Oil prices are increasing again, thanks to the weakness in dollar. Also, China’s central bank said that it would employ various monetary policy tools to bolster the property market and wider economy. The development on this front is, thus, backing the commodity price. This, in turn, will probably increase drilling activities in the prolific Bakken shale play. Companies that are well-poised to gain from the above-mentioned scenario are Hess Corporation HES, Marathon Oil Corporation MRO and ConocoPhillips COP.
Oil Price to Remain Handsome
The price of West Texas Intermediate (WTI) crude is trading at more than the $75 per barrel mark, representing an extremely favorable price for conducting exploration and production activities. In its latest short-term energy outlook, the U.S. Energy Information Administration (“EIA”) is projecting the average spot price of WTI for 2023 at a handsome $77.79 per barrel.
Rising global energy demand amid Saudi Arabia’s extended crude production cut, which is voluntary, is aiding the recent spike in oil prices and will likely continue to back the commodity price.
Modest Rise in Bakken Shale Oil Production
In September, total oil production from shale resources in the United States will likely decrease by 20,000 barrels per day to 9,415 thousand barrels per day (MBbl/D), per the EIA. The shale resources comprise Anadarko, Appalachia, Bakken, Eagle Ford, Haynesville, Niobrara and Permian.
Of all resources, the prolific Bakken shale play and Niobrara will probably witness increased daily oil production next month, per the EIA’s drilling productivity report. In Bakken, the EIA projects oil production to rise 4,000 barrels per day to 1,210 MBbls/D in September.
Bakken Explorers in the Spotlight
It is clear that a favorable crude pricing scenario is backing modestly higher production volumes in Bakken. Improving Bakken production amid healthy oil prices has raised the incentive to keep an eye on stocks of companies operating in the prolific basin. We have zeroed in on three stocks that are well-poised to gain. All three companies currently carry a Zacks Rank #3 (Hold).
3 Stocks to Gain
In the Bakken shale play, Hess has an industry-leading acreage position. With the employment of Lean manufacturing techniques, the company has reduced its well operating costs significantly, while making them considerably more productive. While operating in the Bakken shale play, HES expects to maximize cashflows.
Marathon Oil has a clear focus on operating in the prolific oil-rich shale plays in the United States, where the cost of operations is significantly low. Bakken is one of the key plays, wherein Marathon Oil has roughly 240,000 net acres. In Bakken, MRO plans to bring 80-85 wells to sales in 2023.
ConocoPhillips’ major business unit is Lower 48, representing the company’s operations in key shale plays in the United States. Those low GHG-intensity assets, where operating costs are low, have huge upside potential. Bakken is among the assets in Lower 48, where ConocoPhillips currently has prime focus.
ConocoPhillips (COP): Free Stock Analysis Report
Marathon Oil Corporation (MRO): Free Stock Analysis Report
Hess Corporation (HES): Free Stock Analysis Report
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