In this article, we will look at the 12 best gas stocks to buy according to hedge funds.
The Future of Natural Gas: Sustained Growth Ahead?
The global gas industry plays a crucial role in the energy landscape, providing a relatively cleaner alternative to coal and oil. As countries aim to reduce carbon emissions and transition to more sustainable energy sources, natural gas has become increasingly important. According to a report by The Business Research Company, the global natural gas market was valued at $1.029 trillion in 2023. The market is expected to grow at a compound annual growth rate (CAGR) of 7.7% during 2024-2028 to reach a value of $1.518 trillion by the end of the forecast period. The Asia-Pacific region was the largest market for natural gas globally in 2023.
The International Energy Agency’s 2024 Global Gas Security Review indicates that natural gas consumption rose by 2.8% in the first three quarters of 2024 compared to the previous year, surpassing the average growth rate of 2% seen from 2010 to 2020. Most of this increase came from rapidly growing markets in Asia. However, estimates show that the growth rate slowed to below 2% in the third quarter of 2024, partly due to a recovery in demand that began in late 2023 and also because higher gas prices affected consumption.
For the full year of 2024, global gas demand is projected to increase by over 2.5%, reaching a record high of 4,200 billion cubic meters (bcm). The Asia-Pacific region is expected to contribute nearly 45% of this additional demand. A significant portion of this growth is driven by industrial and energy use, supported by ongoing economic growth in Asia. Additionally, Europe’s industrial gas demand is recovering. Looking ahead, global gas demand is anticipated to rise by another 2.3% in 2025, with Asia continuing to play a crucial role in driving this growth.
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The demand for natural gas in the electric power sector is a major growth driver. Natural gas plants are more efficient and produce fewer emissions compared to traditional coal-fired plants. According to the US Energy Information Administration (EIA), in 2023, the United States consumed 32.50 trillion cubic feet of natural gas, which represents around 36% of the country’s total energy consumption. The electric power sector was the largest user, consuming approximately 40% of the total natural gas. Natural gas accounted for about 42% of the energy used in electricity generation in 2023.
In addition to this, innovations in extraction technologies, such as hydraulic fracturing and horizontal drilling, have made it easier and more cost-effective to produce natural gas. These advancements are enhancing supply capabilities and driving down costs, further supporting market growth.
With this background in mind, let’s take a look at the 12 best gas stocks to buy according to hedge funds.
An industrial facility emitting natural gas from large pipes, with workers in the foreground.
Methodology
To compile our list of the 12 best gas stocks to buy according to hedge funds, we used stock screeners from Finviz and Yahoo Finance. We sorted our results based on market capitalization and picked the largest gas companies by market cap. We also consulted various online resources and reviewed our own rankings. This exercise provided us with a list of more than 30 gas stocks. We focused on the top 12 gas stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 12 best gas stocks to buy were then ranked in ascending order based on the number of hedge funds holding stakes in them.
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12 Best Gas Stocks To Buy According to Hedge Funds
12. Cenovus Energy Inc. (NYSE:CVE)
Number of Hedge Fund Holders: 48
Cenovus Energy Inc. (NYSE:CVE) is a Canadian oil and gas company with operations in Canada, the United States, and the Asia Pacific region. The company is a major producer of natural gas in the Western Canadian Sedimentary Basin, managing over 6 million net acres in Alberta and British Columbia. CVE ranks among the best energy stocks to buy.
In Q3 2024, the company demonstrated strong operational performance, generating nearly $2.5 billion in cash from operating activities. Cenovus Energy Inc. (NYSE:CVE) successfully completed its turnaround at the Christina Lake facility ahead of schedule, leading to an increase of 15,000 to 20,000 barrels per day. This efficiency showcases the company’s commitment to optimizing its operations. Additionally, Cenovus Energy Inc. (NYSE:CVE) completed a major turnaround at its Lima Refinery, ensuring continuous operations by connecting pipelines to the Toledo Refinery. The company also began production at two new well pads at the Sunrise project, which are expected to ramp up further in the fourth quarter.
