In this article, we are going to discuss the top 12 oil and gas stocks to invest in according to hedge funds.
With a record average production of 12.9 million barrels per day in 2023, the United States is the Biggest Oil Producing Country in the World. Every year, the indigenous production of oil and gas helps save American consumers an estimated $203 billion, or $2,500 for each family of four. Moreover, the oil and gas industry supports over 12 million American jobs, provides billions of dollars in tax revenue, and ensures energy security.
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Global Demand for Oil in 2023:
According to OPEC, the global oil demand increased by 2.5 million barrels per day (mb/d) in 2023 to average 102.2 mb/d, surpassing pre-pandemic levels for the first time. The major part of this uptick came from the non-OECD countries, which posted YoY growth of about 2.4 mb/d to average 56.4 mb/d, surpassing pre-pandemic levels for the second consecutive year.
As per the IEA’s recent market outlook, growth in the global demand for oil is expected to slow down in the coming years as energy transitions advance. However, despite the sluggish growth, the world oil demand is still forecast to be 3.2 mb/d higher in 2030 than in 2023, unless stronger policy measures are implemented or changes in behavior take hold.
Future Outlook of the Global Oil Industry:
As 2024 comes to a close, oil prices have moved in the narrowest range this year since 2019, with Brent crude oil prices exhibiting a minimal average monthly change and a monthly range-bound movement between $69 and $90. The general opinion is that a soft demand, coupled with an abundant supply, even on hold, has contributed to the relative stability we witnessed this year.
China’s faltering economy and its shift towards electric vehicles and LNG-fueled trucks weighed heavily on the crude oil demand this year. According to a recent report by the state-owned China National Petroleum Corporation, the world’s largest oil-importing country may see its demand peak in 2025, five years earlier than expected, as the shift away from fossil fuels accelerates. The report reveals that China’s oil demand could reach 770 million tons next year, before gradually falling to 240 million tons by 2060.
As a consequence of the slowdown in the global oil demand, Brent futures prices have shed more than 5% so far this year, setting up a second consecutive annual loss. J.P. Morgan analysts have predicted that the global oil market is widely expected to be in a surplus in 2025, as supply will outpace demand to the tune of 1.2 million b/d. Brent crude prices are forecast to average around $73 a barrel next year, according to a Reuters tally of 11 brokerages that have issued price targets.
The bleak outlook has inevitably caused the oil and gas stocks to tumble and the broader market’s Energy sector has dropped by 13.42% over the last month, while the overall market has stayed relatively stable and lost only 0.3% during the same period.
However, despite the falling prices and decreasing margins, the oil and gas industry is contributing massively to the global economy and shareholder return. A recent report from Deloitte has revealed that the O&G sector distributed nearly $213 billion in dividends and $136 billion in buybacks between January 2024 and mid-November 2024. Also, over the last four years, the industry’s capital expenditures have increased by 53%, while its net profit has risen by nearly 16%. Moreover, an increasing number of oil majors are now investing in low-carbon technology projects to help balance the risks associated with the traditional fossil fuel market.
With that said, here are the Best Energy Stocks in the Oil and Gas Sector.
A row of massive oil rigs in a desert landscape, against a setting sun.
Methodology:
To collect data for this article, we scanned Insider Monkey’s database of 900 hedge funds and picked the top 8 companies operating in the oil and gas sector with the highest number of hedge fund investors. When two or more companies had the same number of hedge funds investing in them, we ranked them by the revenue of their last financial year instead. Following are the Best Energy Stocks Held by the Most Hedge Funds.
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).
12. Cenovus Energy Inc. (NYSE:CVE)
Number of Hedge Fund Holders: 48
Headquartered in Calgary, Canada, Cenovus Energy Inc. (NYSE:CVE) is an energy company that develops, produces, refines, transports, and markets crude oil, natural gas, and refined petroleum products.
