased 91.1% sequentially to $2.79.
Analysts expect WLL’s revenues to increase 25.8% year-over-year to $242.83 million in the current quarter, ending September 2021. A $1.98 consensus EPS estimate o for the current quarter represents a 682.4% rise from the same period last year. WLL has an impressive earnings surprise history also; it beat consensus EPS estimates in three out of trailing four quarters. Shares of WLL have gained 114.7% over the past six months, and 118.2% year-to-date.
It is no surprise that WLL has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade for Momentum, and a grade B for Growth, Sentiment, and Quality. Among the 12 stocks in the Energy - Drilling industry, WLL is ranked #2.
To see additional WLL Ratings for Value and Stability, click here.
SandRidge Energy, Inc. (SD)
SD in Oklahoma City, Okla., is an independent oil and gas company that acquires, develops and produces oil and natural gas. It operates primarily in Oklahoma and Kansas.
On April 22, SD announced the acquisition of all the overriding royalty interest assets of SandRidge Mississippian Trust I with the objective of improving the company’s netbacks and cash flows.
SD’s income from operations increased 374.8% year-over-year to $35.06 million in the fiscal first quarter, ended March 31. Its net income grew 376.6% from its year-ago value to $35.04 million. The company’s EPS increased 361.1% year-over-year to $0.94.
SD has gained 386.8% over the past year. The stock has gained 104.6% over the past six months to close yesterday’s trading session at $6.28.
SD has an overall B rating, which equates to Strong Buy in our proprietary rating system. SD has an A grade for Growth and Momentum, and B for Quality. It is ranked #1 in the same industry.
Beyond what we’ve stated above, we have also rated SD for Value, Sentiment, and Stability. Click here to view all SD Ratings.
WLL shares were trading at $56.76 per share on Thursday afternoon, up $2.21 (+4.05%). Year-to-date, WLL has gained 127.04%, versus a 15.86% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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