{"id":15883,"date":"2019-04-02T10:22:12","date_gmt":"2019-04-02T14:22:12","guid":{"rendered":"https:\/\/capital10x.com\/old\/?p=15883"},"modified":"2019-04-02T11:31:12","modified_gmt":"2019-04-02T15:31:12","slug":"energy-stocks-bteto-bry-swn","status":"publish","type":"post","link":"https:\/\/capital10x.com\/old\/energy-stocks-bteto-bry-swn\/","title":{"rendered":"Take Advantage of Higher Energy Prices With These 3 Stocks"},"content":{"rendered":"<p>Oil prices in the U.S. have <a href=\"https:\/\/www.cnbc.com\/2019\/03\/29\/oil-market-opec-supply-cuts-us-sanctions-in-focus.html\">shot up<\/a> 32% in the first quarter, which is the strongest rise seen in the first quarter of the calendar year for the past decade. The rise in oil prices has been aided by the proactive <a href=\"https:\/\/capital10x.com\/old\/can-oil-prices-rise-higher-2019\/\">supply cuts<\/a> being undertaken by OPEC and its allies.<\/p>\n<p>Now, it is likely that the oil price rally will continue as the ongoing supply cuts will keep a lid on the oversupply. In such a scenario, it makes sense to take a closer look at the likes of <strong>Baytex Energy<\/strong> [stock_market_widget type=\"inline\" template=\"generic\" color=\"default\" assets=\"BTE.TO\" markup=\"(TSX: {symbol} {currency_symbol}{price} ({change_pct}))\" api=\"yf\"], <strong>Berry Petroleum<\/strong> [stock_market_widget type=\"inline\" template=\"generic\" color=\"default\" assets=\"BRY\" markup=\"(NASDAQ: {symbol} {currency_symbol}{price} ({change_pct}))\" api=\"yf\"], and <strong>Southwestern Energy<\/strong> [stock_market_widget type=\"inline\" template=\"generic\" color=\"default\" assets=\"SWN\" markup=\"(NYSE: {symbol} {currency_symbol}{price} ({change_pct}))\" api=\"yf\"] as all three companies are well-placed to take advantage of improved pricing. Let\u2019s see why.<\/p>\n<h2><strong>Baytex Energy<\/strong><\/h2>\n<p>Baytex Energy\u2019s <a href=\"https:\/\/capital10x.com\/old\/baytex-energy-bteto\/\">solid production growth<\/a> was negated by lower oil prices in the second half of 2018. For instance, the company delivered a 42% annual increase in its output for the final quarter of 2018, but because of lower oil prices, its top line increased just 20% year over year.<\/p>\n<p>In fact, low oil prices not only hurt the company\u2019s top line, they also hurt its funds flow from operations. A 22% drop in Baytex\u2019s operating netback per barrel of oil equivalent and shrinking of the company\u2019s adjusted funds flow per BOE from C$16.54 from C$12.17 have been enough to dent investor confidence.<\/p>\n<div class=\"su-pullquote su-pullquote-align-right\">Higher oil prices will turn out to be a boon for Baytex Energy as the company will not only be able to post stronger financial growth, but also improve its balance sheet.<\/div>\n<p>However, the good part is that Baytex can make a strong comeback in 2019 as oil prices are improving and the company is on track to increase its production once again this year. Baytex estimates oil output in the range of 93,000 and 97,000 BOE\/day for 2019, which would be an increase of 18% at the mid-point when compared to the 2018 production of 80,458 BOE\/day.<\/p>\n<p>What\u2019s even more impressive is that the increase in the company\u2019s production will be achieved at a capital budget of C$550 million to C$650 million. This is lower than Baytex\u2019s original capital expenditure guidance of C$750 million to C$850 million. Thanks to the disciplined capital spending plan, Baytex believes that it can now deliver adjusted funds flow of C$800 million for 2019 as compared to the earlier forecast of C$605 million.<\/p>\n<p>Baytex will direct the higher funds flow toward extinguishing its debt to the tune of C$200 million. So, higher oil prices will turn out to be a boon for Baytex Energy as the company will not only be able to post stronger financial growth, but also improve its balance sheet.<\/p>\n<h2><strong>Berry Petroleum<\/strong><\/h2>\n<p>Improving oil prices are already rubbing off positively on Berry Petroleum, with the stock rising <a href=\"https:\/\/capital10x.com\/old\/berry-petroleum-bry\/\">more than<\/a> 30% in 2019 so far. The company did extremely well last year thanks to strong oil price levels and production of 27,000 barrels of oil equivalent per day.<\/p>\n<p>This year, Berry believes it can clock production of 28,000-31,000 BOE\/day, 86% of which will be oil. According to the mid-point of that guidance range, Berry\u2019s output will increase 10% in 2019, while capital expenses are expected between $195 million and $225 million. This represents an increase over last year\u2019s capital expenses of $148 million, so Berry\u2019s capital outlay is going to increase significantly.<\/p>\n<p>In such a scenario, the company will need the aid of stronger oil prices in order to perform well. Last year, Berry had reported an average realized oil price of $64.76 per barrel of oil equivalent as compared to the 2017 average realized price of $48.05 per BOE. The higher oil prices also boosted the company\u2019s adjusted EBITDA from $178 million in 2017 to $258 million last year.<\/p>\n<p>If oil prices start heading lower, Berry will find it difficult to repeat its performance. But if WTI crude oil is <a href=\"https:\/\/www.bloomberg.com\/energy\">trading<\/a> at nearly $61 per barrel and has the potential to move <a href=\"https:\/\/capital10x.com\/old\/can-oil-prices-rise-higher-2019\/\">higher<\/a>, Berry Petroleum investors can expect more upside from the company as it did well last year when prices were strong.