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 Texas Pacific Land Corporation (NYSE:TPL) 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.
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A pipeline running through a rural landscape, a reminder of the companies oil and gas Royalty Interest.
Texas Pacific Land Corporation (NYSE:TPL)
Year to date Share Price Gain: 83.06%
Number of Hedge Fund Holders: 21
Texas Pacific Land Corporation (NYSE:TPL) has diversified operations primarily in land and resource management, along with water services in the Permian Basin, positioning it as a key player in the energy sector. With an impressive year-to-date share price increase of 83.06% in 2024, the company reflects strong investor confidence in its business model and growth prospects. Its strategic advantages, particularly in oil and gas royalty interests, make Texas Pacific Land Corporation (NYSE:TPL) a fundamental stock to watch closely.
Texas Pacific Land Corporation (NYSE:TPL) financial performance in the second quarter of 2024 further underscores its bullish potential. The company reported record numbers across its water services and operations segment, with substantial increases in water sales and produced water royalties. Water sales volumes averaged 800,000 barrels per day, driven by demand from major customers like Exxon, Conoco, and BP. These numbers are significant, as they demonstrate Texas Pacific Land Corporation (NYSE:TPL) ability to leverage its infrastructure for both brackish and recycled water, capturing a growing market in the Permian Basin.
The produced water segment also delivered robust results, with a 43% increase in royalties from the previous year, collecting royalties on over 300 million barrels of produced water. This high-margin business, coupled with minimal operating costs, provides Texas Pacific Land Corporation (NYSE:TPL) with a strong cash flow stream, even amid fluctuating commodity prices. Additionally, the company’s royalty production saw steady growth, with oil and gas royalties comprising 52% of total revenue for Q2 2024.
Texas Pacific Land Corporation (NYSE:TPL) royalty model allows it to benefit from rising commodity prices without incurring the capital or operating costs typical of upstream operators. This unique advantage, combined with its strategic position in the Permian Basin, where it owns a vast amount of royalty acreage, gives the company a long runway for future growth. With continued demand for oil and gas and its water services segment performing at record levels, TPL is poised for further success in the energy market.
Overall, TPL ranks 4th on our list of best performing energy stocks in 2024. While we acknowledge the potential of TPL 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 TPL 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.
