We recently published a list of 10 Best Performing Energy Stocks in 2024. In this article, we are going to take a look at where Greenfire Resources Ltd. (NYSE:GFR) stands against other best performing energy stocks.
The energy sector is poised for significant transformation in 2024, driven by a blend of evolving market dynamics, fluctuating commodity prices, and the growing influence of renewable energy sources. As we move deeper into the year, critical indicators reflect a landscape of opportunity and challenge for investors. Notably, Brent crude oil prices are projected to stabilize around $82 per barrel, a modest increase from $81 in 2023, signaling a return to pre-pandemic levels. Despite some volatility, market analysts expect that strategic production cuts by OPEC+ will sustain this upward trajectory, underscoring the intricate balance between supply and demand that will shape oil markets.
In tandem with oil prices, retail gasoline costs are forecasted to dip slightly, with an average price of $3.30 per gallon expected in both 2024 and 2025. This decrease, coupled with a projected increase in U.S. crude oil production from 12.9 million barrels per day in 2023 to 13.3 million in 2024, indicates a robust domestic supply environment. Moreover, the U.S. liquefied natural gas (LNG) sector is anticipated to grow, with gross exports expected to rise from 12 billion cubic feet per day in 2023 to 14 billion in 2025, highlighting the country’s role as a key player in global energy markets.
Natural gas, another crucial component of the energy portfolio, is also set for price fluctuations. The forecast indicates that prices at Henry Hub will remain relatively stable at around $2.20 per million British thermal units (MMBtu) before spiking to approximately $3.10/MMBtu in 2025. This trend reflects a complex interplay between production capabilities and increasing export demands, especially as the U.S. continues to expand its LNG footprint. Additionally, biomass-based diesel products are gaining traction, now accounting for 9% of total distillate fuel consumption, indicating a shift toward more sustainable fuel sources amidst rising environmental concerns.
Electricity generation in the U.S. is also undergoing a transformative phase, with significant contributions from renewable sources. Natural gas remains the dominant player, accounting for 42% of electricity generation, but renewables are gaining ground, rising from 21% in 2023 to a projected 25% in 2025. Solar energy, in particular, is experiencing explosive growth, driven by enhanced capacity and technological advancements. The first half of 2024 saw solar energy contribute to 59% of new generating capacity additions, primarily fueled by developments in battery storage technologies. States like Texas and California are expected to lead in solar generation, reflecting a broader trend toward green energy adoption.
These shifts in the energy landscape are underpinned by a steady economic backdrop, with the U.S. GDP projected to grow by 2.6% in 2024. However, it’s important to note that CO2 emissions are expected to hold steady at 4.8 billion metric tons, illustrating the ongoing challenge of balancing energy production with environmental stewardship. As the world grapples with climate change, energy companies are increasingly under pressure to innovate and transition to more sustainable practices.
Investors in energy stocks must navigate this evolving environment carefully. The interplay between traditional fossil fuels and renewable energy sources creates a unique set of investment opportunities and risks. While oil and gas companies are expected to benefit from higher prices and increased demand, those heavily invested in renewables may see significant growth as the transition to a low-carbon economy accelerates.
Recent geopolitical tensions, such as political instability in Libya, further complicate the picture. These events can lead to production outages, affecting global oil supply and prices. Despite these uncertainties, the fundamentals of the energy sector indicate promising opportunities for discerning investors. Ongoing production cuts from OPEC+ and strong demand from non-OECD countries signal a likely increase in oil consumption, further enhancing the attractiveness of energy stocks.
As we delve into the ten best-performing energy stocks for 2024, it’s crucial to consider these macroeconomic factors and industry trends. From traditional oil and gas giants to innovative renewable energy firms, the companies featured in this analysis are well-positioned to thrive amidst the changing landscape. Each stock represents a unique opportunity to capitalize on the anticipated shifts in energy consumption, production, and pricing, making them worthy of consideration for any forward-thinking investment portfolio.
In summary, the energy sector in 2024 is characterized by a blend of traditional and renewable energy sources, supported by favorable economic conditions and strategic industry developments. As we explore the ten best-performing energy stocks, we’ll analyze how these companies are adapting to the evolving landscape and positioning themselves for success in a rapidly changing world. The data and insights referenced here are sourced from the U.S. Energy Information Administration (EIA).
Our Methodology
For this article, to make our list of the best performing energy stocks in 2024, we ranked all publicly traded energy companies by their year to date share price performance as of September 25 and picked out the top 10 firms. The stocks are ranked in ascending order of their year-to-date performance.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. 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).
An oil worker wearing a hard hat and a safety vest checking an industrial oil pump.
Greenfire Resources Ltd. (NYSE:GFR)
Year to date Share Price Gain: 57.61%
Number of Hedge Fund Holders: 12
Greenfire Resources Ltd. (NYSE:GFR) stands out as one of the best-performing energy stocks in 2024, boasting a year-to-date share price gain of 57.61%. The company’s strategic focus on oil and gas development in the Athabasca oil sands region of Alberta, combined with its innovative use of Steam-Assisted Gravity Drainage (SAGD) technology, sets it apart as a leader in the sector. Greenfire Resources Ltd. (NYSE:GFR) assets, including a 75% working interest in the Hangingstone Expansion Facility and a 100% working interest in the Hangingstone Demonstration Facility, further highlight its strong production capabilities.
Despite facing operational delays due to wildfires and equipment failures, Greenfire Resources Ltd. (NYSE:GFR) fundamentals remain strong. In Q2 2024, the company delivered consolidated bitumen production of 18,993 barrels per day, a slight increase from 18,036 barrels per day in Q2 2023. More impressively, Greenfire generated adjusted EBITDA of CAD $58.4 million, marking a 70% year-over-year increase, and adjusted funds flow surged by 100% to CAD $47.2 million.
These strong financial results were achieved even with disruptions, highlighting Greenfire’s resilience and effective operational management. The company’s disciplined approach to capital allocation was evident as it invested CAD $23.0 million into property, plant, and equipment, with 90% allocated to drilling. This investment should support further production growth, especially as Greenfire Resources Ltd. (NYSE:GFR) expects production at the Hangingstone Facilities to increase by 13-19% in 2024.
Greenfire Resources Ltd. (NYSE:GFR) is also committed to reducing its debt. The company redeemed US$61 million of its US$300 million Senior Secured Notes due in 2028, emphasizing its focus on maintaining financial stability. With $1.8 billion in corporate tax pools, low pre-payout royalty rates, and no overriding royalty obligations, Greenfire Resources Ltd. (NYSE:GFR) is well-positioned for future free cash flow generation, particularly as the Trans Mountain Expansion pipeline is expected to enhance crude oil transportation and improve pricing for the company’s products. In summary, Greenfire Resources Ltd. (NYSE:GFR) strong financial metrics, operational resilience, and strategic focus on debt reduction and production growth make it a top-performing energy stock in 2024, with substantial upside potential moving forward.
Overall, GFR ranks 8th on our list of best performing energy stocks in 2024. While we acknowledge the potential of GFR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GFR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
