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3 days ago
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PROP vs. CIVI: Which DJ Basin Player Has the Upper Hand?
Prairie Operating Co. PROP and Civitas Resources CIVI are two key independent energy firms with operations deeply rooted in Colorado's Denver-Julesburg (DJ) Basin. PROP, a newer entrant with a bold consolidation strategy, has expanded rapidly through high-profile acquisitions. In contrast, CIVI is a more established player, sharpening its focus on cost discipline while also expanding into the high-return Permian shared presence in the DJ Basin makes them natural competitors. With oil prices hovering in uncertain territory and investor appetite leaning toward disciplined capital deployment and free cash flow visibility, it's crucial to evaluate which name better balances risk, growth and return dive deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now. Strategic Growth via Acquisitions: PROP has undergone a dramatic transformation since 2023, executing over $800 million in deals that tripled its scale. Acquisitions of Genesis, Nickel Road, and Bayswater have added 54,000 net acres and more than 28 thousand barrels of oil-equivalent per day (BOE/d) in output. With an estimated 10-year inventory runway and over 580 gross locations, Prairie Operating Co.'s strategy positions it for long-term growth in a basin where large-cap competitors are pulling back. Its rural Colorado location also reduces permitting risk and accelerates development Firepower and Production Growth: Prairie Operating Co.'s financial metrics are quickly scaling after the $602 million acquisition of Bayswater assets. Adjusted EBITDA for 2025 is forecasted between $350 million and $370 million, a massive leap from the $140 million previously projected. Net income guidance stands between $69 million and $102 million, while the company maintains a low leverage ratio of 1.0x. With $475 million in liquidity, PROP has the balance sheet strength to fund growth without diluting shareholders. On the production side, Prairie Operating Co. expects to average 29,000 to 31,000 BOE/d in 2025, representing a more than 300% increase year over Hedging Locks in Upside: One of the more underappreciated aspects of Prairie Operating Co.'s story is its proactive hedging strategy. It has locked in about 85% of its remaining 2025 daily production at $68.27/bbl WTI and $4.28/MMBtu Henry Hub. For 2026 through Q1 2028, the hedges average $64.29/bbl and $4.09/MMBtu. This not only secures visibility on future cash flows but also shields the company from downside risk in a volatile energy market. In fact, the hedge book is giving it about $70 million in built-in value at today's prices. Prairie Operating Co.'s program also stands out for its scope and timing, implemented just before a pullback in commodity prices. Cost Optimization and Cash Flow Strength: Civitas Resources focuses heavily on driving efficiencies. A company-wide cost optimization plan is targeting $100 million in additional annual free cash flow, with 40% of those savings expected to be hit by the second half of 2025. Deals like a new oil gathering agreement are helping cut costs and boost margins. In 2024, CIVI generated $1.3 billion in free cash flow and expects another $1.1 billion in Permian Expansion: One favorable investment case for Civitas Resources centers on its sharpened focus and early success in the Permian Basin, particularly in the Delaware sub-region. In Q1 2025, Civitas strategically shifted 40% of its capital activity to the Delaware Basin, which has consistently offered the highest returns within its portfolio. This move is already yielding tangible operational gains. According to management, the Delaware team is drilling approximately 10% faster than expected, reflecting meaningful efficiency improvements. Additionally, longer lateral developments enabled by prior ground acquisitions are enhancing capital efficiency Balance Sheet and Hedging Strategy: Civitas remains laser-focused on achieving its $4.5 billion net debt target by year-end 2025. The company has nearly $200 million in hedge value secured, with about 50% of crude volumes hedged, insulating free cash flow against further oil price volatility. Management noted they have structured their base dividend and spending to remain cash flow neutral even if WTI dips to $40. Both stocks have been hammered over the past year. PROP is down 71%, while CIVI has fallen 61%. The declines reflect weak oil prices, EPS misses, and macro concerns. However, Prairie Operating Co.'s sharper decline may also reflect uncertainty around its recent acquisitions. Image Source: Zacks Investment Research PROP trades at just 0.27X forward sales, a significant discount to Civitas Resources' 0.56X. Image Source: Zacks Investment Research According to Zacks' estimates, PROP's earnings are set to surge 382.9% in 2025 and another 13.5% in 2026. Image Source: Zacks Investment Research Civitas Resources, in contrast, is expected to see EPS fall by 29.3% in 2025 and another 9.5% in 2026. Image Source: Zacks Investment Research These trends underscore Prairie Operating Co.'s near-term growth trajectory versus CIVI's short-term reset. Both PROP and CIVI currently carry a Zacks Rank #3 (Hold), reflecting mixed near-term prospects. CIVI offers strong free cash flow, disciplined cost control, and targeted Permian focus. Prairie Operating Co., meanwhile, brings exciting growth potential, low valuation and accelerating volumes. While both stocks have merits, PROP appears slightly better positioned at this moment given its explosive earnings growth outlook and improving cash flow can see the complete list of today's Zacks #1 Rank stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Civitas Resources, Inc. (CIVI) : Free Stock Analysis Report Prairie Operating Co. (PROP) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
23-05-2025
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Chevron vs. Petrobras: Is Either Oil Giant Worth Holding Onto Now?
