Crude oil prices were relatively calm last year. brent oil, World standard price, It fell by 3%, closing the year at around $77 per barrel. Meanwhile, West Texas Intermediate crude, the benchmark for US oil prices, ended the year where it began at around $71 per barrel. Record production in the United States and weakness in the Chinese economy Maintain market balanceAnd keep a lid on crude oil prices.
Most analysts expect more of the same in 2025, with the consensus that crude oil prices will remain at $70 this year. Because of that, Oil stocks Oil prices cannot be relied upon to raise their stock prices this year. They will need other stimuli.
There are two oil stocks that contain notable catalysts ConocoPhillips (NYSE: COP) and Chevron (NYSE: CFX). This is one of the many reasons they rose to the top of my buy list this year.
ConocoPhillips had a lot of success last year. It acquired rival Marathon Oil Company in a $22.5 billion all-stock deal (which included the assumption of $5.4 billion in debt) that closed in late November. This highly accretive deal has deepened its portfolio in the lower 48 states, adding more than 2 billion barrels of resources at an average cost of supply of less than $30 per barrel (WTI).
The company initially expected to capture in excess of $500 million in cost and capital synergies within the first year of the transaction’s closing. It now expects this number to exceed $1 billion within the first 12 months. This will help boost free cash flow further.
ConocoPhillips plans to return a significant portion of its increased cash flow For shareholders. It has already boosted its earnings by 34%. The company intends to achieve growth in dividends to the largest 25% of companies in the world Standard & Poor’s 500 (SNPINDEX: ^GSPC) in the future.
At the same time, it increased its share repurchase rate from $5 billion annually to $7 billion. This puts it on track to retire all of the shares issued to acquire Marathon Oil within the next two or three years. ConocoPhillips’ rising cash flow and cash yields should help give it the fuel it needs to outperform its peers this year if oil prices continue to fluctuate. On the stretch In the range of $70 per barrel.
Chevron It is working to close its needle-moving deal. The oil giant agreed to the purchase Hess in an all-stock deal valued at $60 billion in October 2023. This deal will upgrade and diversify Chevron’s already world-class portfolio. It would boost and expand the company’s production and free cash flow growth outlook into the 2030s, helping it more than Double free cash flow by 2027 (assuming $70 oil).
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