The latest forecasts from the International Energy Agency (IEA) suggest that demand for oil, gas and coal will peak before 2030.
“This is the first time this decade that demand for any fuel has peaked — earlier than many expected,” wrote IEA Director General Fatih Birol in an op-ed published in the Financial Times.
That forecast does not bode well for the Organization of the Petroleum Exporting Countries (OPEC).
“Dismissing fossil fuels or suggesting that they are at the beginning of their end is an extremely dangerous and impractical narrative,” OPEC said in a statement.
“In the past decades, there have often been calls for high supply and in recent times, high demand, but clearly both have not been found. The difference today, and what makes such forecasts so dangerous, is that they are often called to stop investing. In new oil and gas projects .”
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OPEC Secretary General Haitham Al-Ghais said the IEA’s claim could have significant global implications.
“Such narratives will only set the global energy system up for spectacular failure. They will lead to energy chaos on an unprecedented scale, with dire consequences for economies and billions of people around the world,” Al-Ghais said.
OPEC has argued that the IEA’s rationale for fossil fuels is “ideologically driven” rather than fact-based. He also noted that fossil fuels still account for more than 80% of the world’s energy mix and provide “critical” energy security for the world.
OPEC’s statement comes in the wake of recent increases in oil prices. If you share this view of the sustainable value of fossil fuels, you may want to pay more attention to oil reserves. Here’s a look at three that Wall Street finds particularly attractive.
ExxonMobil Corporation (NYSE:XOM)
Commanding a market capitalization of over $450 billion, ExxonMobil is one of the largest players in the global oil and gas industry.
In the year Stocks have seen big rallies in 2021 and 2022. And the latest spike in oil prices seems to be giving the stock even more value: Exxon shares have risen 8 percent in the past month.
The business will continue to generate profits and cash flow.
According to its latest earnings report, Exxon posted a profit of $7.9 billion in the second quarter. It generated $9.4 billion in cash flow from operations and $5 billion in free cash flow.
The company is also returning cash to investors. In the second quarter, Exxon paid out $3.7 billion in dividends and spent $4.3 billion in stock buybacks.
At the current share price, the stock yields 3.1 percent.
Morgan Stanley analyst Devin McDermott is overweight on Exxon and has a price target of $124, indicating a 6% upside.
Devon Energy Corporation (NYSE:DVN)
Devon Energy is an independent oil and gas exploration and production company with onshore operations in the US.
In the second quarter, the company’s oil production reached a record high of 323,000 barrels per day.
The company’s cash flow for the quarter was $1.4 billion. Free cash flow was $326 million.
“Our disciplined reinvestment rate enabled us to generate free cash flow for the 12th consecutive quarter, and we returned $690 million of capital to shareholders through a combination of dividends and stock repurchases,” said Rick Muncrief, Divon’s CEO, in a statement.
The company’s most recent quarterly earnings — payable Sept. 29 — were 49 cents a share. Note that since Devon pays a fixed-plus-variable dividend, the amount may change from one quarter to the next.
Stifel analyst Derek Whitfield has a buy rating on Devon and a price target of $79 — 49% above where the stock currently sits.
Occidental Petroleum Corporation (NYSE:OXY)
Occidental Petroleum shares more than double in 2022. The company has benefited from the rise in oil prices. At the same time, Warren Buffett’s Berkshire Hathaway Inc. gained investor attention last year after announcing a large stake.
Buffett bought more Occidental shares in 2023, and Berkshire owned 224.1 million shares of the company at the end of June.
In the second quarter, Occidental produced 1.22 million barrels of oil per day, which was more than half of the guidance range.
Buffett is not alone in seeing potential in the oil giant. Truist Securities analyst Neil Dingman has a buy rating on Occidental and a price target of $80. The price target suggests a 21% upside as shares currently trade at $66.26.
Note that even large oil companies can experience significant changes in stock prices due to commodity price volatility. If you appreciate the generous shareholder returns offered by the oil sector but are not a fan of such volatility, it may be worth exploring safe income plays outside of the stock market. Investing in rental properties for as little as $100 When you stay completely hands.
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This column ‘Disastrous consequences’ for billions: OPEC blasts IEA fossil fuel demand forecast, warns of ‘energy chaos’ at unprecedented levels – 3 top oil stocks from Wall Street It appeared at first Benzinga.com
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