Enerplus Corp (USA) (NYSE:ERF) said in its second-quarter earnings report that daily production rose 10% year over year and that it remains on track to meet or beat analysts price targets of $22.50 this year. Add to that a meaty 6.4% yield, and I think we’ve found a way to sleep well at night.
The next opportunity takes us across the Atlantic. French supermajor Total SA (ADR) (NYSE:TOT)) is the world’s fifth-largest publicly traded oil and gas company. Like Enerplus, its stock performance is strongly correlated with the price of oil and is highly likely to benefit from further spikes. Over this summer, Total SA (ADR) (NYSE:TOT)’s stock rose from $47 to $57 in just three months on the back of high oil prices.
That’s not even the best part.
2012 Proved Reserves By Region
In late August, China Petroleum & Chemical Corp (ADR) (NYSE:SNP) finalized an agreement with Total SA (ADR) (NYSE:TOT) and Tethys Petroleum Limited (OTCMKTS:TETHF) to develop petroleum assets in Tajikistan in Central Asia. According to a Woods Mackenzie report, China will spend $500 billion a year on crude oil imports by 2020 and overtake the U.S. as the biggest consumer by 2014. Total also recently secured new developments in Africa and Australia.
But — and this is a big “but” — Total SA (ADR) (NYSE:TOT) also just bought retail and commercial fuel operations in Egypt from Royal Dutch Shell plc (ADR) (NYSE:RDS) and Chevron Corporation (NYSE:CVX). It may be risky to buy anything with ties to Egypt right now, but the company’s exposure is small: About 8.5% of production is in “high-risk” countries.
With Total SA (ADR) (NYSE:TOT)’s dividend yield near 5%, I can look past the Egyptian connection. Only Exxon Mobil Corporation (NYSE:XOM) exceeds Total’s ability to extract cheap oil and achieve higher earnings per barrel of produced oil. Total’s sales grew 8% from the previous year to $266 billion in 2012, and its operating income increased 2.4% over the same period.
Looking ahead, Total SA (ADR) (NYSE:TOT) has a target of 3% annual production growth up to 2015, backed by geographically diverse pipeline of new projects. The company expects output to reach about 3 million barrels a day in 2017.
Risks to Consider: Commodities and volatility go hand in hand. It’s never a good idea to devote a large percentage of your portfolio to oil stocks. Should oil take a turn south, you might want to limit any exposure to 10% or less.
Actions to Take –> Both Enerplus and Total are trading above their 50- and 200-day moving averages and have strong upside potential. If oil appeals to you, these stocks might also.
P.S. — Here at StreetAuthority we’re seeing a major disconnect in one of the most important commodities on Earth. And it’s a great opportunity for every single investor. Once you see this one chart, I think you’ll agree. Click here now.
– Karen Canella
The article 2 ‘Syria-Proof’ Oil Stocks With Yields Up To 6.4% originally appeared on StreetAuthority and is written by Karen Canella.
