Domestic Oil Investors Back Permian Stocks as the Commodity Soars

Oil is already up 48% on the year.

Goldman Sachs recently updated their Brent crude forecast to $80 per barrel.

Bank of America strategist Francisco Blanch is calling for $100 oil.

In the US despite a general economic malaise fuel demand has recovered.  In the last month, supply reached almost 21 million barrels per day, which is around the pre-pandemic peak in 2019.

This rising demand is meeting a shrinking supply, crude inventories fell to their lowest levels since October 2018 in the US.

The commodity and companies in the sector could be one of the safest bets in our volatile markets.   

Top value plays for investors seeking low-risk options include; 

California Resources Corp. (NYSE:CRC) an independent oil and natural gas exploration & production company with operations located in California that is up over 82% on the year.

One of the biggest names in the industry, ConocoPhillips (NYSE: COP) explores for, produces, transports and markets crude oil, bitumen, natural gas, liquefied natural gas and natural gas liquids (NGLs) worldwide.  The company made the headlines this week after agreeing to pay $9.5 billion to Royal Dutch Shell for their Permian assets.

The Permian basin is one of the more well-known formations in domestic oil, which will become more and more desirable for companies and their investors as the global oil price and availability becomes more exposed to geo-political factors.

The Permian basin stretches 250 miles wide and 300 miles long spanning two states (New Mexico and Texas).  The bulk of its shale riches is in two sub-basins: the Delaware on the west and the Midland to the east. 

Some well known players in the Permian basin include Occidental Petroleum (NYSE:OXY), Chevron (NYSE:CVX),Apache (NASDAQ:APA), ExxonMobil (NYSE:XOM) and Concho Resources (NYSE:CXO).

One lesser known company that has just struck oil in the basin is Allied Energy Corp (OTCMKTS:AGYP) whose Green Lease is located on the prolific Midland sub-basin.  

This is the same sub-basin Pioneer Natural Resources Company (NYSE:PXD), Diamondback Energy, Inc. (Nasdaq:FANG), and SM Energy Company (NYSE:SM) have created wealth from.

In fact, investors in SM Energy just announced a semi-annual dividend that closes October 21st and pays investors on November 5th.

A few other options for investors looking at opportunities in the Permian basin include Laredo Petroleum (NYSE: LPI) and Altus Midstream Company (ALTM).

As investors seek domestic oil companies, the Permian basin may be a gold mine (or oil well if you will).