In this piece, we will take a look at the ten best performing energy stocks in 2023. If you want to skip our overview of the energy industry and some top players, take a look at the 5 Best Performing Energy Stocks In 2023.
With 2023 coming to a close, one truth has stood the test of time. This truth is that the energy industry remains central to global prosperity despite a stronger push towards renewables in attempts to reduce emissions. The high energy offered by petroleum fuels coupled with the fact that they can be relied on to produce power at any time during the day continues to ensure that traditional fuels will continue to play a crucial role in the global energy mix for the short term at the very least.
Due to its importance, even the slightest disruption in the global energy markets leads to weakness in both developed and developing economies. This principle was in full display last year after the Russian invasion of Ukraine. Russia is one of the biggest suppliers of gas in the world, and its invasion of a smaller country led to Europe urgently scrambling to diversify its energy sources away from Russia. Turbulence in the energy markets caused the price of crude oil to shoot to record high levels. This, combined with the effects of low interest rates and generous stimulus packages during the coronavirus pandemic resulted in inflation shooting to record high levels and spurred central banks into actions that would lead to short term pain for stock market investors.
Fast forwarding to 2023, turmoil in the energy markets started to rear its head once again after the Israel and Palestine conflict. A large portion of the world’s oil is routed from that region, and naturally, investors were worried that even the slightest escalation could lead to oil prices jumping yet again. This time around the effects could have been even more devastating than those in 2022, since interest rates are already high, and central banks would have had to make some really tough decisions to control inflation just as it had started to come down. Thankfully, the conflict is limited right now, and there is some optimism that a truce might be around the corner.
Shifting to the oil industry, it appears that it will exit 2023 with supply cuts to stabilize prices. 2023 opened with significant optimism about a Chinese economic recovery after Beijing ended its Zero COVID policy. However, a troubling real estate sector and a gloomy national mood didn’t spur a Chinese recovery. Naturally, since China is one of the biggest oil importers in the world, its requirements impact oil prices. Major oil producers, particularly Saudi Arabia, panicked and announced production cuts to make sure they could earn sufficient revenues. However, it also appears that the production cuts might extend into 2023 if we believe sources quoted by Reuters. In a November 2023 report, the publication shared that a November 26th OPEC+ meeting would see members seriously consider extending the cuts in 2024. Economic considerations are at the heart of these cuts, with some analysts speculating that Saudi Arabia can enter an economic contraction this year as successive cuts can translate into a 9% annual production reduction. The contraction would be the first since 2020 when global oil demand tanked in the wake of travel and other restrictions due to the coronavirus pandemic.
Narrowing our focus to the oil industry players, 2023 has surprisingly been acquisition season with some historic deals having come into play. U.S. oil giants Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) have announced acquisition deals valued at more than $100 billion, as they open their coffers to expand their operations and production bases. Exxon announced in October 2023 that it will acquire the Permian basin shale oil producer Pioneer Natural Resources Company (NYSE:PXD) for a whopping $59.4 billion price tag as part of an effort that it believes will double its production in the region. Similarly, Chevron is spending another cool $53 billion to buy Hess Corporation (NYSE:HES) which has the strategic advantage of being one of only two oil producers in the South American country of Guyana.
Exxon’s senior vice president Neil Chapman gushed (like Exxon’s oil wells?) about his firm’s multi billion dollar deal during the firm’s third quarter earnings report where he outlined:
As we said with you recently, Pioneer is arguably the best Permian pure play company with the largest undeveloped Tier 1 inventory in the Midland basin. Pioneer’s premier asset base is matched by the quality of its workforce. Its employees are innovative and hard working and possess a deep knowledge of unconventional operations in the Permian. When you combine these attributes with our technology and industry-leading operational capabilities, we’re confident we can unlock far more value together than either of us could do alone. We expect synergies of approximately $1 billion before tax annually, beginning in the second year post closing, and an average of about $2 billion per year over the next decade driving double-digit returns.
