In this article, we discuss the 5 best crude oil stocks to buy as tensions rise. To read our analysis of the current crude oil market situation, go directly to the 12 Best Crude Oil Stocks To Buy As Tensions Rise.
5. Schlumberger Limited (NYSE:SLB)
Number of Hedge Fund Holders: 60
Schlumberger NV, commonly referred to as SLB or Schlumberger Limited (NYSE:SLB), is a prominent oilfield services company that offers advanced technology solutions for reservoir characterization, drilling, production, and processing to the oil and gas sector. The company is a comprehensive provider of products and services to the industry, spanning from exploration and production to integrated pipeline solutions designed to enhance hydrocarbon recovery.
In the third quarter, Schlumberger Limited (NYSE:SLB)’s international revenue experienced a 12% increase, reaching $6.6 billion compared to the same period the previous year. North America’s revenue also saw a 6% increase, although it declined sequentially due to reduced drilling activity in the onshore U.S. and the Gulf of Mexico. The company’s net income, excluding exceptional items, amounted to $0.78 per share for the three months ending on September 30, slightly surpassing the average analysts’ estimate of $0.77 per share.
A total of 60 hedge funds out of the 910 funds tracked by Insider Monkey were long Schlumberger Limited (NYSE:SLB). The most significant stakeholder of Schlumberger Limited (NYSE:SLB) was Rajiv Jain’s GQG Partners which had a $1.7 billion stake in the company.
VGI Partners made the following comment about Schlumberger Limited (NYSE:SLB) in its 2022 annual investor letter:
“In addition to defence, we have focused our efforts on other new sectors where we see structural growth, including energy and medical technology. The long-term outlook for energy looks highly attractive given many years of under-investment and more recently amplified by ESG constraints and corporate discipline. Although we reviewed commodity owners (where we leveraged the expertise of the Regal resources team), we focused our efforts on the second derivative – the oil service companies. These are the picks-and-shovels of the industry and arguably the highest-quality way to gain exposure. As a result, we invested in Schlumberger Limited (NYSE:SLB) earlier this year and grew this to a circa 8% weight during the year (now circa 3%)”
4. ConocoPhillips (NYSE:COP)
Number of Hedge Fund Holders: 62
ConocoPhillips (NYSE:COP), based in Houston, Texas, is an autonomous exploration and production (E&P) enterprise engaged in the global exploration, production, transportation, and marketing of crude oil, bitumen, natural gas, natural gas liquids, and liquefied natural gas.
On October 5, ConocoPhillips (NYSE:COP) successfully finalized the acquisition of the remaining 50% stake in the Surmont oil sands project from TotalEnergies EP Canada Ltd. for roughly $2.7 billion in cash (equivalent to CAD 3.7 billion), along with potential future contingent payments amounting to approximately $0.3 billion (equivalent to CAD 0.4 billion). With this transaction, ConocoPhillips (NYSE:COP) has attained full ownership, holding a 100% stake in Surmont, and will retain its role as the project’s operator.
A total of 62 hedge funds tracked by Insider Monkey had stakes in ConocoPhillips (NYSE:COP) as of the end of the second quarter of 2023. The biggest stakeholder of ConocoPhillips (NYSE:COP) was Natixis Global Asset Management’s Harris Associates which owns a $1.5 billion stake in the company.
Oakmark Select Fund made the following comment about ConocoPhillips (NYSE:COP) in its second quarter 2023 investor letter:
“ConocoPhillips (NYSE:COP) is one of the largest and most efficient exploration and production companies in the country. The company has an extensive resource base of high-quality drilling inventory in the U.S. and various international locations as well as a growing liquified natural gas business. In our view, the depth and quality of ConocoPhillips’s inventory is a competitive differentiator that is not fully captured in today’s share price. Over the next 10 years, we believe ConocoPhillips will be able to return more than 100% of its current market cap to shareholders via dividends and share repurchases while growing its production at a mid-single-digit annual pace. We believe ConocoPhillips is also among the best managed companies in the oil and gas industry and we are impressed by its history of accretive capital allocation under CEO Ryan Lance. The stock has meaningfully underperformed the broader market year-to-date and is an attractive addition to our portfolio.”
3. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 71
Exxon Mobil Corporation (NYSE:XOM), a prominent American energy company, stands out as one of our top picks for investment during bear markets. With a lineage tracing back to John D. Rockefeller’s Standard Oil, Exxon Mobil Corporation (NYSE:XOM) has undergone a remarkable transformation spanning 140 years. Originating as a local kerosene distributor in the United States, it has grown into a global giant, ranking among the foremost publicly traded entities in the petroleum and petrochemical sectors. Over the past five years, Exxon Mobil Corporation (NYSE:XOM) has experienced a significant growth of around 29%, consistently increasing dividends for an impressive 39-year streak.
