In this article, we discuss 10 oil stocks that billionaires are buying. If you want to see more stocks in this selection, check out 5 Oil Stocks Billionaires Are Loading Up On.
According to Deloitte, the global oil and gas sector entered 2023 with a strong balance sheet position and a controlled capital spending strategy. The London, UK-based professional services firm supported this claim with the fact that 93% of the executives surveyed in the oil and gas sector reported having a positive outlook on the sector in 2023. They believe that the healthy balance sheet positions could aid their organizations in covering up for the deficit in investment in recent years and play an important role in accelerating the transition towards green energy. The healthy state of the oil and gas exploration and production (E&P) industry is also supported by the fact that the industry generated record free cash flows (FCF) of $1.4 trillion in 2022. Experts are now closely examining how upstream companies will utilize their resources to enhance shareholder value. The focus lies on two main avenues: boosting shareholder payouts through dividends and share buybacks and exploring opportunities for reinvestment and mergers and acquisitions (M&A) activity. According to Wood Mackenzie, the oil and gas E&P industry is expected to allocate a capital outlay of $470 billion in 2023 to uplift the sector amidst challenging economic circumstances.
Despite the possibility of a global recession, crude oil prices have been able to maintain ground. This can be attributed to the significant production cuts made by the Organization of Petroleum Exporting Countries (OPEC) along with Russia and other allies in the recent past. In April, the group revealed a 1.16 million barrels per day (bpd) cut in production. As per estimates by Reuters, OPEC+ has managed to cut global crude oil production by 3.66 million bpd, which is equivalent to 3.7% of the global demand. Currently, crude oil prices are hovering around the $70 level as opposed to a peak of $139 in March 2022. The head of investment firm Pickering Energy Partners thinks that the recent production cuts implemented by OPEC+ could potentially lead to a $10 increase in oil prices per barrel.
Goldman Sachs' Price Forecasts
Following the production cut in April, Goldman Sachs increased its December 2023 price forecast for Brent crude oil by $5 to $95 per barrel. Furthermore, the Brent crude oil price forecast for December 2024 was increased by $3 to $100 per barrel. The New York-based financial services firm believes that the market has not completely priced in the impact of the production cut as this development is countered by recessionary fears globally. The firm suggests that if the US economy manages to avoid a severe recession and achieves a soft landing, there is a high likelihood of a price rally in the crude oil market following the “great de-stocking” that is currently taking place. Additionally, OPEC+ has the option to implement further production cuts in their upcoming meeting to prevent a supply glut and a decline in prices. You can also read our article on the 11 Best Crude Oil Stocks To Buy As Tensions Rise.
Anticipated Increase in Global Crude Oil Demand
The International Energy Agency (IEA) anticipates global crude oil demand increasing to record levels during the second half of 2023 due to an economic rebound in China, a strong demand outlook from India, ease of macroeconomic uncertainty in the US and Europe, and a rebound in air traffic. The IEA's analysis suggests that between the first and fourth quarters of 2023, global oil demand is set to increase by a total of 3.2 million bpd, resulting in an average growth of 2 million bpd for the year. While the demand for crude oil remains strong in the long term, the transition to cleaner energy sources is a crucial consideration. Landmark policies like the Inflation Reduction Act (IRA) introduced by the US Federal government in August 2022 will play an important role in commercializing cleaner energy sources. As the world aims to achieve net-zero emissions by the mid-century and reduce reliance on conventional energy sources like crude oil, the transition to cleaner energy sources by some of the best oil companies is imperative. Some of the best oil stocks attracting hedge fund investment as of Q1 2023 include Occidental Petroleum Corporation (NYSE:OXY), ConocoPhillips (NYSE:COP), and Chevron Corporation (NYSE:CVX).
