In this article, we will look at the 8 Most Profitable Oil Stocks To Invest In.
OPEC Anticipated to Hold Oil Supply
One of the leading oil-producing regions, OPEC countries and its allies are expected to extend their latest round of oil production cuts for the first quarter of 2025, according to analysts. OPEC+ controls nearly half of the world’s oil production and supply. The oil governing body was planning to initiate unwinding output cuts through 2025. However, the decline in global demand and output outside OPEC could impact oil prices.
“Market participants are closely watching to see if OPEC+ will focus on bolstering prices by extending production cuts, or opt to defend its share of the global crude oil market by easing those cuts,” said Satoru Yoshida, commodity analyst with Rakuten Securities. Yoshida added that the OPEC decision to cut oil supply would potentially have a short-term impact. Still, the market is anticipated to rise by the year-end following the takeover of the Trump administration.
The OPEC+ countries are holding around 5.86 million barrels per day of output, which accounts for almost 5.7% of global demand. To support the oil market, the oil supply has been managed in a series of steps agreed since 2022. The OPEC members had planned an output increase of 180,000 barrels per day for January 2025. The non-OPEC+ countries are expected to boost the oil supply by almost 1.5 million barrels per day in 2025. Nevertheless, the global oil benchmark Brent Crude has mostly traded between $70 to $80 per barrel in 2024, while it hit a 2024 low below $69 in September.
The global oil market is impacted by several factors including, geopolitical risks, production levels, and OPEC’s strategies. The ceasefire between Israel and Hezbollah could affect prices, but the new war in Syria could potentially be a new issue for oil producers. However, oil prices remain lower than expected based on inventory fundamentals. In the long term, oil price hikes above $100 are less likely to occur due to the impact of U.S. shale production over the past decade.
With that, let’s take a look at the 8 most profitable oil stocks to invest in.
A sunset view of an oil and gas refinery located in the San Juan Basin, United States.
Our Methodology
To compile our list of the 8 most profitable oil stocks to invest in, we scanned oil stocks through Finviz Screener using two indicators. We shortlisted the stocks with a minimum net income of $2.5 billion or more in the trailing twelve months (TTM) and with a 5-year net income compound annual growth rate (CAGR) of over 10%. From that list, we narrowed our choices to the 8 stocks that are widely held by hedge funds, as of Q3 2024. The list is ranked in ascending order of hedge fund sentiment, as of the third quarter.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
8 Most Profitable Oil Stocks To Invest In
8. EOG Resources, Inc. (NYSE:EOG)
Number of Hedge Funds Holders: 46
5-Year Net Income CAGR: 19.01%
TTM Net Income: $7.14 Billion
EOG Resources, Inc. (NYSE:EOG) is an oil and gas holding company with main operations in the Permian Basin and the Eagle Ford. The company is engaged in the exploration, development, production, and marketing of crude oil, natural gas liquids (NLGs), and natural gas. EOG owns around 535,000 total net acres in the Eagle Ford play and almost 160,000 net acres in the Dorado gas play.
EOG Resources, Inc. (NYSE:EOG) is a top dividend stock. The company has raised its payout for seven consecutive years while it has a dividend CAGR of 29% over the last five years. The company has smartly improved its earnings through different fuel sources to grow its dividend. Moreover, EOG has expanded its operations organically rather than making costly acquisitions. The company’s ability to discover low-cost, high-return oil and gas resources across the U.S. has been its major advantage.
The company is using technology and innovation across its oil and natural gas basins to improve capital efficiency. This helps EOG to have a solid operational performance across its multiple basins. The company is drilling further and at a historic speed, and the technology utilization is helping it to complete wells with less human capital and equipment. In addition to that, the inventory levels at EOG Resources, Inc.’s North American natural gas are closer to its five-year average throughput. The company anticipates higher demand for gas and has the opportunity to accept additional LNG projects.
Since the end of 2020, EOG Resources, Inc. (NYSE:EOG) has gathered over $22 billion in free cash flow and more than $25 billion in adjusted net income. This sustained growth has allowed the company to regularly increase its dividends. The company’s ability to generate high returns has also assisted in reducing its debt by 35% since 2020. EOG plans to return more than 100% of its annual free cash flow to shareholders in the near term, through share repurchases and paying special dividends.
7. Suncor Energy Inc. (NYSE:SU)
Number of Hedge Funds Holders: 47
5-Year Net Income CAGR: 10.11%
TTM Net Income: $5.92 Billion
Suncor Energy Inc. (NYSE:SU) is one of the top oil stocks with the biggest upside potential according to analysts. The company specializes in oil sands development, refining, and marketing petroleum products. The segments through which Suncor operates include oil sands, exploration and production (E&P), and refining and marketing. The company generates revenue through the production and sale of crude oil, gasoline, diesel, and petrochemicals. Suncor primarily sells its products to industrial users, retailers, and transportation sectors.