Cenovus Energy Inc. (NYSE:CVE) continues to make progress on significant projects like the Narrows Lake tie-back pipeline, which is 93% complete and expected to add 20,000 to 30,000 barrels per day by mid-2025. The West White Rose project is also on track to resume production by the end of 2024. Cenovus Energy Inc.’s (NYSE:CVE) strong operational results and clear growth strategy make it an attractive investment opportunity.
11. Civitas Resources Inc. (NYSE:CIVI)
Number of Hedge Fund Holders: 48
Civitas Resources Inc. (NYSE:CIVI) is an independent oil and natural gas producing company. It is primarily focused on the Denver-Julesburg (DJ) Basin in Colorado and the Permian Basin in Texas and New Mexico. CIVI ranks among the best gas stocks to buy according to hedge funds.
In the third quarter of 2024, Civitas Resources Inc. (NYSE:CIVI) reported capital expenditures of $438 million, reflecting increased efficiency in its drilling and completion activities. The company successfully drilled 26 wells, completed 19, and turned 30 gross operated wells to sales in the Permian Basin. In the DJ Basin, Civitas Resources Inc. (NYSE:CIVI) drilled 14, completed 29, and turned 40 operated wells to sales. These achievements highlight the company’s commitment to enhancing production while managing costs effectively. Through the first nine months of 2024, Civitas Resources Inc. (NYSE:CIVI) has also expanded its portfolio by adding over 75 gross locations in the Delaware and Midland Basins through strategic transactions. This expansion positions the company for continued growth and improved production capabilities.
Production numbers indicate strong operational success, with Civitas Resources Inc. (NYSE:CIVI) expecting a 3% increase in oil volumes for the fourth quarter compared to Q3. In October, production averaged 165 MBbl/d, and the Blue 4AH well in the DJ Basin set a state record by producing 165 thousand barrels of oil within its first 90 days.
With its focus on efficient operations and growth, Civitas Resources Inc. (NYSE:CIVI) presents an appealing investment opportunity. The company is also notable for being Colorado’s first carbon-neutral oil and gas producer. The company’s commitment to sustainability, combined with its strategic expansions and operational efficiencies, makes it a solid choice for investors looking for a reliable energy stock with growth potential.
10. Shell plc (NYSE:SHEL)
Number of Hedge Fund Holders: 48
Shell plc (NYSE:SHEL) is a major British multinational oil and gas company operating in over 70 countries. It is one of the largest energy companies globally, with a growing focus on natural gas as an essential part of its business strategy. Shell plc (NYSE:SHEL) ranks among the best energy stocks to invest in.
In July 2024, the company announced the final investment decision (FID) for the Manatee project, an undeveloped gas field in Trinidad and Tobago. This project will enhance Shell plc’s (NYSE:SHEL) Integrated Gas business and is expected to start production in 2027. Manatee is expected to reach peak production of about 104,000 barrels of oil equivalent per day (boe/d). The Manatee project builds on Shell plc’s (NYSE:SHEL) existing operations in the East Coast Marine Area, which includes some of the country’s most productive gas fields.
In August 2024, Shell plc (NYSE:SHEL) and PetroChina announced plans to develop Phase 2 of the Arrow Energy Surat Gas Project in Australia. This phase is projected to contribute around 22,400 boe/d at peak production and will supply gas to the Shell-operated QCLNG facility. This initiative reflects Shell plc’s (NYSE:SHEL) commitment to increasing gas supply in line with long-term contracts.
Additionally, on December 16, 2024, Shell plc (NYSE:SHEL) also confirmed the final investment decision for the Bonga North project off Nigeria’s coast. This deep-water project will involve drilling 16 wells. Bonga North has estimated recoverable resources exceeding 300 million barrels of oil equivalent (boe). Shell plc’s (NYSE:SHEL) strategic investments in gas projects and its commitment to expanding production capabilities position it well for future growth.
