In this article, we discuss the 13 most profitable oil stocks in the world. To skip our detailed analysis of the oil and gas sector, go directly to the 5 Most Profitable Oil Stocks in the World.
Oil stocks experienced a remarkable performance in 2022, but their fortunes took a downturn in 2023. Despite the broader market’s significant gains, the energy sector saw a decline in value. However, analysts suggest a more favorable outlook for 2024. For example, Maurice Fitzmaurice, a sector portfolio manager at Fidelity, expresses optimism:
“While energy stocks have had a slow 2023, I believe 2024 could be bright. Crude oil prices are likely to remain elevated in 2024 – driven by tight supply, increased geopolitical risk, and strengthening global demand for energy. This could set up a positive backdrop for profitability, and potentially stock prices, in the sector.”
U.S. crude oil experienced a 3% increase on December 14, building on the gains from the previous session, attributed to a marginally improved global demand outlook for 2024 and a weaker dollar. The West Texas Intermediate contract for January advanced by $2.11, or 3.04%, settling at $71.58 per barrel, while the Brent contract for February climbed $2.35, or 3.16%, settling at $76.61 per barrel. The rise in oil prices the day before, exceeding 1%, was influenced by a larger-than-expected withdrawal of 4.3 million barrels from U.S. crude inventories.
The International Energy Agency (IEA) also indicated on December 14 that the global oil demand would increase by 1.1 million barrels per day in 2024, a slight uptick from its previous forecast of 930,000 barrels per day. Additionally, the Federal Reserve alleviated traders’ concerns by acknowledging progress in taming inflation. The central bank signaled three rate cuts for 2024, potentially positively impacting oil demand next year, as higher interest rates tend to slow economic growth, putting downward pressure on crude prices.
Conversely, in the long run, the IEA foresees a 25% reduction in fossil fuel demand by 2030 and an 80% decrease by 2050. According to a report from the Institute of Energy Economics and Financial Analysis, the decline of the oil and gas sector has been gradual, noting that it represented approximately 29% of the S&P 500 in 1980 and has now dwindled to 5.3%.
Regardless, the oil and gas sector has been at the forefront of stock market activity. In light of this, we will explore some of the most undervalued oil stocks in this article. Some notable names include Chevron Corporation (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), and Chesapeake Energy Corporation (NASDAQ:CHK).
A engineer overseeing a exposed network of pipelines connected to tanks at an oil refinery.
Our Methodology
In compiling our list of the most profitable oil stocks for investment, we conducted a thorough analysis of Insider Monkey’s Q3 2023 database to identify industry leaders evaluated by hedge fund sentiment. Subsequently, the selected companies were ranked based on their trailing twelve-month net income.
13. Halliburton Company (NYSE:HAL)
Number of Hedge Fund Holders: 41
Latest TTM Net Income: $2.63 billion
Halliburton Company (NYSE:HAL) functions as a prominent oilfield service provider, specializing in catering to the upstream oil and gas sector across the complete reservoir lifecycle. The company provides a wide array of services encompassing activities from hydrocarbon discovery, geological data management, drilling, formation assessment, well construction, completion, to production optimization.
On October 4, Citigroup increased its stock target for Halliburton Company (NYSE:HAL) from $42.00 to $46.00, in line with analyst Scott Gruber’s optimistic view on future earnings and operational efficiency. Gruber’s “Buy” rating is grounded in the anticipation that Halliburton’s investments in electronic fracking, combined with efficient execution, will lead to market share expansion and enhancements in Completion and Production (C&P) margins.
Insider Monkey’s analysis of the third quarter 2023 investment activities of 910 hedge funds revealed 41 funds with investments in Halliburton Company (NYSE:HAL). The leading shareholder in Insider Monkey’s database is Pzena Investment Management, managed by Richard S. Pzena, holding 3.56 million shares valued at $144.49 million.
Carillon Eagle Mid Cap Growth Fund made the following comment about Halliburton Company (NYSE:HAL) in its Q3 2023 investor letter:
“Halliburton Company (NYSE:HAL) provides equipment and services to the global energy industry. The stock was an impressive outperformer in the quarter, as the recent sharp increase in oil prices should translate to healthy levels of North American shale activity in the remainder of the year and into 2024. Halliburton also is poised to benefit from the ongoing multi-year international and offshore upstream investment cycle.”
Much like Chevron Corporation (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), and Chesapeake Energy Corporation (NASDAQ:CHK), Halliburton Company (NYSE:HAL) ranks as one of the most profitable oil stocks to invest in.