Chevron Corporation CVX and Petróleo Brasileiro S.A., better known as Petrobras PBR, are two heavyweights in the global Oil/Energy sector. Both operate across exploration, production and refining, and both offer substantial dividend payouts. While Chevron dominates U.S. upstream operations and maintains a steady global footprint, Petrobras is Brazil's energy giant with unmatched access to pre-salt offshore reserves and aggressive state-supported investment strategies. Their scale, capital allocation approaches and dividend yields have made them popular among income-focused macro challenges, commodity price volatility and company-specific risks are narrowing the gap between these two. Investors looking for stability and growth in energy stocks must now consider whether either of these names is a solid long-term play, or if both are better left on the sidelines. Let's dive deep and closely compare the fundamentals of the two stocks to determine why it's best to get rid of both stocks now. Chevron has shown resilience through volatile markets, but cracks are forming. In the first quarter of 2025, cash flow from operations was $5.2 billion, down 23.5% year over year. The culprit was lower oil price realizations and tax payments associated with divestment in Canada. U.S. liquids averaged $55.26 per barrel during the first quarter, down nearly 4% from the year-earlier level. Even with natural gas strength, total revenues of $47.6 billion missed the Zacks Consensus Estimate, and earnings slipped to $3.5 billion from $5.5 billion.A core issue lies in Chevron's shrinking flexibility. The company issued $5.5 billion in new debt to fund dividends and buybacks, pushing its debt-to-total capitalization to 16.6. Despite a $75 billion repurchase authorization, quarterly buybacks have been cut to $2.5–$3 billion, down from $4 billion in previous quarters. If oil prices continue to slide, deeper cuts to shareholder returns may be Chevron faces questions around the future of Permian production. The proposed Hess acquisition is expected to bring valuable diversification through the Bakken, potentially easing some of those concerns. However, with investor sentiment around shale turning more cautious, Chevron's ability to generate meaningful growth from these assets will be a key area to monitor. Meanwhile, global macro headwinds, such as a slowing U.S. economy and geopolitical instability, further cloud demand and price visibility. Add in margin pressure in its CPChem segment and inflation-sensitive Power Solutions venture and the outlook becomes doesn't help the case either. CVX trades at a forward P/E of 17.55, well above the sector median. As earnings estimates continue to decline, the risk of further multiple compression is real. Image Source: Zacks Investment Research Image Source: Zacks Investment Research Petrobras has its own list of concerns. Despite reporting consolidated net income of $6 billion in the first quarter, up 25% year over year, adjusted EBITDA fell to $10.4 billion from $12.1 billion a year ago. Revenues came in at $21.1 billion, falling 11.3% from last year and missing estimates. This disconnect - higher income but lower cash flow - is largely due to forex gains and not operational dividend story, once Petrobras' biggest attraction, is losing its shine. Free cash flow declined 30.7% year over year in the first quarter, and with Brent crude between $60 and $65 per barrel, Petrobras may struggle to sustain its 9% annualized dividend yield. Capital spending also surged to $4.1 billion in the January-March period, with more than 85% going into high-cost E&P continues to face significant political risk, which remains a key vulnerability. State influence raises persistent concerns around governance and inefficient capital deployment. The company's $111 billion strategic plan for 2025–2029 places greater focus on politically favored segments like refining and fertilizers, rather than its core upstream oil assets. This shift echoes earlier periods marked by heavy spending and weak returns. Net debt is rising again - now at $56 billion with a net debt/EBITDA ratio of 1.45 versus 0.86 a year earlier. Add in currency risk and regulatory headwinds, and the picture dims metrics show why PBR trades at a discount: forward P/E is just 4.54. While this may look cheap, the discount is largely due to persistent political uncertainty and