9. Diamondback Energy Inc. (NASDAQ:FANG)
Number of Hedge Fund Holders: 49
Diamondback Energy Inc. (NASDAQ:FANG) is an independent oil and natural gas company that specializes in the acquisition, development, exploration, and exploitation of oil and gas reserves primarily in the Permian Basin. FANG is one of the best energy stocks to buy.
In the third quarter of 2024, Diamondback Energy Inc. (NASDAQ:FANG) drilled 71 wells in the Midland Basin and 5 in the Delaware Basin. The company successfully brought 87 wells online in Midland and 8 in Delaware, showcasing its operational efficiency and commitment to maximizing resource extraction.
During this quarter, the company reported capital expenditures totaling $688 million, with $633 million dedicated to drilling and completions. Additionally, $52 million was invested in infrastructure and environmental initiatives. Diamondback Energy Inc. (NASDAQ:FANG) also invested $3 million in midstream. These investments reflect a robust strategy aimed at enhancing production capabilities and sustaining growth momentum.
A significant achievement for Diamondback Energy Inc. (NASDAQ:FANG) was its merger with Endeavor Energy Resources, completed in September 2024. This merger expands Diamondback’s asset base and strengthens its competitive position in the North American market. Furthermore, in November 2024, the company entered into an agreement to trade certain Delaware Basin assets with TRP Energy. This deal is expected to improve cash flow and enhance Diamondback Energy Inc.’s (NASDAQ:FANG) production profile. With its strategic expansions, strong operational performance, and focus on efficient capital allocation, Diamondback Energy Inc. (NASDAQ:FANG) presents a compelling investment opportunity.
8. Chord Energy Corporation (NASDAQ:CHRD)
Number of Hedge Fund Holders: 50
Chord Energy Corporation (NASDAQ:CHRD) is an independent oil and gas company that focuses on exploring, developing, producing, and acquiring crude oil, natural gas, and natural gas liquids (NGLs). The corporation is a leading operator in the Williston Basin, known for its high-quality assets. In May 2024, Chord Energy Corporation (NASDAQ:CHRD) completed its acquisition of Enerplus Corporation, enhancing its position as a premier operator in the Williston Basin. This merger not only increases the company’s scale but also adds significant low-cost inventory to its portfolio.
For the third quarter of 2024, Chord Energy Corporation (NASDAQ:CHRD) reported total production volumes of 280.8 thousand barrels of oil equivalent per day (MBoepd), surpassing guidance expectations. The company’s exploration and production and other capital were $329.2 million, reflecting improved operational efficiencies. This strong performance resulted in an adjusted free cash flow of $312.5 million for the quarter. Chord Energy Corporation (NASDAQ:CHRD) committed to returning 75% of its adjusted free cash flow to shareholders, amounting to $234 million through dividends and share repurchases.
On October 25, 2024, Chord Energy Corporation (NASDAQ:CHRD) sold its assets in the DJ Basin for $36.1 million. The proceeds from this divestiture are expected to fund recent acquisitions and share repurchases in the fourth quarter of 2024. Additionally, Chord Energy Corporation (NASDAQ:CHRD) has been actively acquiring more interests in operated assets in the Williston Basin, investing $7 million during the third quarter of 2024.
CHRD is one of the best gas stocks to buy according to hedge funds. With its strategic acquisitions, operational efficiencies, and commitment to returning capital to shareholders, Chord Energy Corporation (NASDAQ:CHRD) presents a compelling investment opportunity.
7. Permian Resources Corporation (NYSE:PR)
Number of Hedge Fund Holders: 56
Permian Resources Corporation (NYSE:PR) is a prominent independent oil and natural gas company. Based in Midland, Texas, the company focuses on acquiring and developing oil and liquids-rich natural gas assets in the Permian Basin. It is one of the largest pure-play exploration and production companies in this region.
