As energy takes on more of a global focus, so do the stocks of the companies that produce it. With the increase in hydraulic fracturing, or fracking, places once thought of as flyover states are now booming industrial areas because of the new ability to uncover deep underground stores of oil and natural gas. There’s a lot of room for excavation and discovery in these areas, and companies such as Chesapeake Energy Corporation (NYSE:CHK), WPX Energy Inc (NYSE:WPX), and InterOil Corporation (USA) (NYSE:IOC) are taking full advantage.
Chesapeake Energy
Chesapeake Energy Corporation (NYSE:CHK), an Oklahoma-based oil and natural gas producer, has been putting up some strong numbers recently. Revenue has been climbing in the past two quarters, marking year-over-year growth of 40% and 32%, respectively. The company has also earned $0.30 per share over that period, beating estimates of $0.25.
CHK Revenue Quarterly YoY Growth data by YCharts.
With large stakes in the Eagle Ford and the Greater Anadarko Basin, Chesapeake Energy Corporation (NYSE:CHK) has been able to vastly increase its oil production. The Eagle Ford in Texas alone has the potential to produce about 420,000 barrels per day. Chesapeake Energy Corporation (NYSE:CHK) ramped up first-quarter production this year by 56%, which brought about its 40% year-over-year revenue growth. The company has already cemented itself as one of the industry’s top producers, and if it can keep increasing production and decreasing costs the way it’s been doing, the stock price will keep climbing at sharper angles.
WPX Energy
WPX Energy Inc (NYSE:WPX) is a greenhorn in the oil and natural gas industry with a whole lot of potential. In the U.S., it has exploration rights in the Piceance Basin, Bakken Shale, Marcellus Shale, Powder River Basin, and San Juan Basin. With all of that territory, WPX Energy Inc (NYSE:WPX) has plenty of room to run, and its stock price, which has been climbing to all-time highs, reflects that sentiment. Yet despite the recent uptrend in the market and in the individual stocks of Chesapeake and WPX Energy Inc (NYSE:WPX), both companies are still trading well below book value.
CHK Price / Book Value data by YCharts.
Chesapeake Energy Corporation (NYSE:CHK)’s and WPX Energy Inc (NYSE:WPX)’s revenues are highly correlated with the prices of natural gas. Unfortunately for them, the commodity is priced at rock-bottom levels right now. On the other hand, that could also mean major upside potential for when prices start to rise. Despite poor revenues and profit margins of late, WPX could well be a sleeping stock ready to skyrocket in the future.