structural inefficiencies. EPS estimates have dropped sharply, with this year's earnings now expected at $2.75, down from $3.01 a month ago. Image Source: Zacks Investment Research Both stocks have significantly underperformed in 2025. Chevron is down roughly 7% year to date, as weakening oil prices and declining investor confidence in U.S. shale projects drag on sentiment. Petrobras has fared worse, losing more than 8% during the same period, largely due to fears of state intervention and decelerating free cash flow. Image Source: Zacks Investment Research Both Chevron and Petrobras offer high dividends and global scale, but that's where the upside ends for now. Chevron faces declining cash flows, debt growth and peak shale concerns. Petrobras, despite bold growth plans, is hampered by political interference, rising debt and falling free cash flow. With earnings expected to decline for each, CVX and PBR currently carry a Zacks Rank #5 (Strong Sell) and are likely to underperform in the near term. Investors may want to stay cautious until fundamentals improve. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Chevron Corporation (CVX) : Free Stock Analysis Report Petroleo Brasileiro S.A.- Petrobras (PBR) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
21-05-2025
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Big Oil Shrugs at $60 Crude—for Now
The biggest international oil firms used the first-quarter earnings calls to reassure investors that Big Oil is in a 'business as usual' mode at oil prices at $60 per barrel. As ExxonMobil, Chevron, Shell, BP, and TotalEnergies reported their Q1 earnings and provided guidance for the second quarter and the rest of the year, oil prices were ending one of the worst months in years, in which oil sank to its lowest level since 2021. The market rout began on April 2, just after the first quarter ended, so the world's top international oil companies reported a fairly good set of Q1 results, with the exception of BP. But earnings calls analysts were much more interested to learn what happens next than what happened with profits and cash flows in the first quarter. Because the first quarter may have been the last 'business as usual' quarter for a long time. With oil in the low to mid $60 per barrel, the second quarter will see much lower cash flows from operations and earnings compared to executives expressed confidence that their firms can and will withstand the new market downturn and continue to reward shareholders with dividends. Exxon, which topped analyst estimates thanks to higher Permian and Guyana production, expressed confidence that the structural and cost-saving measures of the past few years have prepared it to weather the uncertain market environment. 'In this uncertain market, our shareholders can be confident in knowing that we're built for this,' said Darren Woods, chairman and chief executive officer.'The work we've done to transform our company over the past eight years positions us to excel in any environment.' Woods told analysts, 'In this environment, it's more important than ever to focus on what we can control, in this company's track record of delivery. The work we've done over the past eight years should make one thing clear: we're ready for this.' The other U.S. supermajor, Chevron, revised down its second-quarter buybacks to a range of between $2 billion and $3.5 billion in share repurchases. The company, however, remains positive about the future cash flows as developments in the Gulf of Mexico and Kazakhstan are set to boost growth. Chevron expects $9 billion in incremental free cash flow at $60 oil prices. 'We've been through these cycles before. We know what to do. We know how to manage through it, and we know that opportunity can present itself,' CEO Mike Wirth said. In Europe, Shell launched another $3.5-billion buyback, keeping the pace of its share repurchases, after posting consensus-beating earnings for the first quarter. The new share buyback program for the next three months will mark the 14th consecutive quarter of at least $3 billion in buybacks at the UK-based supermajor. 'We've spent a significant amount of time positioning this company over the last few years to make sure that we are able to manage not just run the company on fundamentals, but to ensure that we position it to be able to deliver through uncertainty,' Shell's chief financial officer Sinead Gorman said. 