12. Enbridge Inc. (NYSE:ENB)
Number of Hedge Fund Holders: 35
Latest TTM Net Income: $3.05 billion
Enbridge Inc. (NYSE:ENB) is a multinational energy and pipeline corporation headquartered in Calgary, Alberta, Canada. The company operates an extensive network of pipelines spanning Canada and the United States, facilitating the transportation of various energy resources, including crude oil, natural gas, and LNG. In addition to its pipeline operations, Enbridge Inc. (NYSE:ENB) is actively involved in renewable energy generation. Notably, Enbridge manages one of the world’s largest oil pipeline systems and plays a crucial role in transporting approximately 30% of the oil produced in North America.
On November 3, Enbridge Inc. (NYSE:ENB) reported third-quarter earnings that surpassed analyst expectations. The company also expressed ongoing interest in smaller acquisitions while progressing with the finalization of a $14 billion agreement to acquire three U.S. gas utilities from Dominion Energy, with the deal expected to conclude in 2024. Furthermore, Enbridge announced agreements to increase its ownership in German offshore wind projects for 625 million euros ($668.7 million) and to acquire seven U.S. renewable natural gas facilities for $1.2 billion.
According to our hedge fund data for the third quarter, 35 hedge funds held stakes in Enbridge Inc. (NYSE:ENB), with a total stake value of $401.46 million. Zimmer Partners emerged as the most prominent shareholder in Enbridge Inc. (NYSE:ENB) at the end of the third quarter, holding 4.1 million shares in the company.
11. Diamondback Energy, Inc. (NASDAQ:FANG)
Number of Hedge Fund Holders: 44
Latest TTM Net Income: $3.16 billion
Diamondback Energy, Inc. (NASDAQ:FANG) is an American energy company focused solely on operations within the Permian Basin. In 2022, the company attained a daily production of around 386 thousand barrels of oil equivalent. It also reported proven reserves totaling 2.3 billion barrels of oil equivalent, with petroleum constituting 53% of the overall reserves.
Out of the 910 hedge funds tracked by Insider Monkey, 44 hedge funds were long Diamondback Energy, Inc. (NASDAQ:FANG). A notable stakeholder of Diamondback Energy, Inc. (NASDAQ:FANG) was Donald Yacktman’s Yacktman Asset Management which owns a $225.38 million stake in the company.
Diamond Hill Large Cap Strategy made the following comment about Diamondback Energy, Inc. (NASDAQ:FANG) in its Q3 2023 investor letter:
“Diamondback Energy, Inc. (NASDAQ:FANG) is a top-tier operator in the independent US E&P sector, running a streamlined team with an organizational culture centered on efficiency and cost-optimization. Its strategic location in Midland, Texas, close to its Permian operations, gives it a unique advantage by being in close proximity to a community of service providers. This has helped the company optimize its operations and reduce costs. The company stands out as a pure play in the Permian region, demonstrating strong operational capabilities, a sound capital return framework and a history of intelligent capital allocation. As long-term investors, we appreciate Diamondback’s strategic approach to investment and its commitment to cost efficiency and sustainable growth.”
10. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 52
Latest TTM Net Income: $3.79 billion
Devon Energy Corporation (NYSE:DVN) is primarily involved in hydrocarbon exploration within the United States. Registered in Delaware and headquartered at the Devon Energy Center, a 50-story skyscraper in Oklahoma City, Oklahoma, the company generated over $1.4 billion in operating cash flow in the second quarter. Additionally, it allocated $690 million to shareholders through dividends and stock buybacks during that period.
On November 27, Stifel adjusted the price target for Devon Energy Corporation (NYSE:DVN) from $79 to $77 while maintaining a Buy rating on the shares.
Among the 910 hedge funds tracked by Insider Monkey, 52 held stakes in Devon Energy Corporation (NYSE: DVN). The largest stake was held by Donald Yacktman’s Yacktman Asset Management, with a $145.2 million investment in the company.
9. Schlumberger Limited (NYSE:SLB)
Number of Hedge Fund Holders: 65
Latest TTM Net Income: $4.16 billion
Schlumberger NV, commonly known as SLB or Schlumberger Limited (NYSE:SLB), is a leading oilfield services company offering advanced technology solutions for reservoir characterization, drilling, production, and processing in the oil and gas sector. The company provides comprehensive products and services, ranging from exploration and production to integrated pipeline solutions, aimed at optimizing hydrocarbon recovery.
