After a huge run off the lows, oil has taken a hit, and for the first time in almost six months investors have an opportunity to grab some of the top companies in the exploration and production arena at lower prices. One area that almost everybody on Wall Street remains positive on is the Permian Basin in west Texas. This is the shale area that looks to be a major producing region for years to come.

While there are a multitude of arguments on supply and demand, one thing is for sure: the OPEC producing countries need oil to stay at or near current levels, and with a meeting coming up later this month to discuss maintaining the production cuts, now may be the time to buy shares.

A new SunTrust research report remains very positive on the Permian Basin, and the companies there, and it noted this:

Despite the catechismic issue in the play two quarters ago by one of the bellwethers, the Permian continues to be our top choice along with most of the Street for best well returns. What has changed in the play is that most of our companies are no longer doing larger mergers and acquisition deals or step out wells, but most E&Ps plan to focus on developmental activity. Equally as important is that infrastructure continues to be a notable issue for numerous plays given the amount of water, gas and oil pipelines that still need to be built.

Three companies are the top plays in the Permian at SunTrust, and all are rated Buy.

Diamondback Energy

This top Permian Basin play remains a favorite across Wall Street. Diamondback Energy Inc. (NASDAQ: FANG) is an independent oil and natural gas company headquartered in Midland, Texas, and focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin. Diamondback’s activities are primarily focused on the horizontal exploitation of multiple intervals within the Wolfcamp, Spraberry, Clearfork and Cline formations.

Wall Street analysts have noted in the past the company’s top-tier asset base, solid accretive additions and financial discipline, which they think allows for not only continued solid cash flow, but could put the company in play as a takeover target. Diamondback continues to drill some of the most economical wells in the United States as efficiencies improve, costs decrease and activity remains in the better regions.

Diamondback recently posted solid third-quarter results with adjusted EBITDA 8% ahead of expectations. 2017 output guidance was raised by 3% at the midpoint. The company is adding a tenth rig to its fleet in coming weeks and is currently running four frac spreads. During 2017, it has continued to differentiate on superior execution, and the analysts expect this positive trend to continue.

The SunTrust price target on the stock is $130. The consensus target is $125.53, and shares closed Thursday at $106.53.

Energen

This lesser known company is a solid play for those looking for Permian Basin exposure at a reasonable price. Energen Corp. (NYSE: EGN) is a pure-play Permian operator with 147,000 net acres in the basin. The majority of its development activity targets the Midland and Delaware Basin, where the company holds 87,000 and 60,000 net acres respectively. Energen also holds an 84,000 net acre position in the Platform area where minimal capital investment is expected.

Top analyst feel that Energen is a rare breed, with strong debt-adjusted growth, inventory depth from a quality and blocky Permian footprint, balance sheet and value. Recent Generation 3 completions show promise for a step-change in well productivity, and none of that appears baked into guidance or street estimates.

The company reported third-quarter earnings that beat most Wall Street estimates on higher production and lower lease operating expenses. Generation 3 fracs continue to outperform the type curve, with batch completions exceeding production from standalone wells. Energen’s 2017 guidance upgrade may be setting the stage for growing momentum heading into 2018.

SunTrust has a $70 price target, and the consensus target is $65.07. Shares closed Thursday at $53.79.

Ring Energy

SunTrust analysts also like this small capitalization play. Ring Energy Inc. (NYSE: REI) is an exploration and production company engaged in oil and natural gas acquisition, exploration, development and production activities. Its exploration and production interests are focused on Texas and Kansas.

The company’s operations are all oil and gas exploration and production related activities in the United States. Its primary drilling operations target the Central Basin Platform in Andrews County and Gaines County, Texas, and the Delaware Basin in Reeves County and Culberson County, Texas.

Ring Energy primarily sells its oil and natural gas production to end users, marketers and other purchasers. The company’s long-term business strategy is focused on the exploration, development and acquisition of oil and natural gas properties in the Permian and Mid-Continent regions of the United States.

Ring Energy recently reported third-quarter net income of $3.1 million, after reporting a loss in the same period a year earlier. On a per-share basis, the results beat Wall Street expectations. Revenue of $16.6 million in the period also beat consensus forecasts.

The $19 SunTrust price target compares with the $18.27 consensus figure. The stock closed Thursday at $13.46.

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Three top picks for more aggressive accounts looking to add energy stocks with big Permian Basin exposure. While oil is likely to remain volatile, this may be a good time to add some shares to portfolios.

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