Crude oil prices were relatively calm last year. Brent oil, Global benchmark price, A decline of 3%, closing the year at about $77 per barrel. Meanwhile, WTI, US Oil, the price benchmark, ended the year where it started at around $71 a barrel. Record production in the US and weakness in China’s economy Keep the market balancedKeeping a lid on crude prices.
Most analysts expect more of the same in 2025, with the consensus that crude oil prices will remain in the $70s this year. because of this, Oil stocks Can’t count on oil prices to prop up their share prices this year. They will need more catalyst.
There are two oil stocks with notable catalysts ConocoPhillips(NYSE: COP) And Chevron(NYSE: CVX ). It’s one of the many reasons it’s risen to the top of my shopping list this year.
ConocoPhillips made a big splash last year. It acquired rival Marathon Oil in a $22.5 billion all-stock deal (which included the assumption of $5.4 billion in debt) that closed in late November. The high-profile transaction deepened its portfolio in the lower 48 states, adding 2 billion barrels of resources at an average supply price of less than $30 per barrel (WTI).
The company initially expected to acquire $500 million in cost and capital support within the first year of closing the deal. It now estimates that number will exceed $1 billion in the first 12 months. This will help increase its free cash flow even further.
ConocoPhillips plans to return a meaningful percentage of its growing cash flow to the shareholders. It has already increased its dividend by 34%. The company intends to provide dividend growth in 25% of companies S&P 500 (SNPINDEX: ^GSPC)in the future.
Meanwhile, it has increased its share repurchase rate from $5 billion annually to $7 billion. This will retire all the equity issued for the Marathon Oil acquisition within the next two to three years. ConocoPhillips’ rising cash flow and cash returns should help fuel it to outperform its peers this year if oil prices continue to decline. with In the $70-a-barrel range.
Chevron Working on closing his own needle-moving deal. The oil giant agreed to buy Hess in an all-stock deal worth $60 billion in October 2023. The transaction will significantly upgrade and diversify Chevron’s already world-class portfolio. This will help boost and enhance the company’s outlook for production and free cash flow growth in the 2030s. more than Double its free cash flow by 2027 (assuming $70 oil).
There’s just one problem: Axon Believes the deal involved Hess and a third partner (China’s CNOOC) in Guyana. The companies are engaged in arbitration, with a decision expected later this year.
If Chevron wins, it will be able to Close its acquisition of Hess, which will significantly enhance its already strong long-term growth profile. Although the company may lose its arbitration case, there is reason to believe it will win.
It’s not just buying Hess for his stake in Guyana. The acquisition will also strengthen its US onshore operations by adding Bakken’s oil-rich resources in North Dakota to its portfolio. In addition, it will add complementary positions in the Gulf of Mexico and Southeast Asia. These additions will enable Chevron to upgrade its entire portfolio.
Even if it loses, Chevron will be in a stronger position. It expects to grow its free cash flow by more than 10% annually through 2027 (assuming Brent averages $60 a barrel) through high-return capital investments in its existing resource portfolio. This would enable Chevron to continue raising its dividend (which it has done Every year over three decades) and repurchase shares at the high end of its $10 billion to $20 billion annual target range.
ConocoPhillips has already closed its needle-moving deal, and Chevron should be able to wrap up its transaction this year. Those acquisitions are called these oil stocks big Boost in 2025. That’s why they stand out as Top People to Buy This Year
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