Cenovus Energy Inc. (NYSE:CVE) reported a 56% fall in its Q3 2024 profit due to a decline in production and throughput volumes following oil sands and US refinery maintenance and lower commodity prices. Primarily due to the maintenance at its Christina Lake oil sands facility, the company’s total upstream production was 771,300 barrels of oil equivalent (BOE) per day in the quarter, down almost 3.2% from the same period last year. However, this decline was lower than expected, as Christina Lake completed its turnaround ahead of schedule. On the other hand, Cenovus Energy Inc. (NYSE:CVE) reported a significant increase in its downstream refining segment compared to Q2 2024, with total throughput up by almost 20,000 barrels per day. This was largely attributed to the successful completion of a major maintenance turnaround at the Lima Refinery. In its offshore business segment, production was approximately 66,000 BOE per day, in line with the previous quarter.
Cenovus Energy Inc. (NYSE:CVE) generated $2.4 billion in operating margin in Q3, with about $600 million of free funds flow. It also spent $1.3 billion as capital investment during the quarter and its annual guidance for capital spending of $4.5 billion to $5 billion remains unchanged. Cenovous remains committed to its disciplined capital management strategy, maintaining net debt near $4 billion ($4.2 billion at the end of Q3) while returning 100% of excess free funds flow to shareholders. In fact, through its base dividend and share buyback program, the company returned approximately $1.1 billion of cash to its shareholders in the quarter, far exceeding 100% of its excess free funds flow.
L1 Capital stated the following about Cenovus Energy Inc. (NYSE:CVE) in its Q3 2024 investor letter:
“Cenovus Energy Inc. (NYSE:CVE) (Long -15%) and MEG Energy (Long -13%) shares fell as the WTI oil price decreased 17% to ~US$69/bbl on the back of increased concerns around a potential increase in OPEC supply along with slower global economic growth. Despite OPEC delaying a previously planned increase in oil output, the oil price continued to weaken due to the weaker demand outlook. During the quarter, we attended the Peters & Co oil and gas conference in Toronto, meeting one-on-one with management from Cenovus and MEG Energy, along with the entire peer group. We continue to favor Cenovus and MEG in the sector due to their strong cash flow generation, the long-life nature of their oil sands assets, low cost of production and strong balance sheets. Both Cenovus and MEG have now transitioned to returning 100% of free cash flow back to shareholders, having reached their respective net debt targets. As a result, we see both names offering sector leading shareholder returns, combined with some modest, accretive output growth.”
11. Shell plc (NYSE:SHEL)
Number of Hedge Fund Holders: 48
Shell plc (NYSE:SHEL) engages in oil and natural gas production, operating through the following segments: Integrated Gas, Upstream, Downstream, and Corporate. Shell is number one globally in liquified natural gas (LNG), a sector that is expected to grow substantially over the coming decade.
Shell plc (NYSE:SHEL) reported adjusted earnings of $6 billion in Q3 2024, surpassing analysts’ estimates by 13.2%. Free cash flow also increased to $10.83 billion, compared to $7.5 billion in the same period last year. Moreover, the London-based company announced that it would buy back a further $3.5 billion of its shares until the end of this year while holding its dividend unchanged at $0.34 per share. This marks the 12th consecutive quarter that the oil and gas giant has announced at least $3 billion in buybacks. Net debt came in at $35.2 billion, down 13% YoY.
However, Shell plc (NYSE:SHEL) has faced criticism after its Q3 2024 investments in the renewables and energy solutions division fell to 8% of its overall capital expenditure, down from 9% in Q2. The decline in green energy investments comes after the oil major weakened its 2030 carbon emissions reduction target in March this year.
Shell plc (NYSE:SHEL) continues to invest in traditional hydrocarbon projects and it was recently reported that the company’s Nigerian subsidiary has announced a final investment decision (FID) on Bonga North, a deep-water project off the coast of Nigeria. The $5 billion initiative marks a significant step in the development of the African country’s oil and gas industry, with production expected by the end of the decade. It was also announced earlier this month that Shell plc (NYSE:SHEL) and Norway’s Equinor are to combine their UK offshore oil and gas assets and expertise to form a new company which will be the UK North Sea’s biggest independent producer.
