The initial pandemic period, when there were no vaccines, saw an environment of heightened uncertainties. The price of crude oil plunged to a negative $36.98 per barrel on Apr 20, 2020. However, with the rapid developments of vaccines, which led to the gradual opening of the economies, the pricing scenario of West Texas Intermediate crude improved drastically over time to reach $123.64 per barrel on Mar 8, 2022. Oil price data are per the U.S. Energy Information Administration.
Currently, the WTI oil price is approaching $90 per barrel. Prediction for robust global demand growth by The Organization of the Petroleum Exporting Countries amid tight supplies is primarily aiding the crude price rally.
Thus, it’s pretty apparent that the business model of most energy players, by nature, is exposed to extreme volatility in commodity prices. Energy companies with robust balance sheets will be better positioned to navigate these uncertainties.
Hence, it would be wise for investors to keep an eye on promising stocks like Exxon Mobil Corporation XOM, Chevron Corporation CVX and Pioneer Natural Resources Company PXD. All the stocks carry a Zacks Rank #3 (Hold) and have significantly lower debt exposure than the composite stocks belonging to the respective industries.
Chevron and ExxonMobil have strong balance sheets, so they can withstand adverse business environments. While XOM has a total debt-to-capitalization of 16.7%, the metric for CVX is 11.9%. Compared to the 24.8% debt-to-capitalization of composite stocks belonging to the Zacks Oil & Gas Integrated International industry, ExxonMobil and Chevron are better off.
In fact, both the leading integrated energy companies have been consistently witnessing lower debt-to-capitalization ratios than the industry over the past three years.
Pioneer Natural is a leading upstream energy firm with a strong presence in the low-cost, oil-rich Midland basin — a sub-basin of the broader Permian. Pioneer Natural has a total debt-to-capitalization of 19.5%, significantly lower than the Zacks Oil & Gas US Exploration and Production industry’s 26.4%.
Chevron Corporation (CVX): Free Stock Analysis Report
Exxon Mobil Corporation (XOM): Free Stock Analysis Report
Pioneer Natural Resources Company (PXD): Free Stock Analysis Report
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