In the third quarter of 2024, Permian Resources Corporation (NYSE:PR) demonstrated strong operational efficiency by reducing its drilling and completion costs to $800 per lateral foot, marking a 16% decrease from the previous year. The company also achieved a 16% reduction in drilling cycle times and a 19% increase in completion crew pump hours per day. These improvements not only cut costs but also enhance profitability.
On September 17, 2024, the company completed its acquisition of the Barilla Draw assets, adding approximately 29,500 net acres to its portfolio. This strategic acquisition is expected to boost production significantly, with the new properties already yielding about 2 MBoe/d during the third quarter. Additionally, Permian Resources Corporation (NYSE:PR) has been actively pursuing smaller acquisitions, adding around 460 net acres during Q3 2024.
The corporation is also looking to divest non-core assets to streamline operations and create value for shareholders. On December 10, 2024, Permian Resources Corporation (NYSE:PR) announced it would sell its natural gas and oil gathering systems in Reeves County, Texas, to Kinetik Holdings for $180 million. With its focus on operational improvements and strategic acquisitions, Permian Resources Corporation (NYSE:PR) presents a strong case for investment. PR ranks among the best energy stocks to buy.
6. Cheniere Energy Inc. (NYSE:LNG)
Number of Hedge Fund Holders: 62
Cheniere Energy Inc. (NYSE:LNG) is a major producer and exporter of liquefied natural gas (LNG). As the second largest producer of LNG globally, the company plays a crucial role in meeting the rising demand for natural gas by providing a clean, secure, and affordable energy solution. Cheniere Energy Inc. (NYSE:LNG) operates major liquefaction facilities at Sabine Pass and Corpus Christi on the US Gulf Coast.
In September 2024, the company celebrated a significant milestone by loading its 1,000th LNG cargo for export at the Corpus Christi facility, which was delivered to Italy. Since 2016, Cheniere Energy Inc. (NYSE:LNG) has exported around 3,720 cargoes to approximately 40 different markets worldwide. This strong export performance highlights the company’s global reach and operational efficiency.
Cheniere Energy Inc. (NYSE:LNG) is also expanding its production capabilities. The company is progressing on the Corpus Christi Stage 3 project. The first LNG production from this expansion is expected by the end of 2024, with substantial completion anticipated in early 2025. This expansion will enhance Cheniere Energy Inc.’s (NYSE:LNG) total production capacity significantly.
In addition to its operational growth, the company has been actively managing its capital structure. In the third quarter of 2024, Cheniere Energy Inc. (NYSE:LNG) repurchased about 1.6 million shares for approximately $282 million and increased its quarterly dividend by 15% to $0.50 per share. Through the first nine months of 2024, the company has returned about $2 billion through share repurchases. Since launching its 2020 Vision Plan in September 2022, Cheniere Energy Inc. (NYSE:LNG) has repurchased around 10% of its outstanding shares. This commitment to returning value to shareholders demonstrates financial strength and confidence in future growth. With its leading position in the LNG market, ongoing expansions, and robust shareholder returns, Cheniere Energy Inc. (NYSE:LNG) represents a compelling investment opportunity for those looking to invest in the energy sector.
5. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 63
Chevron Corporation (NYSE:CVX) is a leading American multinational energy company with a strong focus on oil and gas. The company produces crude oil and natural gas and also manufactures fuels, lubricants, and petrochemicals. CVX ranks among the best gas stocks to buy according to hedge funds.
In the third quarter of 2024, Chevron Corporation (NYSE:CVX) achieved a 7% increase in worldwide net oil-equivalent production compared to the previous year, driven by record output from the US and the Permian Basin. The company has also successfully launched key projects in the Anchor, Jack/St. Malo, and Tahiti fields in the Gulf of Mexico. These initiatives are expected to boost Gulf production to 300,000 barrels of net oil equivalent per day by 2026. The corporation’s innovative approach includes the use of high-pressure deepwater technology at the Anchor project and water injection operations at its Jack/St. Malo and Tahiti facilities. These efforts will allow Chevron Corporation (NYSE:CVX) to enhance oil and natural gas recovery while maintaining some of the lowest carbon intensity levels in its operations.