On October 11, Exxon Mobil Corporation (NYSE:XOM) and Pioneer Natural Resources (NYSE:PXD) jointly unveiled a firm agreement, detailing Exxon Mobil Corporation (NYSE:XOM)’s acquisition of Pioneer. This merger is structured as an all-stock transaction with a total valuation of $59.5 billion, equivalent to $253 per share based on ExxonMobil’s closing price on October 5, 2023. As per the agreement’s stipulations, Pioneer shareholders will be granted 2.3234 shares of XOM for each PXD share upon completion. The overall enterprise value of this transaction, which accounts for net debt, approximates $64.5 billion.
By the end of Q2 2023, data from Insider Monkey’s database revealed that 71 hedge funds had positions in Exxon Mobil Corporation (NYSE:XOM), a slight decrease from the 73 hedge funds in the previous quarter. The combined value of these holdings exceeds $3 billion.
2. Occidental Petroleum Corporation (NYSE:OXY)
Number of Hedge Fund Holders: 73
Occidental Petroleum Corporation (NYSE:OXY) is an American company that specializes in hydrocarbon exploration within the United States and the Middle East. Additionally, the company is involved in petrochemical manufacturing activities across several locations, including the United States, Canada, and Chile. Organized in Delaware, Occidental Petroleum Corporation (NYSE:OXY) has its headquarters situated in Houston.
In August, Occidental Petroleum Corporation (NYSE:OXY) made a $1.1 billion deal to acquire Carbon Engineering Ltd, a technology supplier. This strategic move is part of Occidental’s plan to establish a series of carbon-capture facilities with the goal of addressing climate change and generating revenue. The company has ambitious plans to construct approximately 100 plants employing direct air capture (DAC) technology, which removes carbon dioxide (CO2) directly from the atmosphere, and the captured CO2 can then be stored underground or used in various applications, including the production of concrete and aviation fuel.
A total of 73 hedge funds out of the 910 hedge funds tracked by Insider Monkey had stakes in Occidental Petroleum. The biggest stakeholder of the company was Warren Buffett’s Berkshire Hathaway which had a $13.2 billion stake in the company.
1. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 73
Chevron Corporation (NYSE:CVX) is a prominent American multinational energy company with a primary focus on the oil and gas industry. Emerging as the second-largest direct descendant of Standard Oil, it was initially established as the Standard Oil Company of California. The company’s headquarters are situated in San Ramon, California, and it maintains operations across over 180 countries worldwide.
Chevron Corporation (NYSE:CVX) announced on October 23 that it had reached a definitive agreement with Hess Corporation to complete an all-stock transaction valued at $53 billion. Under this agreement, Chevron will acquire all outstanding shares of Hess. Chevron believes that this acquisition will enhance and broaden its portfolio, particularly highlighting the Stabroek block in Guyana, which it describes as an “exceptional” asset offering industry-leading cash margins and a low carbon footprint, promising continued production growth into the next decade.
By the end of this year’s second quarter, 73 out of the 910 hedge funds part of Insider Monkey’s database had held a stake in Chevron Corporation (NYSE:CVX). Out of these, the firm’s biggest investor is Warren Buffett’s Berkshire Hathaway since it owns 123.12 million shares that are worth $19.37 billion.
The London Company Large Cap Strategy made the following comment about Chevron Corporation (NYSE:CVX) in its first quarter 2023 investor letter:
“Initiated: Chevron Corporation (NYSE:CVX) – CVX is an integrated energy and chemical producer. Its upstream segment explores for, produces, processes and transfers energy products. Its downstream segment refines and markets these products in addition to industrial plastics and fuel and lubricant additives. Among the major oil companies, CVX is the most levered to oil and gas production; it has one of the most successful exploration programs and among the best production profiles. CVX also has less exposure to the downstream business, which provides an above-peer operating margin profile and supports CVX’s return on invested capital. CVX has one of the strongest balance sheets in the oil industry with net debt/EBITDA of just 0.1x. The combination of its low cost positioning and strong balance sheet gives us greater confidence in downside protection despite its ties to a volatile commodity. We’re attracted to management’s rational approach to capital allocation, with consideration for the full cycle. In terms of capital allocation, CVX just announced a $75B share repurchase plan, and it pays a healthy 3.5% dividend. We have owned CVX in the past and it is the only Energy exposure in the Large Cap portfolio.”
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