Last week, we reported that the Organization of the Petroleum Exporting Countries had decided to cut oil production by 100,000 barrels per day to go back to the August quotas, as the increase was only for September. Now OPEC is starting to sing a far different tune, as both Brent and West Texas Intermediate crude are down close to 30% from intraday highs posted back in March. The cuts that may be coming will not be just 100,000 barrels per day.
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The energy team at J.P. Morgan has been watching the energy complex pricing closely. While both Brent and West Texas Intermediate were up over 3% on Friday, the analysts feel there is a solid chance that OPEC will step in big, and possibly make a loud statement for maintaining and protecting pricing. J.P. Morgan had this to say:

OPEC is likely to step in with additional cuts if oil downward momentum persists. Monday’s OPEC+ meeting reinforces our view that upcoming agreements will seek to align the market with underlying fundamentals and encourage future investment. Given heightened volatility and a further fall in oil prices since the cut was announced (Brent down 8% month to date as we write), we believe further intervention may be necessary and suggest a cut up to 1 million barrels-per-day may be needed to stem the downward momentum in prices and realign physical and paper markets which appear disconnected.

One million barrels per day is not inconsequential, and that could have a very positive effect for energy investors and energy pricing going forward. We screened our 24/7 Wall St. energy research database looking for energy stocks, both oil and natural gas related, that paid at least a 6% dividend, are rated Buy at top Wall Street firms and look like they have solid upside potential.

Six stocks hit our screens. While they all offer tantalizing value, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Cheniere Energy Partners

This is a solid idea for investors looking to grab shares of a company with a more extensive liquefied natural gas (LNG) presence. Cheniere Energy Partners L.P. (NYSE: CQP) owns and operates a natural gas liquefaction and export facility at the Sabine Pass LNG terminal located in Cameron Parish, Louisiana.

The company’s regasification facilities include five LNG storage tanks with an aggregate capacity of approximately 17 billion cubic feet equivalent; two marine berths that accommodate vessels with capacity of up to 266,000 cubic meters; and vaporizers with regasification capacity of approximately 4 billion cubic feet per day. It also owns a 94-mile pipeline that interconnects the Sabine Pass LNG terminal with various interstate pipelines. Cheniere Energy Partners GP serves as the general partner of the company.

Cheniere Energy Partners stock investors receive a 6.46% dividend. Evercore ISI’s $55 target price may be headed higher soon. The consensus target of analysts is $52.77, and shares closed on Friday at $57.28, which was up over 7% for the day on no news we could find.

This may be one of the best value propositions in the sector, as it uses a variable dividend strategy. Devon Energy Corp. (NYSE: DVN) is an independent energy company that primarily engages in the exploration, development and production of oil, natural gas and natural gas liquids (NGLs) in the United States and Canada. It operates approximately 19,000 wells.
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The company also offers midstream energy services, including gathering, transmission, processing, fractionation and marketing to producers of natural gas, NGLs, crude oil and condensate through its natural gas pipelines, plants and treatment facilities.

Production is weighted toward crude oil while growth opportunities are liquids focused, anchored by the Delaware Basin, SCOOP/STACK, Eagle Ford Shale, Canadian Oil Sands, and the Barnett. Devon also owns equity in the publicly traded midstream master limited partnership (MLP) EnLink.

Shareholders receive a 7.48% dividend. Truist Financial has a $115 target price on Devon Energy stock, well above the $79.25 consensus target. The shares closed on Friday at $68.51

Energy Transfer

This top MLP is a very safe way for investors looking for energy exposure and income. Energy Transfer L.P. (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all the major domestic production basins.

This publicly traded limited partnership has core operations that include complimentary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, NGLs and refined product transportation and terminaling assets; NGL fractionation; and various acquisition and marketing assets.

After the purchase of Enable Partners last December, Energy Transfer now owns and operates more than 114,000 miles of pipelines and related assets in all the major U.S. producing regions and markets across 41 states, further solidifying its leadership position in the midstream sector.

The completion of the transaction was immediately accretive to Energy Transfer and furthers Energy Transfer’s deleveraging efforts. It also adds significant fee-based cash flows from fixed-fee contracts. Additionally, the combined operations of the two companies are expected to generate annual run-rate cost and efficiency synergies of more than $100 million, excluding potential financial and commercial synergies.

Through its ownership of Energy Transfer Operating, formerly known as Energy Transfer Partners, the company also owns Lake Charles LNG, as well as the general partner interests, the incentive distribution rights and 28.5 million common units of Sunoco, and the general partner interests and 39.7 million common units of USA Compression Partners.

Investors receive a 7.86% distribution. The price target at Morgan Stanley is $15, while the consensus target is $15.75. Energy Transfer stock closed on Friday at $11.91.

Enterprise Products Partners

This is the largest publicly traded energy partnership and a leading North American provider of midstream energy services to producers and consumers. Enterprise Products Partners L.P. (NYSE: EPD) provides a wide variety of midstream energy services, including gathering, processing, transportation and storage of natural gas, NGL fractionation, import and export terminaling, and offshore production platform services.
One reason many analysts may have a liking for Enterprise Products Partners stock might be its distribution coverage ratio. This ratio is well above 1 times, making it relatively less risky among the MLPs.

Investors receive a 7.22% distribution. The $33 UBS price target compares with the $31.64 consensus target for the stock and Friday’s close at $26.70.
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ONEOK

The solid price of natural gas over the past year has helped to lift this top energy company. ONEOK Inc. (NYSE: OKE) primarily engages in natural gas transportation, storage and natural gas and NGLs gathering, processing and fractionation in the Bakken, Mid-Continent and Permian. The company recently closed the roll-up of its underlying MLP, ONEOK Partners.

The company has a strong presence in the Oklahoma SCOOP/STACK (NGL gathering/takeaway system, G&P), the Williston Basin (G&P, NGL takeaway) and the Permian Basin (NGL gathering, NGL takeaway, natural gas takeaway), which analysts feel provides high-return growth opportunities.

Many on Wall Street remain positive on the company’s primarily fee-based earnings, which account for 90% of total earnings.

ONEOK stock comes with a 6.28% dividend. Raymond James has set a $75 price target, and the consensus target is $69.29. The shares closed at $62.49 on Friday.

Pioneer Natural Resources

Many Wall Street analysts love this stock as a pure crude oil play and, the company also is looking to employ variable dividends. Pioneer Natural Resources Co. (NYSE: PXD) operates as an independent oil and gas exploration and production company in the United States.

The company explores for, develops and produces oil, NGLs and natural gas. It has operations in the Midland Basin in West Texas. As of December 31, 2021, the company had proved undeveloped reserves and proved developed non-producing reserves of 130 million barrels of oil, 92 million barrels of NGLs and 462 billion cubic feet of gas, and it owned interests in 11 gas processing plants.

Pioneer production services are supported by 100 well-servicing rigs, more than 100 cased-hole, open-hole and offshore wireline units, and a range of advanced coiled tubing units.

Pioneer 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. With a stellar balance sheet, the company is poised to remain a top player in the Permian, as it expects to deliver solid production growth in 2022 and beyond.

Investors receive an 8.49% dividend, which may vary from quarter to quarter. The Pioneer Natural Resources target price at Piper Sandler is $339 target price. That is well above the $286.90 consensus target and the most recent close at $239.62.

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While not all these stocks are pure oil plays, they will benefit from any increase in the cost of a barrel of oil. The LNG companies will play a big role this winter after Russia cut off natural gas supplies to Europe, and energy MLPs most certainly will benefit from higher prices, as they move both oil and gas around the energy complex and infrastructure.

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