Additionally, the corporation is optimizing its asset portfolio. In November 2024, Chevron Corporation (NYSE:CVX) announced a $6.5 billion sale of its interest in the Athabasca Oil Sands Project and Duvernay shale assets in Canada. This move is part of a broader strategy to divest $10 to 15 billion in assets by 2028, further streamlining its operations. Financially, Chevron Corporation (NYSE:CVX) returned a record $7.7 billion to shareholders in Q3 2024 through share repurchases and dividends. This commitment to returning capital makes Chevron Corporation (NYSE:CVX) an attractive investment option.
With strong production growth, strategic project developments, and a focus on shareholder returns, Chevron Corporation (NYSE:CVX) stands out as a solid stock for investors looking for stability and growth in the energy sector.
4. ConocoPhillips (NYSE:COP)
Number of Hedge Fund Holders: 66
ConocoPhillips (NYSE:COP) is one of the world’s largest oil and gas exploration and production companies based on production and proved reserves. The company is involved in various activities, including the exploration, development, production, transportation, and marketing of crude oil, natural gas, and liquefied natural gas. ConocoPhillips (NYSE:COP) is one of the best energy stocks to invest in.
In the third quarter of 2024, the company achieved a total production of 1,917 thousand barrels of oil equivalent per day (MBOED), reflecting a solid increase from previous periods. For the first nine months of 2024, production averaged 1,921 MBOED, which is an increase of 120 MBOED compared to the same timeframe last year. ConocoPhillips (NYSE:COP) also completed successful turnarounds in Canada and the contiguous United States.
The company has made strategic moves to enhance its portfolio. In November 2024, ConocoPhillips (NYSE:COP) completed its acquisition of Marathon Oil Corporation. This acquisition adds valuable low-cost inventory to its existing operations and is expected to generate over $1 billion in synergies on a run-rate basis within the next year. ConocoPhillips (NYSE:COP) has also exercised its preferential rights to acquire additional working interests in the Kuparuk River and Prudhoe Bay units in Alaska for around $300 million.
Such strategic investments and acquisitions highlight ConocoPhillips’ (NYSE:COP) commitment to strengthening its position in the oil and gas sector, making it an appealing option for investors looking for growth opportunities.
3. Occidental Petroleum Corporation (NYSE:OXY)
Number of Hedge Fund Holders: 71
Occidental Petroleum Corporation (NYSE:OXY) is a major international energy company with operations primarily in the United States, the Middle East, and North Africa. It ranks among the largest oil and gas producers in the US, especially known for its significant presence in the Permian and DJ basins, as well as offshore in the Gulf of Mexico.
In August 2024, Occidental Petroleum Corporation (NYSE:OXY) completed its acquisition of CrownRock, enhancing its assets in the Midland Basin. This acquisition adds valuable development-ready inventory to the corporation’s already strong portfolio, which helps reduce production costs and increase efficiency.
For the third quarter of 2024, Occidental Petroleum Corporation (NYSE:OXY) reported total production of 1,412 thousand barrels of oil equivalent per day (Mboed), surpassing guidance by 22 Mboed. The Permian Basin was a standout performer, contributing an average of 729 Mboed. This success is attributed to strong performance from new wells and improved operational uptime. Occidental Petroleum Corporation (NYSE:OXY) also demonstrated impressive drilling efficiency, achieving a 10% reduction in Permian drilling cycle times compared to the previous year. In the DJ Basin, the corporation successfully drilled a two-mile lateral well in just 80 hours and reduced well costs by 20% compared to earlier this year.
Occidental Petroleum Corporation (NYSE:OXY) is one of the best gas stocks to buy according to hedge funds. With a commitment to operational excellence and strategic acquisitions, combined with a focus on reducing costs, Occidental Petroleum Corporation (NYSE:OXY) is well-positioned for future growth.
