Mid-cap oil stocks may be poised to provide the best returns on energy equities in 2017. The Energy Information Administration (EIA) predicts that oil will average $53 per barrel throughout the year. The rise in oil at the end of 2016 and into 2017 has boosted the bottom lines of some energy companies, and their stocks are beginning to rise. In addition, forecasters are predicting an end to the major oil oversupply and this could give more relief to oil companies. (See also: OPEC Expects Stable Oil Prices.)
Mid-cap oil stocks could help to take advantage of oil industry trends specifically because they tend to be more volatile than larger companies’ stocks. You can buy on the dips and get a low average per-share price. We have highlighted three of the top energy mid-caps in oil exploration and production that could be poised for gains.
All figures are as of November 3, 2017.
Viper Energy Partners LP (VNOM)
This company has active exploration and production operations throughout North America. Its primary assets are in the Permian Basin in West Texas. The company has been benefiting from advanced technologies and higher oil prices supporting exploration and production in the Permian Basin.
Over the last year the stock has gained 46.51%. Its third quarter earnings beat analysts’ estimates for both revenue and earnings per share. Revenue of $42.5 million for the third quarter was up 112.5% from the comparable quarter and beat estimates by $1.32 million. Earnings per share of $0.24 beat estimates by $0.01.
The company has a forward dividend yield of 6.84%. It is currently trading at $19.72 with a one-year price target of $22.58.
Enerplus (ERF)
Enerplus is involved in oil and natural gas exploration and production in Canada and the United States. Its primary activities are in the Bakken/Three Forks region in North Dakota, waterflood properties in Western Canada and the Marcellus shale gas region in the U.S.
Over the last year the stock has gained 40.17%. Its second quarter earnings showed 35% production growth in North Dakota quarter-over-quarter and a 19% reduction in operating expenses year-over-year. Trailing twelve month revenue is $724 million. Trailing twelve month earnings per share are $3.25.
The company has a forward dividend yield of 1%. It is currently trading at $9.50 with a one-year price target of $11.02.
Panhandle Oil and Gas (PHX)
The company has activities primarily in the U.S. Its exploration and drilling is focused in the U.S. states of Arkansas, Oklahoma and Texas.
Over the last year the stock has gained 36.68%. Its third quarter earnings were $12.4 million, increasing 27% from the comparable quarter, and its earnings per share were $0.07. Over the past year the firm has generated revenue of $43.6 million resulting in earnings per share of $0.19.
The company has a forward dividend yield of 0.66%. It is currently trading at $24.10 with a one-year price target of $30.00.
The Bottom Line
Energy stocks will continue to receive a lot of attention if oil maintains its upward price march. However, some of the big companies may already seem out of reach. They have made their moves and left some investors behind. (See also: Investing in Oil Stocks vs. Oil Companies: What’s the Difference?)
Mid-cap energy stocks offer an opportunity for investors to get into the energy sector, because many of them are just now establishing uptrends or breaking out. Mid-cap energy is not a guaranteed sector, however, and due diligence is always required.
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