<\/p>\n<h2><strong>Southwestern Energy<\/strong><\/h2>\n<p>Southwestern Energy has also been in great form on the stock market this year thanks to rising energy prices, which will allow it to take advantage of its improving production profile. For instance, the company\u2019s revenue for the fourth quarter of 2018 was up 46% annually and trumped Wall Street\u2019s forecast by $200 million.<\/p>\n<p>Now, 83% of Southwestern\u2019s production is composed of natural gas. Last year, the company produced 946 billion cubic feet equivalent (Bcfe), an increase of 5.4% over the prior year. After adjusting for the Fayetteville sale, Southwestern\u2019s annual production was 703 Bcfe.<\/p>\n<p>The company expects production of 750-785 billion cubic feet (Bcfe) in 2019, a jump of 9% over the prior year. Moreover, the increase in production this year will be achieved at a lower cost base. Southwestern expects 25% in its average well costs this year to $875 per lateral foot. What\u2019s more, the average lateral length is on track to increase to the tune of 35% this year.<\/p>\n<p>As a result of these lower costs, Southwestern\u2019s capital expenditure for 2019 will be $1.13 billion as compared to last year\u2019s outlay of $1.25 billion.<\/p>\n<p>Meanwhile, NYMEX natural gas is currently <a href=\"https:\/\/www.bloomberg.com\/energy\">trading<\/a> at nearly $2.70\/MMBtu, which is lower than Southwestern\u2019s assumption of $2.85 per MMBtu. However, the EIA <a href=\"https:\/\/www.eia.gov\/outlooks\/steo\/report\/natgas.php\">expects<\/a> that natural gas prices will eventually hit $2.85\/MMBtu in 2019.<\/p>\n<p>So, Southwestern Energy\u2019s performance will depend on the direction natural gas prices take this year. The good part is the EIA expects a gradual uptick in gas prices going forward, which should act as a tailwind for the company in light of the potential increase in its production.<\/p>\n<p>Additionally, Southwestern\u2019s funds flow from operations should also get a shot in the arm thanks to lower costs. As such, Southwestern investors have enough reasons to remain invested in the stock because of the tailwinds discussed above.<\/p>\n<h2><strong>Conclusion<\/strong><\/h2>\n<p>Baytex, Berry, and Southwest might not be very well-known names, but all three companies give investors three different ways to capitalize on higher prices. In all, it makes sense to take a closer look at these three oil stocks as they are focused on improving their production efficiently.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>These three energy companies, Berry Petroleum (NASDAQ: BRY), Baytex Energy (TSX: BTE.TO) , and Southwestern Energy (NYSE: SWN), are on track to take advantage of better energy prices.<\/p>\n","protected":false},"author":8,"featured_media":15456,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[60],"tags":[106,289,290,368,208,192,373,374],"class_list":{"0":"post-15883","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-energy","8":"tag-baytex-energy","9":"tag-berry-petroleum","10":"tag-bry","11":"tag-bte-to","12":"tag-company-news","13":"tag-energy-stocks","14":"tag-southwestern-energy","15":"tag-swn"},"acf":[],"yoast_head":"<!-- This site is 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Chauhan","image":{"@type":"ImageObject","inLanguage":"en-CA","@id":"https:\/\/capital10x.com\/old\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/888e70b636e900dd8ac0b2b40fa637de67adcdb01dee57616ac6ceeacb845f1b?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/888e70b636e900dd8ac0b2b40fa637de67adcdb01dee57616ac6ceeacb845f1b?s=96&d=mm&r=g","caption":"Harsh Singh Chauhan"},"description":"Harsh Singh Chauhan has a wealth of experience evaluating publicly-traded companies across several verticals, including technology, oil and gas, retail, and consumer goods. His financial writing has been published across platforms such as The Motley Fool, TheStreet, and Seeking Alpha. Harsh's philosophy is to find great businesses for the long run based on company fundamentals and industry prospects. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.","sameAs":["https:\/\/www.linkedin.com\/in\/harsh-singh-chauhan-a8224734\/"],"url":"https:\/\/capital10x.com\/old\/author\/harsh-singh-chauhan\/"}]}},"_links":{"self":[{"href":"https:\/\/capital10x.com\/old\/wp-json\/wp\/v2\/posts\/15883","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/capital10x.com\/old\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/capital10x.com\/old\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/capital10x.com\/old\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/capital10x.com\/old\/wp-json\/wp\/v2\/comments?post=15883"}],"version-history":[{"count":0,"href":"https:\/\/capital10x.com\/old\/wp-json\/wp\/v2\/posts\/15883\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/capital10x.com\/old\/wp-json\/wp\/v2\/media\/15456"}],"wp:attachment":[{"href":"https:\/\/capital10x.com\/old\/wp-json\/wp\/v2\/media?parent=15883"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/capital10x.com\/old\/wp-json\/wp\/v2\/categories?post=15883"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/capital10x.com\/old\/wp-json\/wp\/v2\/tags?post=15883"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}