2. Hess Corporation (NYSE:HES)
Number of Hedge Fund Holders: 75
Hess Corporation (NYSE:HES) is a prominent independent energy company focused on exploring and producing crude oil and natural gas. It has a strong presence in the Bakken shale formation in North Dakota and is a major player in the deepwater Gulf of Mexico. Additionally, Hess Corporation (NYSE:HES) is a key supplier of natural gas to Peninsular Malaysia and Thailand.
In the third quarter of 2024, the corporation reported impressive production figures, with oil and gas net production reaching 461,000 barrels of oil equivalent per day (boepd), a 17% increase from 395,000 boepd in the same period last year. Production from the Bakken contributed significantly, with production rising to 206,000 boepd, up from 190,000 boepd in Q3 2023. This growth is attributed to increased drilling activity, as the company operated four rigs and brought 37 new wells online during the quarter.
Hess Corporation (NYSE:HES) also announced an increase in its capital expenditures for exploration and production, raising its guidance for 2024 to approximately $4.9 billion from $4.2 billion. This increase reflects the decision to expedite the acquisition of floating production storage and offloading vessels, which will enhance operational efficiency.
Additionally, in the third quarter of 2024, Hess Corporation (NYSE:HES) reported cash operating costs of $13.84 per barrel of oil equivalent (boe), a slight improvement from $14.04 per barrel of oil equivalent (boe) in the same period last year. The company generated net cash from operating activities amounting to $1.51 billion, significantly up from $986 million in the third quarter of 2023. This solid cash flow indicates the corporation’s effective management and operational efficiency, making it an attractive investment option. With strong production growth and strategic investments, Hess Corporation (NYSE:HES) ranks among the best energy stocks.
1. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 86
Exxon Mobil Corporation (NYSE:XOM) is a leading American oil and gas company with a robust portfolio that includes natural gas operations across several regions, such as the United States, Papua New Guinea, Mozambique, and Qatar. Exxon Mobil Corporation (NYSE:XOM) ranks among the best energy stocks to buy.
In May 2024, the corporation completed its acquisition of Pioneer Natural Resources. This merger significantly enhances Exxon Mobil Corporation’s (NYSE:XOM) operations in the Permian Basin, which is known for its high-return development potential. With this acquisition, the company’s production capacity in the Permian is set to more than double to 1.3 million barrels of oil equivalent per day, with projections to reach approximately 2 million by 2027. This growth is supported by an estimated 16 billion barrels of oil equivalent resource across their combined acreage in the Delaware and Midland basins.
On December 2, Exxon Mobil Corporation (NYSE:XOM) announced its Corporate Plan to 2030 and outlined ambitious goals for shareholder value. The company aims to achieve a compound annual growth rate (CAGR) of 10% in earnings and 8% in cash flow while implementing $7 billion in cost savings through improved processes and technology. By investing around $140 billion in major projects and the Permian Basin development program through 2030, Exxon Mobil Corporation (NYSE:XOM) expects to generate returns exceeding 30% over the life of these investments.
The company is focused on achieving cost efficiencies by simplifying its operations and optimizing supply chains. This strategic focus has significantly boosted the company’s financial performance and structural cost savings have reached over $11 billion year-to-date versus 2019, reflecting the effectiveness of these initiatives in improving profitability. Exxon Mobil Corporation (NYSE:XOM) has also made substantial changes to its refining operations, reducing the number of refineries from 22 in 2017 to an expected 15 by the end of 2024. This consolidation aims to create a more advantageous portfolio by divesting less efficient sites. Overall, Exxon Mobil Corporation’s (NYSE:XOM) strategic acquisitions, strong growth projections, and disciplined capital management make it a compelling stock for investors looking for stability and growth potential in the energy sector.
Overall, XOM ranks first among the 12 best gas stocks to buy according to hedge funds. While we acknowledge the potential of gas companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than XOM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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