My time in San Francisco at The Oil and Services Conference revealed a lot about what’s going on in the hallways and boardrooms of the country’s oil companies.
On Tuesday, I explained the delineation between the companies that will survive the current crisis and emerge in much stronger shape a couple of years from now… and those that will come out of the crash bruised and limping.
Obviously, Wall Street Daily readers want to side with the former.
So, as promised, here are the two best oil companies for investors looking for legitimate plays that aren’t threatened by current oil prices. These firms are poised for solid growth in the months and years ahead.
Placing Smart Bets
If oil prices recover this year, all boats will rise with the tide. The problem is, that’s an iffy bet at this point.
But if we see a protracted slump, that’s not where you want your real investment dollars working for you.
Still, oil and energy represents a heck of an opportunity for the long term.
And it’s during times like these that the great companies get tossed out with the mediocre or poor companies. Investors tend to be irrational when it comes to selling and exuberant when it comes to buying. That’s the beauty of a bear market or a crash – no company is spared as investors rush for the exits.
Here are two companies that will not only survive, but prosper.
Must-Have No. 1: Synergy Resources (SYRG). This is a small-cap play that dominates in the Wattenberg region of Colorado, where the company has prolific oil-producing properties that are profitable below $60 per barrel. Synergy is also in the process of acquiring more land in an area where land is seldom up for sale, and it’s acquiring more assets and operations from smaller, more-leveraged providers. Shares are down about 25% from their highs versus 50% to 70% for the more-leveraged producers.
Must-Have No. 2: EOG Resources (EOG). This is a large-cap producer that’s dominant in many of the big shale plays. It has a lower cost structure, less leverage than most of its peers, and is considered the premier play in the sector. What I like most about EOG Resources is what the company said in its most recent earnings announcement. That is, it’s planning to curtail production and NOT increase it during the current crisis. The company doesn’t want to sell its assets (oil and gas) at current levels, which are too cheap. Instead, the company is holding its oil in the ground and waiting for better times and prices (because it has that luxury).
If you’re looking to build your future energy portfolio or make some lateral adjustments, these two companies are a great place to start. And the current prices are attractive enough to begin wading into positions.
Founder Robert Williams is preparing to release a brand-new report to his True Alpha subscribers. In it, he takes a deeper dive into the companies that are destined to come out on top once the oil rebound kicks in.
If you haven’t signed up to receive True Alpha, now’s the time. Click here for more information, including another fascinating opportunity Robert previously uncovered.
And the chase continues,