In the third quarter, Schlumberger Limited (NYSE:SLB) witnessed a 12% increase in international revenue, reaching $6.6 billion compared to the same period in the previous year. North America also experienced a 6% revenue boost, albeit with a sequential decline due to reduced drilling activity in the onshore U.S. and the Gulf of Mexico. The company’s net income, excluding exceptional items, was $0.78 per share for the three months ending on September 30, slightly surpassing the average analysts’ estimate of $0.77 per share.
Among the 910 hedge funds tracked by Insider Monkey, 65 were long on Schlumberger Limited (NYSE:SLB). The most significant stake was held by Rajiv Jain’s GQG Partners, with a $1.7 billion investment in the company.
Alger Spectra Fund made the following comment about Schlumberger Limited (NYSE:SLB) in its Q3 2023 investor letter:
“Schlumberger Limited (NYSE:SLB) provides technology for reservoir characterization, drilling, production, and processing to the oil and gas industry. During the period, shares contributed to performance driven in large part by higher oil prices and strong fiscal second quarter earnings results. Within its quarterly report. the company highlighted growing momentum in international offshore markets that reflected market share gains as well as solid end market activity, leading to strong profit margins and healthy free cash flow generation, in our view.”
8. Occidental Petroleum Corporation (NYSE:OXY)
Number of Hedge Fund Holders: 75
Latest TTM Net Income: $4.45 billion
Occidental Petroleum Corporation (NYSE:OXY) is an American company specializing in hydrocarbon exploration within the United States and the Middle East. Additionally, the company engages in petrochemical manufacturing activities across various locations, including the United States, Canada, and Chile. Organized in Delaware, Occidental Petroleum Corporation (NYSE:OXY) has its headquarters situated in Houston.
On December 11, Occidental Petroleum Corporation (NYSE:OXY) has reached an agreement to acquire CrownRock, a highly sought-after private shale oil producer in the U.S., in a deal valued at approximately $12 billion, including debt. If the takeover is successful, it would solidify Occidental Petroleum Corporation (NYSE:OXY)’s position as the second-largest player in the prolific Permian Basin in the U.S. southwest.
Among the 910 hedge funds tracked by Insider Monkey, 75 had stakes in Occidental Petroleum. The largest stakeholder in the company was Warren Buffett’s Berkshire Hathaway, holding a $13.2 billion stake in the company.
7. Chesapeake Energy Corporation (NASDAQ:CHK)
Number of Hedge Fund Holders: 45
Latest TTM Net Income: $5.36 billion
Founded in 1989, Chesapeake Energy Corporation (NASDAQ:CHK) specializes in exploring and responsibly developing key assets within three prominent U.S. oil and gas regions: the Eagle Ford, Haynesville, and Marcellus Shales. Headquartered in Oklahoma City, a major hub for the natural gas and oil industry, the company achieved a daily production rate of around 4.0 billion cubic feet equivalent (bcfe) per day throughout 2022.
Chesapeake Energy Corporation (NASDAQ:CHK) is currently in the early stages of considering the acquisition of its fellow gas industry counterpart, Southwestern Energy, valued at over $8 billion. Initial discussions between Chesapeake and Southwestern were reported by Reuters on October 17. If a merger between the two companies materializes, they would surpass EQT Corporation, becoming the largest exploration and production enterprise focused on natural gas in the United States, measured by market value.
As of the end of the third quarter of this year, Insider Monkey’s survey of 910 hedge funds identified 45 that had invested in Chesapeake Energy Corporation (NASDAQ:CHK). The largest stakeholder among these is Oaktree Capital Management, led by Howard Marks, with holdings valued at $603.6 million.
6. Valero Energy Corporation (NYSE:VLO)
Number of Hedge Fund Holders: 44
Latest TTM Net Income: $10.71 billion
Headquartered in San Antonio, Texas, Valero Energy Corporation (NYSE:VLO) is an American-based downstream petroleum company primarily focused on the manufacturing and marketing of transportation fuels, as well as other petrochemical products and power.
Valero Energy Corporation (NYSE:VLO) exceeded third-quarter profit expectations on October 26, driven by sustained demand for fuel and refined products amid tight supplies. The company reported that throughput volumes averaged 3 million barrels per day in the quarter, holding steady compared to the previous year but surpassing the Street’s estimate of 2.96 million bpd. For the current quarter, Valero anticipates refining throughput to range between 2.93 million and 3.04 million bpd.
44 hedge funds out of the 910 part of Insider Monkey’s Q3 2023 research had held a stake in the company. Valero Energy Corporation (NYSE:VLO)’s largest investor in our database is Cliff Asness’ AQR Capital Management as it owns $287.09 million worth of shares.
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Disclosure: None. 13 Most Profitable Oil Stocks in the World is originally published on Insider Monkey.
