Table of Contents
Table of Contents
Best Value Natural Gas Stocks
Fastest Growing Natural Gas Stocks
Natural Gas Stocks with the Most Momentum
Advantages of Natural Gas Stocks
Trends in Natural Gas Stocks
- Markets News
Permian Resources, Civitas Resources, and Northern Oil & Gas led sector performance over the past year
By
Noah Bolton
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Noah has about a year of freelance writing experience. He's worked on his investing website dealing with topics such as the stock market and financial advice for beginners.
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Published August 01, 2023
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Top natural gas stocks this month include Permian Resources Corp., Civitas Resources Inc., and Northern Oil & Gas Inc., the share prices of which have all risen by more than 40% in the past year.
Natural gas stocks, represented by the First Trust Natural Gas ETF (FCG), have risen 6% in the past 12 months compared with a 16% gain for theRussell 1000.
Here are the top three natural gas stocks with the best value, the fastest growth, and the most momentum. All data are as of July 19.
Best Value Natural Gas Stocks
These are the natural gas stocks with the lowest 12-month trailing price-to-sales (P/S) ratio. For companies in early stages of development or industries suffering from major shocks, this can be substituted as a rough measure of a business’s value. A business with higher sales could eventually produce more profit when it achieves, or returns to, profitability. The P/S ratio shows how much you’re paying for the stock for each dollar of sales generated.
| Best Value Natural Gas Stocks | |||
|---|---|---|---|
| Price ($) | Market Capitalization (Market Cap) ($B) | 12-Month Trailing P/S Ratio | |
| Obsidian Energy Ltd. (OBE) | 6.45 | 0.5 | 0.9 |
| Vital Energy (VTLE) | 47.90 | 0.9 | 1.0 |
| Southwestern Energy Co. (SWN) | 6.20 | 6.8 | 1.1 |
Source: YCharts
- Obsidian Energy Ltd.:Obsidian Energy explores, develops, and produces petroleum resources around Alberta, Canada. On May 4, the company released its first quarter earnings for 2023. Net income grew by 28% on revenue from operations, increasing by 20% compared to the previous year. The company has seen positive results regarding its Peace River and Viking wells
- Vital Energy Inc.: Vital Energy explores, acquires, and develops oil and natural gas properties throughout Texas. On May 9, the company released its first-quarter earnings—net income swung to $114 million from a net loss of $87 million in the same quarter in 2022. Vital Energy posted a large derivatives loss of $326 million in the first quarter of 2022, which is a major reason the stock is trading at such a low P/E ratio.In May, Vital Energy entered into an agreement with Forge Energy II LLC, a private oil and gas exploration company, to acquire their Delaware Basin assets through a third-party partnership. The all-cash transaction totals $540 million; the acquisition will add 198,000 net acres to the Vital Energy Permian Basin leasehold.
- Southwestern Energy Co.:An oil and natural gas explorer and producer with properties in Pennsylvania, Ohio, West Virginia, and Louisiana. In June 2022, the company authorized a $1 billion share repurchase program that can continue through the end of 2023.In the first quarter, Southwestern reported net income of $1.9 billion, swinging from a net loss of $2.7 billion in the year-ago quarter, and a 28% year-over-year revenue decline.
Fastest Growing Natural Gas Stocks
These are the top natural gas stocks as ranked by agrowthmodel that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentagerevenuegrowth and their most recent quarterly YOYearnings-per-share (EPS)growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 1,000% were excluded as outliers.
| Fastest Growing Natural Gas Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| Permian Resources Corp. (PR) | 11.13 | 3.5 | 520 | 77 |
| EOG Resources Inc. (EOG) | 122.44 | 7.2 | 415 | -17 |
| Enerplus Corp. (ERF) | 15.69 | 3.4 | 377 | 2 |
Source: YCharts
- Permian Resources Corp.:Permian Resources develops crude oil and natural gas reserves in the Delaware and Midland Basins located in New Mexico and Texas. The company released first quarter earnings on May 8. Net income surged 14 fold, and their net oil and natural gas production grew by 150% compared to the previous year. Permian Resources also announced a first quarter dividend of $0.05 per share which was payable on May 24.
- EOG Resources Inc.: EOG Resources explores, acquires, and develops oil and natural gas properties in the United States and Trinidad and Tobago.
- Enerplus Corp.: Enerplus develops and explores crude oil and natural gas properties in the United States and Canada.