Shell plc (NYSE:SHEL) was included in our list of the Best ADR Stocks to Invest In According to Analysts.
10. Diamondback Energy, Inc. (NASDAQ:FANG)
Number of Hedge Fund Holders: 49
Diamondback Energy, Inc. (NASDAQ:FANG) is a Texas-based independent oil and natural gas company, specializing in unconventional, onshore oil and natural gas reserves in the Permian Basin of West Texas. In September, Diamondback completed its merger with Endeavor Energy Resources, creating a leading operator focused on the Permian Basin. Moreover, the company has also announced an asset trade agreement with TRP Energy, enhancing its Midland Basin position.
Diamondback Energy, Inc. (NASDAQ:FANG) had a strong Q3 as it reported a revenue uptick of 13%, driven by higher production volumes following the merger and an increase in oil sales. It also had a net income of $659 million and adjusted net income of $698 million for the third quarter. The company reported a free cash flow of $708 million and declared a quarterly dividend of $0.9 per share. Diamondback Energy, Inc. (NASDAQ:FANG) has experienced six straight years of dividend growth and has a 5-year dividend CAGR of almost 49%. The company has also increased its share repurchase authorization to $6 billion, demonstrating a commitment to returning capital to shareholders.
At the end of Q3 2024, shares of Diamondback Energy, Inc. (NASDAQ:FANG) were held by 49 hedge funds in the IM database with a total stake value of $1.67 billion, up by a significant 85.5% from the previous quarter.
Chartwell Investment Partners, LLC, said the following about Diamondback Energy, Inc. (NASDAQ:FANG) in its Q3 investment letter:
“Diamondback Energy, Inc. (NASDAQ:FANG) is an exploration and production company with operations focused on the Mid-land and Delaware basins, both located within the Permian Basin in West Texas and southeastern New Mexico. While fundamental performance remains solid, shares were pressured by lower oil prices.”
9. Valero Energy Corporation (NYSE:VLO)
Number of Hedge Fund Holders: 49
Next on our list of the Best Energy Stocks is Valero Energy Corporation (NYSE:VLO), the largest independent petroleum refiner in the world and an international distributor and marketer of transportation fuels. It runs 15 refineries in the US, Canada, and the UK with a combined daily throughput capacity of 3.2 million barrels.
Valero Energy Corporation (NYSE:VLO) reported a widely expected plunge in its Q3 2024 profits, but still managed to exceed Wall Street analysts’ expectations. The refining giant posted an EPS of $1.14 for Q3, down by a significant 86% YoY. Yet, the earnings per share for the quarter beat the analysts’ consensus estimate of $0.98. It must be kept in mind that all American refiners were expected to report a plunge in profitability for Q3, as refining margins slumped to multi-year lows amid tepid fuel demand and increased global fuel supply. However, despite the declining margins and earnings, Valero remains committed to a through-cycle minimum annual shareholder payout ratio of 40 to 50%.
Although the transition away from fossil fuels threatens to reduce oil demand, Valero Energy Corporation (NYSE:VLO) has adapted well by taking advantage of the growing scarcity of refining capacity around the globe. Other industry giants continue to shut down their refineries, offering the potential for a stronger uptick in refining margins. This puts Velo, and its low-fixed-cost refineries, in a favorable position. The restrictions on building new refineries in California also put Valero Energy Corporation (NYSE:VLO) in a dominant position, as its West Coast division earns 70% higher profits than other regions. Moreover, the company remains committed to expanding its low-carbon fuels business and its investment in the Diamond Green Diesel SAF project is a key part of its efforts to diversify and reduce its dependence on traditional refining business.
Valero Energy Corporation (NYSE:VLO) is included among the Stocks that Jim Cramer Says Will Go Higher in the Trump Presidency.
8. Chord Energy Corporation (NASDAQ:CHRD)
Number of Hedge Fund Holders: 50
Chord Energy Corporation (NASDAQ:CHRD) is an independent exploration and production company, with an immense focus on acquiring and developing oil and natural gas properties. Chord finalized its acquisition of Enerplus in June, significantly expanding its footprint and making it the largest producer in the Bakken. However, while the merger comes with a plethora of opportunities, integration challenges could potentially affect the company’s near-term performance.