Suncor Energy Inc. (NYSE:SU) wells in Alberta are giving a remarkable output. In October, record gains at the Firebag oil sands site were reported, denoted as a “rock star” operation by the producer’s chief executive. In Q3, the company reported a record quarterly production of approximately 488,000 barrels per day. In October, the company produced about 284,000 barrels per day, up by 14% from September. Suncor’s high production is mainly driven by its Firebag site, which recorded the majority of production in October.
Suncor Energy Inc.’s (NYSE:SU) Firebag is an asset that will help its operations in the long run. The company expects Firebag to restore the potential loss of 30% of its production following the anticipated closure of its Base Plant oil sands mine in the next 10 years. Firebag has already achieved five record months of output in 2024. Suncor Energy seeks the Fort Hills mine as another key asset to contribute to its overall production capacity, while Firebag will remain key to the company’s future growth.
6. Canadian Natural Resources Limited (NYSE:CNQ)
Number of Hedge Funds Holders: 48
5-Year Net Income CAGR: 13.44%
TTM Net Income: $7.59 Billion
Canadian Natural Resources (NYSE:CNQ) is one of the largest independent crude oil and natural gas producers based out of Canada. The company operates through exploration and production, oil sands mining and upgrading, and midstream and refining. The company has a diverse portfolio of assets which includes major operations in Western Canada, the United Kingdom, the North Sea, offshore Africa, and various other international locations.
Canadian Natural Resources (NYSE:CNQ) has a long-life, low-decline asset portfolio which offers greater flexibility and resilience than conventional exploration and production companies. The company’s oil sands assets require minimum reinvestment to sustain output, allowing CNQ to save capital and generate more free cash flow.
Similar to Suncor Energy, CNQ has tapped into new assets in Alberta, which is one of the richest oil and gas regions in the world. The company has acquired Chevron’s 70% operator working interest in light crude oil and liquid-rich assets in the Duvernay play in Alberta. Furthermore, the company has announced that it has signed an agreement to acquire a 20% interest in the Athabasca Oil Sands Project (AOSP) from Chevron Canada Limited. This acquisition will potentially increase CNQ’s per day synthetic crude oil production by 62,500 barrels. In another deal with Chevron, the company expects to add 60,000 barrels of oil equivalent per day to its production in 2025.
5. Cenovus Energy Inc. (NYSE:CVE)
Number of Hedge Funds Holders: 48
5-Year Net Income CAGR: 38.83%
TTM Net Income: $2.73 Billion
Cenovus Energy Inc. (NYSE:CVE) is another Canada-based integrated energy company with segments including upstream, downstream, and corporate and eliminations. The upstream segment consists of oil sands, conventional, and offshore, while the downstream manages Canadian and U.S. manufacturing.
Cenovus Energy Inc. (NYSE:CVE) resumed Christina Lake which will improve the company’s production. The company has also completed pipeline tie-in work that will support new production from Narrows Lake in 2025. This will potentially add 20,000 to 30,000 barrels per day with the first production expected in mid-2025. In addition to that, the company is also progressing its development at Sunrise and Foster Creek Optimization Project and expects to add to the growth of the oil sands business in the next two years. These are some of the company’s low-cost projects that will generate high returns.
During the third quarter of 2024, the company reported slightly lower production in its upstream segment, where it produced over 771,000 barrels of oil equivalent per day. This was mainly due to the turnaround at the Christina Lake oil sands facility. On the other hand, Cenovus Energy Inc. (NYSE:CVE) reported a notable increase in its downstream refining segment, with total throughput up by almost 20,000 barrels per day, compared to Q2 2024.
Cenovus Energy Inc.’s offshore production remains steady as it recorded 66,000 barrels of oil equivalent per day in Q3. The SeaRose FPSO offshore facility has achieved life-extension work while its West White Rose project is 85% complete and will produce the first oil in 2026.
4. Diamondback Energy, Inc. (NASDAQ:FANG)
Number of Hedge Funds Holders: 49
5-Year Net Income CAGR: 25.54%
TTM Net Income: $3.22 Billion
Diamondback Energy, Inc. (NASDAQ:FANG) is an independent oil and gas company based in Texas. The company specializes in the exploration and production of crude oil from the Permian Basin. Diamondback primarily serves domestic refineries and energy distributors. The company’s subsidiary, Viper Energy, Inc., owns and acquires mineral interests and royalty interests in oil and natural gas properties mainly in the Permian Basin.
Diamondback Energy, Inc. (NASDAQ:FANG) recently completed the merger with Endeavor Energy Resources, which increases its dominance in the Permian Basin. The deal valued at $26 billion will make Diamondback the majority shareholder of Endeavor with a total stake of almost 60.5%. Endeavor merger will potentially add another 816,000 barrels of oil and gas daily.
