We recently compiled a list of the 10 High Growth Energy Stocks To Invest In. In this article, we are going to take a look at where Permian Resources Corporation (NYSE:PR) stands against the other high-growth energy stocks.
Investments in the Energy Sector Expected to Rise Amid Growing Demand?
The global energy industry is undergoing significant transformation, driven by the urgent need to address climate change and the increasing demand for cleaner energy sources. This sector is crucial not only for powering economies but also for ensuring energy security and sustainability. According to Infosys Limited, global investments in power generation are projected to reach approximately $3 trillion in 2024, with $2 trillion of that allocated to clean energy initiatives. This shift reflects a broader trend towards renewable sources such as solar and wind, which are becoming more competitive with traditional fossil fuels.
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Despite the push for clean energy, the oil and gas sector remains vital for energy security and economic stability. Companies are focusing on optimizing their portfolios and improving operational efficiencies. On December 16, Reuters reported oil and gas companies in Norway expect to make a record investment of NOK 275 billion ($24.68 billion) in 2025, according to a recent report by the Offshore Norge industry association. This marks an increase from NOK 263.7 billion this year and surpasses earlier forecasts. A year ago, the association had estimated investments for 2024 and 2025 would total NOK 240 billion and NOK 225.9 billion, respectively. The rise in investment is attributed to factors such as inflation, faster development timelines, and expanded project scopes, including additional drilling at existing sites.
In 2025, companies plan to drill 45 exploration wells in Norwegian waters, up from 41 this year, marking the highest level of activity since 2019. Norway is the largest oil and gas producer in Western Europe, with production exceeding 4 million barrels of oil equivalent per day. The outlook for investments indicates a gradual decline after 2025, with projections of NOK 251 billion in 2026 and NOK 203 billion by 2029 as current projects reach completion. This forecast is based on insights from 14 major companies that account for nearly all of Norway’s oil and gas output.
According to the Global Energy Perspective 2024 report by McKinsey & Company, global energy demand is projected to increase by 11% to 18% by 2050, mainly driven by emerging economies. These regions are experiencing population growth and a rising middle class, which leads to higher energy needs. Additionally, as manufacturing industries move from developed to developing countries, the demand for energy in these areas is expected to rise further.
Despite advancements in renewable energy sources, the transition to cleaner energy has been slower than anticipated. Key technologies are still not fully developed or cost-effective, meaning that renewables alone may not meet future energy demands. As a result, fossil fuels, including oil, natural gas, and coal, are projected to meet between 40% to 60% of global energy demand by 2050, down from 78% in 2023. Investment in fossil fuels is expected to persist for at least the next decade to keep pace with growing energy needs.
The future of the energy sector may depend on how effectively energy companies can adapt to changing market dynamics and invest in innovative technologies while meeting the growing demand for energy.
Methodology
To compile our list of the 10 high-growth energy stocks to invest in, we used stock screeners from Finviz and Yahoo Finance. We sorted our results based on market capitalization and picked the largest energy companies by market cap. We also consulted various online resources and reviewed our own rankings. This exercise provided us with a list of more than 60 energy stocks.
To narrow down our list to high-growth energy stocks, we focused on companies with a compound annual growth rate (CAGR) in net revenue exceeding 20% over the past 5 years. Finally, from this list of high-growth stocks that met our criteria, we focused on the top 10 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 10 high-growth energy stocks to invest in are ranked in ascending order based on the number of hedge funds holding stakes in them as of Q3 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Aerial view of oil rig in the Permian Basin, illustrating the expansive operations in West Texas and New Mexico.
Permian Resources Corporation (NYSE:PR)
5-Year Revenue CAGR: 39.60%
Number of Hedge Fund Holders: 56
Permian Resources Corporation (NYSE:PR) is a leading independent oil and natural gas company based in Midland, Texas, primarily focused on the acquisition and development of oil and liquids-rich natural gas assets in the Permian Basin. As the second-largest pure-play exploration and production company in this region, Permian Resources Corporation (NYSE:PR) has established a strong foothold in the lucrative Delaware Basin.
In the third quarter of 2024, the company showcased impressive operational efficiency, reducing drilling and completion costs to $800 per lateral foot, a 16% decrease from the previous year. This reduction, coupled with a 16% decrease in drilling cycle times and a 19% increase in completion crew pump hours per day, reflects the Permian Resources Corporation’s (NYSE:PR) commitment to optimizing its operations. Such efficiencies not only lower costs but also enhance profitability, making it an attractive investment option.
On September 17, 2024, Permian Resources Corporation (NYSE:PR) completed the acquisition of the Barilla Draw assets, which added around 29,500 net acres to its portfolio. This strategic move is expected to contribute significantly to production, with the acquired properties already yielding approximately 2 MBoe/d during the third quarter. Additionally, the company has been actively pursuing smaller grassroots acquisitions, adding about 460 net acres during the third quarter.
On December 10, Permian Resources Corporation (NYSE:PR) announced that it has agreed to sell its natural gas and oil gathering systems in Reeves County, Texas, to Kinetik Holdings for $180 million. This divestiture of a non-core asset, expected to close in the first quarter of 2025, aims to streamline operations and drive value for investors. With its strong operational improvements and strategic acquisitions, Permian Resources Corporation (NYSE:PR) presents a compelling case.
Aristotle Capital Boston, LLC stated the following regarding Permian Resources Corporation (NYSE:PR) in its “Small/Mid Cap Equity Strategy” third quarter 2024 investor letter:
“Permian Resources Corporation (NYSE:PR) is a Texas-based oil & gas exploration & production company with a large acreage position and deep inventory of high return potential drilling locations in the core of the Permian Basin. We expect management to continue to execute on its strategy of optimizing returns, diligently allocating capital to new opportunities, and returning excess capital to shareholders.”
Overall PR ranks 1st on our list of the high-growth energy stocks to invest in. While we acknowledge the potential of PR as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.