'We don't believe that at this moment in time, we need to step back within the capital range that we've got,' Gorman added. The flexibility to reduce capex is there, but 'that's not the position we're in at the moment,' the executive noted. Shell will continue buybacks at $50 oil and will be able to cover the dividends even at $40 oil price for a prolonged period of time, Gorman told analysts. BP, however, reduced by $1 billion its quarterly share buyback program after reporting weaker-than-expected earnings, significantly lower cash flow, and rising net debt for the first quarter. France's TotalEnergies remains confident it can sustain $2-billion buybacks in the second quarter despite lower oil Big Oil only cut 2% of total capex guidance during the Q1 earnings season, HSBC analyst Kim Fustier told the Financial Times, noting that none of the companies is rushing to drastic decisions that could be irreversible. 'They're in a bit of a wait-and-see mode,' Fustier told FT. HSBC lowered its earnings per share forecasts for Big Oil going forward, including slashing EPS projections for BP – seen as the most vulnerable – by 35%. Morgan Stanley, which has slashed its oil price forecasts to $62.50 amid expectations of a larger market surplus later this year, expects buybacks at Big Oil to be reduced by between 10% and 50%, with net debt at the international majors rising. Earnings at the biggest international oil companies are set to slump later this year and in 2026, threatening the pace of buybacks, as a substantial oil market surplus would weigh on prices, according to Morgan Stanley. Most analysts concur that Big Oil would not need to make drastic changes at $65 a barrel oil as the firms would be able to cover shareholder payouts at this price level. However, should prices sink to $60 and below for a longer period of time, sacrifices will have to be made, including capex at the low end of the range and buybacks trimmed or halted. By Tsvetana Paraskova for More Top Reads From this article on Sign in to access your portfolio
Yahoo
20-05-2025
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7 Energy Winners in a Market Going Nowhere
Oil prices are stuck in a rut, with Brent hovering near $65 and WTI not far behind. The White House has dialed tariffs back—for now—but Washington's 150-country trade warning last week has traders and executives bracing for more volatility. But still, a handful of oil and gas stocks are proving they can still deliver, regardless of the current macro whiplash. While the S&P Energy sector remains down slightly for the year, some names are either outperforming or building strong forward momentum. Here's our latest Oil Stock Report Card, highlighting companies that continue to defend their cash flows, invest smartly, and keep shareholders happy with dividends and buybacks: ExxonMobil (NYSE: XOM) Exxon remains the benchmark. In Q1, the company averaged 4.6 million barrels of oil equivalent per day, beat EPS expectations at $1.76, and returned $9.1 billion to shareholders. Capital spending remains locked in at $28 to $33 billion annually through 2030. Exxon projects its breakeven Brent price to drop to $30 by the decade's end. That's a fortress balance sheet and a low-cost barrel in one package. Chevron (NYSE: CVX) Chevron is pushing forward, too. It recently received a Buy upgrade from Argus with a $169 price target, citing undervaluation and long-term free cash flow growth. Q1 EPS came in at $2.18, topping forecasts. Shareholder returns were strong—$6.9 billion in the quarter—and the Hess acquisition is set to close soon. Chevron's break-even cost, around $30 per barrel, remains one of the best in Big Oil. TotalEnergies (NYSE: TTE) France's oil giant is pivoting hard into LNG, renewables, and hydrogen, while still pumping out steady returns from upstream. Q1 revenue dropped, but EPS came in at $1.83 and LNG operations posted solid cash flow. The company's break-even point post-dividend is under $50, and it raised its interim dividend by 7.6%.EQT Corp. (NYSE: EQT) EQT is a U.S. natural gas powerhouse. The company posted a 44% year-on-year increase in per-share earnings and is projected to grow earnings over 100% in 2025. With strong operational discipline and strategic hedging, EQT is the top gas play in a market short on good ones. Shell (NYSE: SHEL) Shell has quietly become a