Chord Energy Corporation (NASDAQ:CHRD) had a strong Q3 2024 as its oil volumes were toward the top end of guidance, driven by strong execution, well performance, and lower downtime. As a result, the Texas-based company generated an adjusted free cash flow of $312 million and a net income of $225.3 million. Chord also announced a base dividend of $1.25 per share and repurchased shares worth $146 million during the quarter. The company’s commitment to returning 75% of its free cash flow to shareholders through dividends and stock buybacks presents significant potential upside for investors.
Chord Energy Corporation (NASDAQ:CHRD) also remains focused on becoming more sustainable and reported a 9% decrease in operated Scope 1 GHG emissions intensity in 2023 as compared to 2022 and a 57% decrease as compared to 2019. Additionally, it also witnessed a 44% decline in operated Scope 1 methane emissions intensity last year when compared to 2022 and a 70% decrease as compared to 2019.
50 hedge funds tracked by Insider Monkey held shares of Chord Energy Corporation (NASDAQ:CHRD) at the end of Q3 2024, with Point72 Asset Management holding the largest stake of 880,787 shares, valued at over $114.7 million.
Carillon Tower Advisers stated the following about Chord Energy Corporation (NASDAQ:CHRD) in its Q3 investment letter:
“Chord Energy Corporation (NASDAQ:CHRD) is an independent exploration and production company with operations in the Williston Basin in North Dakota, Montana, and South Dakota. The company’s shares lagged largely due to the recent pressure in the price of oil. Some recent data indicating slightly disappointing initial well productivity from a handful of recently completed wells also contributed to lackluster performance. Despite this, we remain optimistic on management’s ability to drive operational efficiencies following the recent close of Chord’s acquisition of Enerplus, by applying best practices of both independent companies in a manner that should provide upside to the previously communicated synergies. We believe the continued successful implementation of Chord’s 3-mile lateral strategy, which entails drilling both vertically and horizontally for distances longer than in 2-mile lateral wells, also could drive increased shareholder returns.”
7. Permian Resources Corporation (NYSE:PR)
Number of Hedge Fund Holders: 56
Permian Resources Corporation (NYSE:PR) is an independent oil and natural gas company focused on the development of unconventional oil and associated liquid-rich natural gas reserves in the Permian basin.
Permian Resources Corporation (NYSE:PR) reported a strong Q3 2024 with a revenue of $1.22 billion, up by a staggering 60% YoY and even beating the analysts’ estimates by over $937,000. The Texas-based company also posted an adjusted operating cash flow of $823 million and an adjusted free cash flow of $303 million. Moreover, it ended the quarter with over $272 million available in cash and cash equivalents, significantly up from $73.3 million at the end of 2023. The strong cash reserves have enabled Permian Resources to announce a quarterly base dividend of $0.15 per share, a 150% increase compared to the prior quarter. Thanks to these encouraging results, the company has increased its full year production guidance for the third consecutive quarter.
During the quarter, Permian Resources Corporation (NYSE:PR) successfully closed its Barilla Draw bolt on acquisition and continued driving operational efficiencies, which translates into improved capital efficiency and strong free cash flow generation. It was also announced in December that Permian Resources has agreed to sell its natural gas and oil gathering systems in the Permian’s Delaware sub-basin of West Texas to Kinetik Holdings Inc. for a hefty sum of $180 million. The deal is expected to lead to more sales tied to Gulf Coast prices.
Following an impressive Q3, Aristotle Capital Boston, LLC, stated the following about Permian Resources Corporation (NYSE:PR) in its Q3 investment letter:
“Permian Resources Corporation (NYSE:PR) is a Texas-based oil & gas exploration & production company with a large acreage position and deep inventory of high return potential drilling locations in the core of the Permian Basin. We expect management to continue to execute on its strategy of optimizing returns, diligently allocating capital to new opportunities, and returning excess capital to shareholders.”
