There are certain independent players in the oil and gas sector that actively engage in the core functionalities of exploration and extraction of oil and natural gas. With a positive market outlook for oil and gas in 2012, I believe these independent companies have significant resources to effectuate the extraction or exploration of oil and gas, and will find themselves in a formidable position. In this article, I will explore five stocks of independent companies within the oil and gas sector that are actively involved in the business of extraction and exploration. I will make recommendations about each stock based on my findings. As always, use my research as a starting point for your own due diligence.
Anadarko Petroleum Corporation (APC) is engaged in activities pertaining to the exploration and production of oil and natural gas. The company has a strong asset base located on the onshore of the Rocky Mountains region as well as those in the Appalachian basin. The company's earnings per share forecast is expected to rise steadily over the years, with a forecast of around $3.15 in 2012, and round $3.35 in 2013. Moreover, the company is expected to experience a top line growth in the current year of around 22.40%, which is steadily said to increase over the years. As one of the best independent exploration companies, Anadarko's business is covered across the West African Atlantic Transform margin, the U.S. Gulf of Mexico, and also East Africa. The stock can easily trigger a substantial uptrend, in case of even a minute discovery in any of the regions. The stock is currently trading at around $87.11, nearly at its 52-week highs of $88.21. The company has a market capitalization of around $43.34 billion. Considering the current macro environment in the oil and gas sector, an attractive risk to reward ratio, and a possible uptrend forecast for the sector in 2012, I would consider purchasing Anadarko Petroleum Corporation at its current market price, keeping a long-term perspective.
Occidental Petroleum Corporation (OXY) is a major oil and gas exploration company, which is engaged in mainstream segments such as the chemical, midstream, marketing and production of oil and gas. The company integrates with its subsidiaries to carry out its oil and gas business. The market price of Occidental Petroleum Corporation is around $102, within its 52 week range of $117.885 and $66.36. The earnings per share of Occidental Petroleum Corporation is approximately $7.79, while its price earnings ratio stands at around $13.40. With a market capitalization of around 83.37 billion, Occidental Petroleum Corporation displays a healthy dividend yield of around 1.80%. Along with the current news of the company's plans to expand its production facilities in California, the uptrend expected in the oil and gas sector will certainly provide a positive uptrend to the company's stock as well as its financial status. Having a strong operating cash flow of around $12 billion, Occidental Petroleum Corporation, in my opinion, is a good purchase at its current market price, especially for the investors who want a long-term oil and gas stock in their portfolio.
Cimarex Energy Co. (XEC) is engaged in the extraction, exploration and production of natural gas. Natural gas, as a resource, is relatively untapped. Moreover, the significance of natural gas to be known as the primary energy resource of the future cannot be neglected. In that context, Cimarex Energy Co. looks appealing. The current market price of Cimarex Energy Co. is around $66.93, trading within its 52-week highs and lows of $117.95 and $50.80. With a price earnings ratio of around $10.80, and a earnings per share of approximately $6.17, Cimarex Energy Co. looks attractively valued on the basis of its resources and the company's operational strengths. The company operates in the U.S. in the Permian basin, Gulf Coast and the Mid Continent. Its revenues over the last 10 years have grown at the rate of around 13%. 2012 looks good for the energy sector, and I expect Cimarex Energy Co. to perform well, in tandem with its sector uptrend. In my opinion, purchasing the stock at the current price for a long-term horizon would be optimal investment decision.
Range Resources Corporation (RRC) is currently trading at around $62.92, within its 52 week range of $77.24 and $46.18. The company is an independent oil and gas producer, engaged actively in the business of acquisition and exploration. The company has book value per share of around $14.60, whereas its balance sheet shows debt of around $1.7 billion and cash of around $51.80 million. The company has successfully improved its production lines by decreasing its associated costs, ultimately creating an positive impact on its quarterly results. Likewise, a 15% rise on its realized prices was reflected in its third quarter results. The company strives to further improve its production in 2012 and the years ahead. In my opinion, I find Range Resources Corporation as a good investment opportunity at its current market level, especially where exploration and production of natural gas is an attractive avenue in the years to come. I would recommend Range Resources Corporation from a long term perspective.
Helix Energy Solutions Group (HLX) operates in the oil and gas sector in providing of contractual services for rendering energy and reservoir development solutions. Moreover, the company also provides services to its oil and gas properties, focused in deepwater, encompassing the regions of North Sea, the Asia Pacific, the Gulf of Mexico and West Africa. it is currently trading within its 52-week range of $21.65 and $11.57, at around $18.04. The company depicts positive estimates for 2012, and is trading at multiples of approximately 10 of its 2012 estimates. The company's price earnings to growth ratio for five years has been projected to around $1.04, while its revenues are expected to increase in 2012, posting a double digit rise. I would recommend purchasing this stock at its current price level, with a short to medium term perspective.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.