The lingering supply disruptions for natural gas have worsened with bans on Russian imports because Russia is one of the major global suppliers of oil and natural gas. This has driven natural gas prices higher. According to the EIA, U.S. dry natural gas production is estimated to reach 97.5 Bcf/d by December 2022, a new record high. However, experts expect natural gas prices to soar on surging demand.
Natural gas is a necessity for power generation, and its demand is slated to surge in the coming months. The U.S. consumption of natural gas is expected to average 84.6 Bcf/d in 2022, up 2% year-over-year. Investors’ interest in this space is evident in the United States Natural Gas Fund, LP’s (UNG) 15.4% returns over the past month compared to the SPDR S&P 500 Trust ETF’s (SPY) 4.7% returns.
Therefore, we think high-quality natural gas stocks EOG Resources, Inc. (EOG) and Devon Energy Corporation (DVN) could be ideal bets now.
EOG Resources, Inc. (EOG)
Houston, Tex.-based EOG, along with its subsidiaries, explores, develops, produces, and markets crude oil, natural gas, and natural gas liquids. The company has net proved reserves of 3,747 million barrels of oil equivalent, and its principal producing areas are in New Mexico, Texas, and the Republic of Trinidad and Tobago.
On Feb. 24, 2022, Ezra Yacob, CEO of EOG, said, “Looking to 2022, our disciplined capital plan reflects an oil market that is in position to rebalance during the year. It is focused on investments in high-return double premium wells along with exploration and infrastructure projects to further improve the business.”
EOG’s total revenue increased 103.8% year-over-year to $6.04 billion for the 2021 fourth quarter. Its non-GAAP adjusted net income came in at $1.81 billion, up 339.4% year-over-year. Also, its non-GAAP adjusted EPS was $3.09, up 335.2% year-over-year.
Analysts expect EOG’s revenue to increase 15.6% year-over-year to $21.54 billion in its fiscal year 2022. Its EPS is estimated to increase 52% to $13.09 in 2022. It surpassed the EPS estimates in three of the trailing four quarters. And over the past year, the stock has gained 83.5% in price to close yesterday’s session at $120.83.
EOG’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
EOG has an A grade for Momentum and a B grade for Growth, Sentiment, and Quality. Within the B-rated Energy - Oil & Gas industry, it is ranked #25 of 89 stocks. Click here to see the additional POWR Ratings for Value and Stability for EOG.
Devon Energy Corporation (DVN)
DVN is an independent energy company that engages primarily in the exploration, development, and production of oil, natural gas, and natural gas liquids in the United States. It operates approximately 5,134 gross wells. DVN is based in Oklahoma City, Okla.
On Feb. 15, 2022, Rick Muncrief, President, and CEO, said, “2021 was a breakout year for Devon that can best be defined by our bold strategic consolidation, unyielding commitment to capital discipline and the successful deployment of our industry leading cash-return business model.”
For its fourth quarter, ended Dec. 31, 2021, DVN’s oil, gas, and NGL sales came in at $2.98 billion, up 279.8% year-over-year. Its total revenues increased 233.8% year-over-year to $4.27 billion. Furthermore, its net earnings came in at $1.51 billion, compared to a $102 million loss, while its EPS came in at $2.23, compared to a $0.27 loss per share.
Analysts expect DVN’s revenue to be $14.46 billion in 2022, representing an 18.5% year-over-year rise. Its EPS is estimated to increase 96% to $6.92 in 2022. It surpassed The Street’s EPS estimates in each of the trailing four quarters. And over the past year, the stock has gained 182% in price to close yesterday’s trading session at $60.63.
DVN’s POWR Ratings reflect this promising outlook. It has an A grade for Momentum and a B grade for Growth, Quality, and Sentiment. It is ranked #37 in the Energy - Oil & Gas industry. Click here to see the additional ratings for DVN (Value and Stability).
EOG shares were trading at $123.89 per share on Wednesday morning, up $3.06 (+2.53%). Year-to-date, EOG has gained 41.71%, versus a -5.41% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
2 High-Quality Natural Gas Stocks to Own in Q1 2022 StockNews.com