In the third quarter of 2024, the company posted a 13% year-over-year increase in revenue, driven by higher production volumes. In the first nine months of 2024, the company drilled 211 gross wells in the Midland Basin and 24 gross wells in the Delaware Basin. The company turned 283 operated wells to production in the Midland Basin and Delaware Basin. Furthermore, Diamondback Energy, Inc. (NASDAQ:FANG) has experienced six straight years of dividend growth and has a 5-year dividend CAGR of almost 49%.
3. Schlumberger Limited (NYSE:SLB)
Number of Hedge Funds Holders: 65
5-Year Net Income CAGR: 39.37%
TTM Net Income: $4.48 Billion
Schlumberger Limited (NYSE:SLB) is the world’s largest oilfield services company. The company is a key player in the crude oil industry, delivering drilling, exploration, and production solutions to major clients, including Aramco, ExxonMobil, and Chevron. The company operates through four segments including, digital and integration, reservoir performance, well construction, and production systems.
The demand for Schlumberger Limited’s (NYSE:SLB) digital products and services continues to increase in the Middle East and Asia, driven by oil capacity expansions, strong gas activity, and offshore projects. The revenue growth remains solid in Europe and Africa, mainly due to strong production and recovery activity in North Africa.
The company’s digital and integration segment is making a massive stride, which adds great support to revenue growth. In Q3, the segment achieved a new quarterly revenue high and improved profitability, increasing the company’s pretax segment operating margin to 36%. Schlumberger Limited (NYSE:SLB) is focused on its digital services and continues to enhance its portfolio with improved offerings. The company is working in collaboration with NVIDIA and AWS to strengthen its digital portfolio, in addition to the release of the Lumi AI platform.
With the Trump administration back, the U.S. energy sector could potentially improve for oil companies and Schlumberger is well-positioned to benefit from that.
2. Occidental Petroleum Corporation (NYSE:OXY)
Number of Hedge Funds Holders: 71
5-Year Net Income CAGR: 30.22%
TTM Net Income: $3.68 Billion
Occidental Petroleum Corporation (NYSE:OXY) is a global energy company with assets primarily in the United States, the Middle East, and North Africa. The company is engaged in the exploration, production, and marketing of crude oil. Occidental Petroleum Corporation has three segments including, oil and gas, chemical and midstream, and marketing.
Following the acquisition of CrownRock, Occidental Petroleum Corporation (NYSE:OXY) has done well to repay its debt, having paid $4 billion in debt by Q3 2024. The company announced to repay around $4.5 billion in debt in 2024, which has been mostly achieved, driven by strong cash flows.
The target of short-term debt reduction means that the company can focus on generating more cash flows and having the opportunity to invest in new projects in 2025. Occidental Petroleum Corporation’s next target is to invest in chemicals (OxyChem) and low-carbon venture businesses, both of which have solid growth potential. During Q3, the company’s OxyChem exceeded guidance with pre-tax income of $304 million.
Oil & Gas segment remains the key driver for the company as it continues to grow. In Q3, the segment recorded the highest quarterly U.S. production in the company’s history. Despite the hurricanes that impacted OXY’s operations across the Gulf of Mexico, the company was able to pull off record results. This production outperformance was primarily driven by strong new well performance and higher uptime throughout the Permian Basin. In addition to that, the Gulf of Mexico also remains the top-producing unit of OXY.
1. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Funds Holders: 86
5-Year Net Income CAGR: 18.13%
TTM Net Income: $33.70 Billion
Exxon Mobil Corporation (NYSE:XOM) is one of the largest international energy and petrochemical companies in the world. The company is primarily focused on exploration, production, refining, manufacturing, and activities across its upstream, downstream, and chemical segments. The company operates in over 60 countries.
Exxon Mobil Corporation (NYSE:XOM) has improved its earnings over the years. Since 2019, the company’s earnings per barrel in the upstream business have doubled. During Q3 2024, the company reported earnings of $8.6 billion while cash flow from operating activities was $17.6 billion, and free cash flow was $11.3 billion. Two of the company’s premier assets include Guyana and Permian. During Q3, advantaged asset volume growth from record Guyana, heritage Permian and Pioneer production added $1.5 billion to earnings. A record production of over 1.4 million oil-equivalent barrels at Permian was reported during the quarter.
Exxon Mobil Corporation (NYSE:XOM) is one of the oil companies looked upon ahead of Trump’s second term. President-elect Trump will be friendlier to traditional oil and gas production, which would benefit oil drillers and natural gas and oil service providers. XOM also remains one of the top dividend stocks, with a consecutive 26-year history of dividend growth.
While we acknowledge the potential of Exxon Mobil Corporation (NYSE:XOM) to grow, 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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