We recently published a list of 11 Best Crude Oil Stocks To Buy Right Now. In this article, we are going to take a look at where Chord Energy Corporation (NASDAQ:CHRD) stands against other best crude oil stocks to buy right now.
Crude oil markets have seen extreme volatility over the past year, fueled by a variety of economic, geopolitical, and supply and demand factors. Prices fell at the end of 2023, when international demand faltered and supply remained strong from key regions, before rebounding in early 2024 as leading oil-producing countries implemented supply cuts to stabilize the market. Meanwhile, demand signals have been mixed — industrial activity in major economies has improved, but high interest rates and inflationary pressures have limited overall energy consumption. After the presidential elections in the US, the Trump 2.0 agenda appears to be driving cracks in the economic outlook, due to a plethora of initiatives such as tariffs, a fight with immigration, and significant cuts in government spending. Despite Republicans notoriously being pro-business and pro-carbon, as confirmed by an announced policy of encouraging energy exploration and production on Federal land and Outer Continental Shelf, the reaction of the stock market has been mixed, as many crude oil stocks have underperformed the broad market in the last couple of months.
The reluctance of the broad market to price in an acceleration in the crude oil space is likely due to expectations of lower oil prices, primarily driven by an uncertain economic and industrial outlook. A slowing economy generally consumes less oil, which coupled with an increasing supply should put downward pressure on prices. Optimism for the year ahead vanished and the outlook has become one of the gloomiest since the pandemic. Companies started to signal widespread concerns about the impact of government policies, ranging from spending cuts to tariffs and geopolitical developments. For instance, the US economic surprise index hit the lowest last week since September, while the business capex forecasts were abruptly cut at the beginning of the year. Small businesses reflect similar signals, by cutting their capex expectations (as per surveys), while consumers report deteriorating financial expectations going forward. All these developments don’t play out in favor of a strong economy in the following quarters.
Financial markets have reflected this turbulence, as energy stocks moved in tandem with the swings in oil prices, which retracted more than 10% since the inauguration day. While refiners and midstream companies have generally performed well due to resilient transportation and processing demand, exploration and production firms have faced challenges in securing new investments. Looking forward, macroeconomic and geopolitical factors will continue to shape the crude oil market. Geopolitical factors, particularly in key oil-producing regions, remain an ongoing concern – with the end of the Ukraine conflict becoming a reality, Russian oil will likely flow more freely abroad, putting even more downward pressure on global prices. Despite the aforementioned headwinds, there are also some positive takeaways for investors – while renewable energy investments continue to grow, the transition remains gradual, ensuring that crude oil will remain a critical component of the global energy mix in the future, especially under the carbon-friendly Trump 2.0 regime. Furthermore, with oil prices declining and many crude oil stocks being down from their mid-2024 highs, the current developments may turn out to be a great long-term buying opportunity.
Our Methodology
We used the Insider Monkey proprietary hedge fund holding database and identified the 11 most popular crude oil companies, ranked by the number of hedge funds that own the stock.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A technician in a lab coat examining a sample of crude oil.
Chord Energy Corporation (NASDAQ:CHRD)
Number of Hedge Fund Holders: 56
Chord Energy Corporation (NASDAQ:CHRD) is a pure-play exploration and production company with a strong focus on crude oil development in the Williston Basin, one of the most productive shale regions in the United States. Formed through the merger of Oasis Petroleum and Whiting Petroleum, CHRD has built a high-quality asset base that prioritizes efficiency and free cash flow generation. While it also produces natural gas and natural gas liquids, crude oil is the core of CHRD’s business, driving the majority of its revenue.
Chord Energy Corporation (NASDAQ:CHRD) delivered strong results in the latest Q3 2024 with oil volumes at the top end of guidance, driven by strong execution, well performance, and lower downtime. The company generated adjusted free cash flow of approximately $312 million in the quarter, with 75% being returned to shareholders. The company has demonstrated operational excellence through improved capital efficiency, with drilling speeds increasing over 30% compared to the previous year and a 40% increase in frac feet per day through simul-frac operations. The integration of Enerplus assets is progressing well, with the combined team capturing over $200 million of synergies annually.
Looking forward, Chord Energy Corporation (NASDAQ:CHRD) has outlined a three-year plan to maintain oil volumes steady at 152,000 to 153,000 barrels per day from 2025 through 2027 with annual capital expenditures of $1.4 billion per year. The company sees further upside potential through extending lateral lengths, including incorporating 4-mile wells and pushing continuous improvement and cost reduction across all aspects of the business. The outlook is supported by CHRD’s substantial yet low decline and high oil cut production base, paired with a deep portfolio of highly economic, lower-risk, conservatively spaced, and oil-rich inventory. With that in mind, CHRD is well-positioned to withstand any macro scenario.
Overall, CHRD ranks 9th on our list of best crude oil stocks to buy right now. While we acknowledge the potential of CHRD as an investment, 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 CHRD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