Natural Gas Stocks with the Most Momentum
These are the natural gas stocks that had the highest total return over the last 12 months.
| Natural Gas Stocks with the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Permian Resources Corp. (PR) | 11.13 | 3.5 | 82 |
| Civitas Resources Inc. (CIVI) | 75.01 | 6.0 | 61 |
| Northern Oil & Gas Inc. (NOG) | 35.89 | 3.1 | 44 |
| Russell 1000 | N/A | N/A | 16 |
| First Trust Natural Gas ETF (FCG) | N/A | N/A | 6 |
Source: YCharts
- Permian Resources Corp.: See company description above,
- Civitas Resources Inc.: Civitas produces crude oil and natural gas-related products in the Denver-Julesburg Basin of Colorado. The company reported first quarter earnings in May, which stated a 121% increase in net income and a 20% reduction in overall revenue. Their sales volume for crude oil and natural gas also remained unchanged compared to the previous year. On June 20, Civitas announced that two agreements were signed that would allow them to acquire oil properties in the Midland in Delaware Basin for a total consideration of $4.7 billion.
- Northern Oil & Gas Inc.: Northern Oil & Gas is an energy company that operates oil and gas properties throughout the U.S.
Advantages of Natural Gas Stocks
Natural gas prices soared in 2022 after Russia invaded Ukraine. Russia is one of the world's largest producers of natural gas, accounting for around 17% of total global production in 2020. It was also the biggest exporter of natural gas in the world as of 2021. The war led many Western countries—including the U.K., U.S., and EU members—to impose sanctions on Russian energy imports, limiting the supply of natural gas in these markets and subsequently increasing prices.
There are many publicly traded companies in the natural gas industry, and their stock performance will tend to improve when the price of natural gas rises. However, if investing in natural gas stocks, it's important to remember that there are factors other than the price of natural gas that affect a company's share price. In other words, just because natural gas prices are up doesn't mean natural gas stocks will rise at the same rate, or at all.
Trends in Natural Gas Stocks
The following are some trends in the natural gas sector that could affect its stock prices.
Price volatility because of Russian sanctions and retaliation: Though the gas-intensive winter season is behind Europe, tensions between Russia and the rest of the continent will persist as long as the war in Ukraine. Russia has been accused of weaponizing energy prices in retaliation for sanctions. Last fall it said the Nordstream pipeline, which has typically supplied the EU with about a third of its Russian natural gas, would be closed indefinitely for "technical reasons."
Global gas demand is falling: The shift toward renewables has been underway for over a decade, but last year's spike in natural gas prices compelled policymakers and businesses to increase investment in renewable energy generation and storage, hastening the transition and eroding global gas demand. Policymakers in Europe are expected to speed up the shift away from natural gas, as the recent EU proposal to support biomethane and hydrogen suggests.
Added liquefied natural gas (LNG) projects:The United States is one of the largest natural gas exporters due to increased plant production and an abundance of shale discoveries, particularly in the southern U.S. At this time, there are four LNG plants in the U.S. under construction. And LNG output is projected to grow more than 50% by 2035.
The comments, opinions, and analyses expressed on Investopedia are for informational purposes online. Read ourwarranty and liability disclaimerfor more info.
As of the date this article was written, the author does not own any of the above stocks.
Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy.
Obsidian Energy Ltd. "Obsidian Energy Announces Strong First Quarter 2023 Results."
Vital Energy Inc. "Vital Energy Reports First Quarter 2023 Financial and Operating Results."
Vital Energy Inc. "Vital Energy Expands Permian Footprint with Delaware Basin Acquisition."
Southwestern Energy Co. "Southwestern Energy Announces $1 Billion Share Repurchase Program."
Southwestern Energy Co. "Southwestern Energy Announces First-Quarter 2023 Results."
Permian Resources Corp. "Permian Resources Announces First Quarter 2023 Results."
Permian Resources Corp. "Permian Resources Declares Quarterly Cash Dividend."
Civitas Resources Inc. "Civitas Resources Announces First Quarter 2023 Results."
Civitas Resources Inc. "Civitas Resources to Enter Permian Basin through Transformative Transaction."
BP. "Statistical Review of World Energy 2021." Page 36.
U.S. Energy Information Administration. "Europe Is a Key Destination for Russia's Energy Exports."
Admiral Markets. "How to Invest in Natural Gas."
Reuters. "US LNG Project Approvals on Track for Record New Volumes."
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