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With oil prices generally firming, I looked at the oil and gas industry to find stocks that we believe must be owned through 2011. Here’s what I found:

Apache Corporation (NYSE:APA): APA is an oil and gas exploration and production company headquartered in Texas. Shares are trading at $120.02 at the time of writing, a little off the top of their 52-week trading range of $85.35 to $134.13. At the current market price, the company is capitalized at $46.02 billion. Earnings per share for the last fiscal year were $9.27, placing the shares on a PE ratio of 12.95. It paid a dividend of $0.60 last year (a yield of 0.50%).

Its earnings are expected to rise through the next couple of years, hitting $12.09 this year, and then rising to $13.40 the following year as higher crude oil prices make new drilling more economically viable. Revenue during this time is forecast to increase to around $18.35 billion.

Apache compares well to its peers like Devon (NYSE:DVN) and Andarko (NYSE:APC). Good management has promoted a market leading operating margin of 48%, and quarterly year on year revenue growth of 46.80%. With oil and gas prices rising almost daily, the need to find and develop new resources is becoming more important and profitable. The shares, even so close to their 52-week high, look good value on fundamentals and growth prospects.

Weatherford International Ltd. (NYSE:WFT): WFT is an oil services company out of Geneva. Shares are trading at $20.86 at the time of writing, down 3.60% on the day and in the middle of their 52-week trading range of $14.65 to $26.25. At the current market price, the company is capitalized at $15.66 billion. Earnings per share for the last fiscal year were $0.23, placing the shares on a PE ratio of 90.44. It did not pay a dividend.

These earnings are expected to rise through the next couple of years, hitting $0.86 this year, and then rising to $1.64 the following year as costs due to severance of some Canadian concerns dissipate. Revenue during this time is also forecast to increase from $11.36 billion to around $15.031billion.

Weatherfield is ideally placed to benefit from increased oil and gas exploration projects, and though the historic PE of 90.44 is very high, when looking forward at its expected increasing earnings, the PE comes down to 12.7. Market analysts have spotted this, and predict the shares will rise to as high as $45 in twelve months. Such a share price, with earnings hitting estimates would give a PE ratio of 52.3. The shares look good value for further progress throughout 2011.

Anadarko Petroleum Corporation (APC): Headquartered in Woodlands, this oil and gas exploration and production company was founded in 1959. It operates mainly in the Gulf of Mexico, the United States, and Algeria.

Shares are trading at $80.78 at the time of writing, down 2.52% on the day and a little off the top of their 52-week trading range of $45.07 to $85.50. At the current market price, the company is capitalized at $40.21 billion. Earnings per share for the last fiscal year were $1.68, placing the shares on a PE ratio of 47.97. It paid dividends of $0.36 last year (a yield of 0.40%) which was covered 4.66 times by its earnings.

These earnings are expected to explode through the next couple of years, hitting $3.50 this year, and then rising to $4.38 the following year as the high oil price brings increasing margins on existing operations, and makes new fields more economically viable. Consequently, revenue during this time is forecast to increase to around $15.6billion from the last year’s $12.11billion.

When compared to its sector, its operating margin of 20.11% compares well to the its larger rivals, BP (NYSE:BP) and Exxon (NYSE:XOM) (detailed below).

Anadarko’s Gulf operations will benefit from the lessening impact of the BP catastrophe, though the rising oil price will be key to its future prospects. With this now set at far higher levels than just a few years ago, the company’s non-profitable fields become suddenly profitable and drive shareholder value.

Exxon Mobil Corporation (XOM): Exxon Mobil is one of the giants in the world of oil and gas production. It was founded in 1870, is headquartered in Irving, Texas, and has operations across all continents of the world. Shares are trading at $77.84 at the time of writing, down 2.21% on the day and middling in their 52-week trading range of $58.05 to $88.23. At the current market price, the company is capitalized at $383.45 billion. Earnings per share for the last fiscal year were $7.02, placing the shares on a PE ratio of 11.09. It paid a dividend of $1.88 last year (a yield of 2.40%) which was covered 3.73 times by its earnings.

These earnings are expected to continue the growth they have seen through the last few years, reaching $8.67 this year, and then rising to $9.11 the following year as higher input costs take effect. Revenue during this time is forecast to increase to around $520.46 billion.

When compared to its sector, its operating margin of 12.82% and its PE ratio of 11.09 are in line with the sector’s averages. It's not surprising as Exxon is the major player in its industry.

An energy portfolio must have Exxon in it. A truly global company, its operations are well diversified geographically and it is able to weather any regional specific shocks well.

BP PLC. (BP): Founded in 1889 and headquartered in London, UK, BP is an integrated oil and gas company that explore, produces, and sells oil and oil based products and petrochemicals around the world.

Shares are trading at $43.61 at the time of writing, with a 52-week trading range of $34.16 to $49.50. At the current market price, the company is capitalized at $137.27billion. Earnings per share for the last fiscal year were $6.28, placing the shares on a PE ratio of just 6.94. It paid a dividend of $0.84 last year (a yield of 1.90%).

BP’s shares have been kept under pressure by the spectre of the lawsuit following the Gulf of Mexico disaster. However, even with its production from the Gulf hit hard, its earnings are expected to rise to $7.49 in 2012.

BP reported replacement cost profits up 13% from its last report recently, despite production levels some 11% lower. Increasing oil prices and progress in upstream operations is helping its earnings. It has also recently completed its purchase of exploration fields from Devon Energy and ratified an agreement that will see increase its operations in the Caspian Sea. With these developments, and the decreasing threat to earnings from the Gulf disaster, BP shares should continue to move upwards.

Transocean Ltd. (NYSE:RIG): Transocean is a Swiss company that provides offshore drilling services. Shares are trading at $59.23 at the time of writing, with a 52-week trading range of $49.56 to $85.98. At the current market price, the company is capitalized at $18.93billion. Earnings per share for the last fiscal year were $1.86, placing the shares on a PE ratio of 31.78. It paid a dividend of $0.90 last year (a yield of 1.50%) which was covered 2.06 times by its earnings.

These earnings are expected to fly through the next couple of years, hitting $4.01 this year, and then rising to $6.18 the following year as the fallout from the BP Gulf of Mexico debacle subsides. Revenue during this time is forecast to increase to around $10.47 billion from last year’s $9.14billion.

Transocean’s shares are still trading under the shadow of the Gulf of Mexico disaster. It is worth noting the earnings growth prospects of the company, while also considering potential litigation results. With shares valued at below book value, litigation prospects are more than fully reflected in the share price. Earnings growth will become more relevant through time, and drive the share price.

Source: 6 Must-Own Energy Stocks for 2011