56 hedge funds tracked by IM held positions in Permian Resources Corporation (NYSE:PR) at the end of Q3 2024, up from 51 in the previous quarter.
6. Cheniere Energy, Inc. (NYSE:LNG)
Number of Hedge Fund Holders: 62
Headquartered in Texas, Cheniere Energy, Inc. (NYSE:LNG) is the largest producer of LNG in the United States and the second-largest LNG operator in the world. Although the company began operations only in 2016, its energy infrastructure already represents a more than $38 billion investment in the future of energy.
In Q3 2024, Cheniere Energy, Inc. (NYSE:LNG) reported a decline in revenues and profits amid decreased market volatility and lower international LNG and natural gas prices. The company posted a revenue of $3.76 billion, down by 9.52% YoY and missing the analysts’ estimates by $9.52 million. Net income also nearly halved to $893 million, down from $1.7 billion in the same period last year. During the quarter, Cherniere also repurchased shares worth $282 million and increased its quarterly dividend by approximately 15% to $0.5 per share.
Cheniere Energy, Inc. (NYSE:LNG) is investing heavily to expand its LNG production capacity, and one of its most significant growth initiatives is the Corpus Christi Stage 3 expansion project, which was 68% complete at the end of Q3, and ahead of schedule. The new LNG export facility, which has already received regulatory approval, is nearing the commencement of operations and will produce around 10 million tonnes per annum of liquefied natural gas.
Though the declining international LNG and gas prices have been weighing it down Cheniere Energy, Inc. (NYSE:LNG) remains upbeat about long-term LNG demand, especially in China. The country’s demand for natural gas is set to jump by more than 50% by 2040, and LNG will represent 25%-30% of this total, according to Yingying Zhou, director of LNG origination at Cheniere.
At the end of Q3 2024, 62 hedge funds tracked by IM held shares of Cheniere Energy, Inc. (NYSE:LNG), with Millennium Management holding the largest stake of more than 2.3 million shares worth over $416.1 million.
5. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 63
Chevron Corporation (NYSE:CVX) produces crude oil, natural gas, and many other essential products, and is the second-largest integrated energy company headquartered in the United States.
Chevron Corporation (NYSE:CVX) reported strong earnings for Q3 of 2024, with revenues reaching $50.67 billion, surpassing analysts’ expectations by $1.63 billion. The company also generated $9.7 billion in operating cash flow, up from $6.3 billion in the prior quarter. Additionally, it returned $7.7 billion to shareholders through dividends and share buybacks during the quarter. Chevron Corporation’s (NYSE:CVX) dividend growth streak spans over 37 years and supports an above-average dividend yield of around 4.5%, placing it on our list of the Dogs of the Dow Dividend Stocks to Invest In.
Chevron Corporation (NYSE:CVX) remains focused on innovation and the company announced in Q3 that it has started oil and natural gas production from the Anchor project in the deepwater US Gulf of Mexico, marking the successful delivery of high-pressure technology and representing a breakthrough for the energy industry.
Chevron Corporation (NYSE:CVX) is also investing to expand its operations in the Permian, Kazakhstan, and elsewhere, which will help fuel production growth through at least 2027. The company expects to increase its output in the region by 300,000 BOE/d by 2025. Growth is also set to come from its pending acquisition of Hess, as the deal will add complementary positions in the Gulf of Mexico and Southeast Asia while adding assets in the Bakken and offshore Guyana to its portfolio. It will also more than double the oil major’s free cash flow by 2027, assuming oil prices remain around the current level.
4. Schlumberger Limited (NYSE:SLB)
Number of Hedge Fund Holders: 65
Coming in at number 4 in our list of the Best Energy Stocks Specializing in Oil and Gas is Schlumberger Limited (NYSE:SLB) – the world’s leading provider of technology for reservoir characterization, drilling, production, and processing to the global energy industry. The company’s clients include major oil and gas producers worldwide.
