In the midst of ongoing conflicts such as the Russian war in Ukraine and sustained tension in the Middle East, one might anticipate a surge in oil prices. Surprisingly, despite the volatility in the energy sector, oil prices have experienced an 11% decline year-to-date.
Wells Fargo’s noted analyst Roger Read, distinguished with a 5-star rating by TipRanks, has turned his attention to the oil and natural gas markets, offering insights into energy stocks. Despite the geopolitical turbulence, Read maintains a belief that the oil and gas markets won’t witness a drastic spike in prices.
According to Read, the oil market is expected to remain relatively stable, projecting a balanced state until 2024. He foresees a favorable environment for Exploration and Production (E&P) companies, anticipating modest deflation in oilfield service prices in 2024, with potential for further deflation if commodity prices fall below expectations.
Leveraging his optimism for the energy market, Read has highlighted two specific energy stocks, urging investors to consider a purchase. The first of these selections is Coterra Energy, a Houston-based oil and gas exploration and production company operating in prime regions like the Permian Basin in Texas, the Anadarko Basin in Oklahoma, and the Marcellus Shale in Pennsylvania.
Coterra Energy boasts a diversified portfolio encompassing both oil and natural gas assets across 672,000 net acres in its operational areas. Notably, the company holds 183,000 net acres in the Marcellus shale, a key production zone characterized by 100% natural gas production and substantial proven reserves of 1,498 million barrels of oil equivalent (MMboe) as of the previous year’s end.
Additionally, in Texas and Oklahoma, Coterra controls 307,000 and 182,000 net acres, respectively, securing a combined 900 MMboe in proven reserves, comprising crude oil, natural gas, and natural gas liquids.
Read’s endorsement positions Coterra Energy as a promising investment prospect, given its diversified assets in lucrative regions, implying resilience in navigating economic fluctuations within the energy sector.