This transaction not only strengthens our current position but it also transforms our portfolio, increasing our exposure to short cycle low cost to supply liquids in the United States. Based on our initial assessment, we expect our combined Permian production to increase to approximately 2 million oil-equivalent barrels per day by the end of 2027. Downstream, this merger also increases the integration between high value light Permian crude and our premier refinery and chemical footprint on the U.S. Gulf Coast. Finally, we’ve said many times that we’re working to solve the end equation, providing the energy and products society needs and reducing emissions, both ours and others. This transaction reflects both parts of our commitment. We will increase our Permian production with plans to accelerate Pioneer’s net zero plan to 2035 from 2050, and decrease our combined Permian emissions.
So, within this dynamic environment, what are some top performing energy stocks in 2023? We took a look so read on below to find out more.
A miner in a hardhat and safety gear toiling in a mine below the surface.
Our Methodology
To compile our list of the best performing energy stocks, we ranked the top performing energy stocks this year through their year to date share price performance. Out of these, the stocks with high double or triple digit percentage share price returns were selected. The list is not all inclusive.
10 Best Performing Energy Stocks In 2023
10. Gulfport Energy Corporation (NYSE:GPOR)
Year To Date Share Price Gains: 87.53%
Gulfport Energy Corporation (NYSE:GPOR) is a small oil and gas exploration and production firm headquartered in Oklahoma City, Oklahoma. The firm has beaten analyst EPS estimates in all four of its latest quarters and the shares are rated Strong Buy on average. Analysts have set an average share price target of $152.67 for Gulfport Energy Corporation (NYSE:GPOR).
As of September 2023 end, 27 out of the 910 hedge funds part of Insider Monkey’s database had held a stake in Gulfport Energy Corporation (NYSE:GPOR). Edward A. Mule’s Silver Point Capital owned the largest stake among these which was worth $755 million.
9. Frontline plc (NYSE:FRO)
Year To Date Share Price Gains: 91.6%
Frontline plc (NYSE:FRO) is an ocean oil freight company headquartered in Limassol, Cyprus. Even though it has regularly been missing analyst EPS estimates as of late, Frontline plc (NYSE:FRO) is busy investing in its future as the firm expanded its fleet by adding 24 new ships in its fleet for $2.4 billion in October 2023.
By the end of this year’s third quarter, 17 out of the 910 hedge funds tracked by Insider Monkey had bought and owned Frontline plc (NYSE:FRO)’s shares. This marked a substantial drop, as 23 had held a stake in the company during Q2.
8. Weatherford International plc (NASDAQ:WFRD)
Year To Date Share Price Gains: 92.19%
Weatherford International plc (NASDAQ:WFRD) is a sizeable backend oil and gas exploration firm that provides products and machines used by oil exploration companies. The firm secured a win in November 2023 when it signed an MOA with one of the biggest industrial equipment companies in the world, Honeywell, to help monitor emissions for decarbonization efforts.
Insider Monkey sifted through 910 hedge fund portfolios for their September quarter of 2023 investments and found 34 investors in the company’s shares. In the same quarter, Weatherford International plc (NASDAQ:WFRD)’s biggest hedge fund stakeholder was Donald Yacktman’s Yacktman Asset Management since it owned $201 million worth of shares.
7. Cameco Corporation (NYSE:CCJ)
Year To Date Share Price Gains: 95.16%
Cameco Corporation (NYSE:CCJ) is one of the biggest uranium companies in the world. It made a big announcement in November 2023, sharing its partnership with an asset management firm to acquire nuclear power products provider Westinghouse.
By the end of September 2023, 54 out of the 910 hedge funds profiled by Insider Monkey had invested in Cameco Corporation (NYSE:CCJ). Richard Driehaus’s Driehaus Capital owned the largest stake in the firm in Q3, which came through 3.9 million shares and was worth $154 million.
6. Vista Energy, S.A.B. de C.V. (NYSE:VIST)
Year To Date Share Price Gains: 107%
Vista Energy, S.A.B. de C.V. (NYSE:VIST) is a Mexican oil and gas producer. The shares are rated Strong Buy on average and analysts have set an average share price target of $40.96.
As of Q3 2023 end, 11 out of the 910 hedge funds part of Insider Monkey had owned the firm’s shares. Vista Energy, S.A.B. de C.V. (NYSE:VIST)’s biggest investor in this quarter was Rob Citrone’s Discovery Capital Management due to its $99 million investment.
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Disclosure: None. 10 Best Performing Energy Stocks In 2023 is originally published on Insider Monkey.