For its Q3 2024, Schlumberger Limited (NYSE:SLB) reported a revenue of $9.16 billion, up by over 10% YoY, but still missing the analysts’ estimates by $144.43 million. However, the company expanded its adjusted EBITDA margin by more than 50 basis points to 25.6% by driving efficiencies throughout the business and generated a very strong free cash flow of $1.81 billion. Meanwhile, the operating cash flow was $2.45 billion. SLB also returned close to $900 million to shareholders through stock repurchases and dividends during the quarter, bringing total return to shareholders for the first nine months of the year to $2.38 billion. On October 17th, the company approved a quarterly cash dividend of $0.275 per share. Demand for Schlumberger’s digital products and services continued to accelerate in the international market and it maintained steady growth in the Middle East and Asia, fueled by oil capacity expansions and strong gas activity as well as offshore projects.
In a move to solidify itself at the forefront of technological innovation in the energy industry, Schlumberger Limited (NYSE:SLB) introduced the Lumi AI platform, with applications spanning the entire E&P lifecycle. Moreover, the company is also working in collaboration with NVIDIA and AWS to strengthen its digital portfolio and generative AI capabilities.
Schlumberger Limited (NYSE:SLB)’s pending $8.2 billion acquisition of ChampionX is also expected to be finalized by the Q1 of 2025, and so the company is quite comfortable to reaffirm its $4 billion target returns to shareholders for next year, as free cash flow is expected to increase in 2025.
65 hedge funds in the IM database held a stake in Schlumberger Limited (NYSE:SLB) at the end of Q3 2024, with a total stake value of around $1.62 billion, up by almost 8% from the previous quarter.
3. ConocoPhillips (NYSE:COP)
Number of Hedge Fund Holders: 66
Founded in 1875, ConocoPhillips (NYSE:COP) is an independent company that explores, produces, transports, and markets crude oil, bitumen, natural gas, natural gas liquids, and LNG worldwide.
ConocoPhillips (NYSE:COP) announced last month that it has completed the $22.5 billion acquisition of Marathon Oil, making it the third-largest oil and natural gas producer in America. And importantly, the resources that ConocoPhillips has added have a fairly low average cost of around $30 per barrel of oil. The company also stated that it would significantly increase its dividends and share buybacks after the deal.
Ryan Lance, Chairman and CEO of ConocoPhillips (NYSE:COP) said regarding the deal:
“This acquisition of Marathon Oil is a perfect fit for ConocoPhillips, adding to our deep, durable and diverse portfolio while meeting our strict financial framework. Marathon Oil adds high-quality, low cost of supply inventory adjacent to our leading U.S. unconventional position. We have a strong history of seamlessly integrating assets and we expect to deliver synergies of over $1 billion on a run rate basis in the next 12 months.”
In Q3 of 2024, ConocoPhillips (NYSE:COP) reported a revenue of $13.6 billion. Although it beat the analysts’ estimates by over $32 million, it was down by almost 8.5% from the same period last year, primarily due to the decrease in prices. Meanwhile, cash generated from operating activities was $5.8 billion and the company ended the quarter with cash and short-term investments of $7.1 billion and long-term investments of $1 billion. More significantly, ConocoPhillips (NYSE:COP) raised its ordinary dividend by 34% to $0.78 per share and increased existing share repurchase authorization by up to $20 billion, effectively living up to its promises.
ConocoPhillips (NYSE:COP) is also well-positioned to capitalize on several growth opportunities, including Qatar’s North Field East & South LNG projects, the Port Arthur project in Texas, and the Willow project in Alaska. These major investments, coupled with the Marathon Oil acquisition, are expected to substantially grow its cash flow in the coming years.
Shares of ConocoPhillips (NYSE:COP) were held by 66 hedge funds at the end of Q3 2024, according to IM’s database. The largest stake of over 15.2 million shares, valued at more than $1.6 billion, was held by Eagle Capital Management.
2. Occidental Petroleum Corporation (NYSE:OXY)
Number of Hedge Fund Holders: 71
Occidental Petroleum Corporation (NYSE:OXY) is an independent exploration and production company with energy and chemical assets around the globe, including in the United States, the Middle East, Africa, and Latin America.
