While everybody who drives a vehicle to and from work or anywhere else is seeing the price of gasoline plummet, energy investors are taking it on the chin. The costs for exploration and production companies in the major shales continued to drop over the past year, and the margins will still be strained with lower oil prices. The energy team at J.P. Morgan have made the case the exploration and production stocks are fairly valued and will not change activity in a big way, unless oil falls to the $70 to $75 range.

In a new research report, the J.P. Morgan analysts highlight the firm’s favorite oil exploration and production stocks. We screened those companies for the top large- and mid-cap stocks to buy. All are rated Overweight at J.P. Morgan.

Anadarko Petroleum Corp. (NYSE: APC) is not only a top stock to buy at J.P. Morgan, but some think the company remains an acquisition target. Anadarko is one of the biggest independent oil and gas producers in the country, with exploration or production work in all major domestic drilling areas, as well as in South America, Africa, Asia and New Zealand. While the company is a leading player in areas known as “tight plays,” some think changing conditions would precipitate reduced drilling activity in United States tight oil plays as companies seek to cut high-grade drilling inventories and manage their balance sheets. Still, the future remains very bright for this very well-run company.

Anadarko investors are paid a 1.18% dividend. The J.P. Morgan price target for the stock is $114. The Thomson/First Call consensus estimate is higher at $120.96. Shares closed Wednesday at $89.97.

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EOG Resources Inc. (NYSE: EOG) is another top stock that looks like a potential takeover candidate. EOG is the top producer in the Eagle Ford Shale and it has solid positions in both the Bakken and Permian Basin, making it a perfect fit for an integrated looking to expand in those areas. The company recently reported that the cost of completing a well in the Leonard shale of the Permian’s Delaware Basin fell to $5 million this year, compared with $6.9 million in 2011. The huge drop in costs helps to mitigate the sharp drop in crude.

EOG Investors are paid a tiny 0.7% dividend. J.P. Morgan has a $109 price target set for EOG. The consensus target is much higher at $117.03. Shares closed Wednesday at $92.087.

Noble Energy Inc. (NYSE: NBL) should have almost 54% of its total 2014 production in the form of natural gas, and that certainly helps to hedge against falling oil prices, especially if we have another brutal winter. Noble is also one of the many American firms expected to benefit when Mexico opens the door for exploration and production from outside companies for the first time in 70 years.

Noble investors are paid a small 1.3% dividend. The J.P. Morgan price target is $76, and the consensus figure is at $82.12. Nobel closed trading Wednesday at $57.13.

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Pioneer Natural Resources Co. (NYSE: PXD) is a huge player in the Permian Basin and the Eagle Ford in Texas, and the company owns more than 20,000 locations in the world’s second largest oil reservoir in the Midland Basin. In addition, the company owns its own frac fleets, allowing Pioneer to be a low-cost, high-margin producer, which could prove to be huge with oil prices at $80 for a protracted period. Pioneer was also one of the firms named by the U.S. Commerce Department to produce and export condensate.

The J.P. Morgan price target is $248, and the consensus target is $237.58. Pioneer closed trading on Wednesday at $178.99.

Cimarex Energy Co. (NYSE: XEC) is an independent exploration and production company. The primary activities of the company are in the Mid-Continent and Permian Basin areas of the United States. The company is focused on increasing shareholder value through strategies linked to generating attractive economic returns on capital employed and profitable growth in per-share reserves, production and cash flow. It intends to profitably grow reserves and production through a balanced mix of exploration, exploitation and acquisitions. Cimarex has a diversified base of high-quality production and attractive drilling opportunities, and it should be closing on a huge oil and gas asset sale by the end of this month.

Cimarex investors are paid a small 0.6% dividend. The J.P. Morgan price objective is set at $156. The consensus price target is $161.76. Shares closed Wednesday at $107.44.

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All the J.P. Morgan price targets are below consensus, which shows that the firm is cautious. That said, all five stocks have very good prospects, and if the price of oil holds steady or moves higher, they should show solid results going forward.

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