turnaround story. The stock has trailed the pack, but it's underpinned by global LNG strength and a cleaned-up balance sheet. If oil prices rise or Europe leans harder into LNG imports, Shell is well-positioned to benefit. Diamondback Energy (NASDAQ: FANG) Diamondback has built a reputation for operating discipline and capital efficiency. Focused on the Permian, it's maintaining profitability even at $60 oil. A 12% return so far in 2025 reflects confidence in the model. Vista Energy (NYSE: VIST) This Latin American player is small-cap but fast-moving. Despite volatility in Argentina, Vista's U.S. listing and tight operations in Argentina and Mexico have drawn investor interest. It's up 18% YTD and gaining ground as a stealth growth name. Analyst Outlook: Navigating a Complex Energy Landscape While these companies demonstrate resilience, the broader oil market faces significant headwinds. According to the International Energy Agency (IEA), global oil demand growth is projected to slow from 990,000 barrels per day in Q1 2025 to 650,000 barrels per day for the remainder of the year, influenced by economic challenges and record electric vehicle sales. Goldman Sachs forecasts a decline in global oil prices through the end of 2026, citing increased supply from OPEC+ and heightened recession risks stemming from a global trade war, particularly between the U.S. and China. The investment bank projects Brent crude will average $63 per barrel in 2025 and fall to $58 in 2026. On Monday, Goldman upgraded its global oil demand forecast, upping it by 600,000 bpd for this year, and by 400,000 bpd in 2026, though price prediction remained unchanged, and the move may have contributed some to easing the oil sell-off. Morgan Stanley anticipates that global oil inventories will start to increase in 2025, growing 0.5 million barrels per day on average in the second quarter before increasing by 0.7 million barrels per day in Q4. This accumulation is expected to exert downward pressure on prices, with Brent crude oil prices forecasted to fall from an average of $76 per barrel in Q1 2025 to an average of $61 per barrel by Q4 2025. In this environment, companies with low breakeven costs, diversified portfolios, and disciplined capital allocation are better positioned to weather the storm. Investors should remain vigilant, focusing on firms that demonstrate operational efficiency and adaptability in the face of market volatility. By Alex Kimani for More Top Reads From this article on
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16-05-2025
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US Oil Drillers Continue To Back Off As Prices Languish Below Breakevens
The total number of active drilling rigs for oil and gas in the United States slipped again this week, according to new data that Baker Hughes published on Friday, following a 6-rig decrease last week. The total rig count in the US fell by 6 to 578 rigs, according to Baker Hughes, down 25 from this same time last year. The number of oil rigs fell by 1 to 473 after falling by 5 during the previous week—and down by 24 compared to this time last year. The number of gas rigs also slipped by 1 this week, to 100 for a loss of 3 active gas rigs from this time last year. The miscellaneous rig count stayed the same at 3. The latest EIA data showed that weekly U.S. crude oil production rose, from 13.367 million bpd to 13.387 million bpd. The figure is 244,000 bpd down from the all-time high reached during the week of December 6, 2024. Primary Vision's Frac Spread Count, an estimate of the number of crews completing wells, fell again during the week of May 9, this time to 195, compared to 201 in the week prior. WTI is trading up on the day, but still below what the Dallas Fed Survey says is the breakeven for Permian players, with drilling activity in the basin falling by 3 this week to 282—a figure that is 30 fewer than this same time last year. The count in the Eagle Ford stayed the same again this week, at 46. Rigs in the Eagle Ford are 5 below where they were this time last year. At 12:29 p.m., ET, the WTI benchmark was trading up $0.93 per barrel (+1.51%) on the day at $62.55, and up $2 per barrel from last Friday's price. The Brent benchmark was trading up $0.90 (+1.39%) on the day at $65.43— up roughly $2 per barrel from last Friday. By Julianne Geiger for More Top Reads From this article on