Occidental Petroleum Corporation (NYSE:OXY)’s recent $12 billion acquisition of CrownRock has significantly bolstered its presence in the Permian Basin, but it has also raised concerns about the company’s financial leverage. To pay off its mounting debt, Occidental had to resort to selling some of its properties in July for $970 million, resulting in a loss of $572 million on the sales. The asset sales also caused the company’s Q3 2024 operating profit from pumping oil and gas to fall by 25%. However, proceeds from the sales helped reduce Occidental’s heavy debt load, and long-term debt at the end of the quarter was $25.46 billion, down $4 billion. Despite the reduction in profits, the company managed to generate $1.5 billion of free cash flow before working capital, finishing the quarter with $1.8 billion of unrestricted cash.
Moreover, thanks to its CrownRock acquisition, the oil major’s Q3 oil production rose 15.7% to 1.4 million barrels of oil and gas per day. Full-year production from expanded Permian properties should reach 661,000 barrels of oil and gas per day, up 12% from a year ago.
Occidental Petroleum Corporation (NYSE:OXY)’s stock price is a little over $45.3 as of the writing of this article, down by over 24% since the beginning of the year, primarily due to broader market pessimism. However, it must be kept in mind that Warren Buffett, a notable advocate for OXY, bought shares in the $60s, further reinforcing confidence in the company’s long-term potential.
To keep up with an evolving energy landscape, Occidental Petroleum Corporation (NYSE:OXY) is also making significant investments in carbon capture and storage technologies. The company’s STRATOS, the largest direct air capture (DAC) facility in the world with an initial 250,000 tons per annum load capacity, is expected to come online in mid-2025.
1. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 86
Topping our list of the Best Energy Stocks According to Hedge Funds is Exxon Mobil Corporation (NYSE:XOM) – a multinational oil, gas, and chemicals company with an extensive portfolio of products including crude oil, for refining into petroleum derivates; natural gas; refined fuels, like gasoline, diesel, jet fuel, and heating oil; and motor oil and industrial lubricants. With operations in more than 60 countries around the globe, the oil major’s competitive edge stems from its diversified world-class asset portfolio.
In Q3 of 2023, Exxon Mobil Corporation (NYSE:XOM) reported revenue of $90.02 billion, surpassing analysts’ estimates by $1.66 billion. The company also achieved an operating cash flow of $17.6 billion, with its free cash flow at $11.3 billion. Over three years, XOM’s stock boasts a remarkable performance compared to its peers and has given more than twice as much shareholder returns as the next big competitor.
Exxon Mobil Corporation (NYSE:XOM) also returned $26.1 billion to its shareholders in the form of dividends and share repurchases in Q3, with plans to repurchase over $19 billion of shares by the end of the year. Moreover, the oil and gas giant offers a quarterly dividend of $0.99 per share, having raised it by 4% in November this year. Exxon has increased its annual dividend for 42 consecutive years, a claim that less than 4% of the S&P 500 companies can make, putting it on our list of Dividend Knights that Beat the Market Last 3 Years.
In May, Exxon Mobil Corporation (NYSE:XOM) announced the acquisition of Pioneer Natural Resources in a massive $59.5 billion all-stock deal. The venture seems to be bearing fruit as the company has used it to offset the effect of the decline in average oil prices during the quarter, registering the first impact of the new asset.
Additionally, to ensure its smooth energy transition, Exxon Mobil Corporation (NYSE:XOM) has secured the largest offshore carbon dioxide storage site in the US through an agreement with the Texas General Land Office. The 271,000-acre site complements the company’s onshore carbon storage portfolio and further solidifies it as the company of choice for carbon capture, transport, and storage across the American Gulf Coast.
86 hedge funds in the IM database held shares of Exxon Mobil Corporation (NYSE:XOM) at the end of Q3 2024, with a total stake value of over $6.9 billion, up 11.7% from the previous quarter.
Overall, Exxon Mobil Corporation (NYSE:XOM) ranks first on our list of the best oil and gas energy stocks. While we acknowledge the potential for XOM to grow, our conviction lies in the belief that some 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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