10 Oil Stocks Billionaires Are Loading Up On
Photo by Zbynek Burival on Unsplash
Our Methodology
We used Insider Monkey's database of billionaire-owned stocks to shortlist the oil stocks that attracted the highest number of billionaire investors during Q1 2023. We have also included information regarding the total number of hedge fund investors in these companies as of the first quarter of the year. The best oil stocks have been ranked in ascending order of the number of billionaires holding a stake in them.
Oil Stocks Billionaires Are Loading Up On
10. Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR)
Number of Billionaire Investors: 13
Dollar Value of Billionaire Holdings: $280,161,993
Number of Hedge Fund Holders: 39
Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) is a state-controlled company established in 1953, with the Brazilian government holding the majority of its shares.
On May 31, Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) CEO Jean-Paul Prates revealed that the company plans on making new investments across South America, signaling a strategic shift towards regional opportunities. Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) aims to make investments in Bolivia, Guyana, and Venezuela in the near future. The company has positive growth prospects, making it one of the best oil stocks to invest in.
At the end of Q1 2023, 13 billionaires reported owning a stake worth $280.1 million in Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR).
Dollar Value of Billionaire Holdings: $319,257,382
Number of Hedge Fund Holders: 66
Schlumberger Limited (NYSE:SLB) is a Houston, Texas-based oilfield services company founded in 1926 that provides technology, information solutions, and integrated project management services to the oil and gas industry.
Schlumberger Limited (NYSE:SLB) has a bullish outlook as it anticipates achieving revenue growth of at least 45% by the middle of this decade. Furthermore, the company expects its full-year earnings before interest, taxes, depreciation, and amortization (EBITDA) to increase by 60%, according to CEO Olivier Le Peuch. Schlumberger Limited (NYSE:SLB) intends to surpass the growth levels achieved in the previous growth cycle of 2009 to 2014. The company's strong business fundamentals make it one of the best oil stocks in the market currently. Click here to read the company’s earnings call transcript for Q1 2023.
Dollar Value of Billionaire Holdings: $387,201,897
Number of Hedge Fund Holders: 42
Antero Resources Corporation (NYSE:AR) is a Denver, Colorado-based independent exploration and production company formed in 2002. The company primarily operates in the Appalachian Basin, with a significant presence in the Marcellus and Utica shale plays. Antero Resources Corporation (NYSE:AR) has secured the eighth position on our list of best oil stocks billionaires are purchasing.
In a note issued to investors on May 19, Nitin Kumar at Mizuho increased the target price for Antero Resources Corporation (NYSE:AR) stock from $38 to $40 and maintained a Buy rating. The analyst believes that the recent stock sell-off due to plummeting crude oil prices provides an attractive entry point for investors. Kumar highlighted that companies are now focused on capital discipline and better cash returns and have been experiencing an improving service cost environment since Q1 2023.
Here’s what Carillon Tower Advisers said about Antero Resources Corporation (NYSE:AR) in its Q1 2023 investor letter:
“Antero Resources Corporation (NYSE:AR) is a natural gas exploration and production company with operations in the Appalachian Basin. Overall natural gas storage inventories recently have reached slightly elevated levels, due largely to the milder than average winter experienced across the globe. This dynamic has weighed on benchmark natural gas prices, and in turn has pressured Antero’s stock. Despite these current headwinds, we believe the company’s relatively low-cost operations, strong balance sheet, positive recent productivity trends, and ability to price its production at a premium to benchmark prices should position it well to weather the current choppy environment until the country’s liquified natural gas export capacity increases over the next several years.”
Dollar Value of Billionaire Holdings: $516,517,651
Number of Hedge Fund Holders: 42
Southwestern Energy Company (NYSE:SWN) is a Houston, Texas-based independent energy company formed in 1929 that focuses on the exploration, development, and production of crude oil and natural gas. Like Antero, the company has operations in major shale plays in the US and also has a presence in the Arkoma Basin in Oklahoma.
Southwestern Energy Company (NYSE:SWN) is amongst the best oil stocks attracting hedge fund investment. The top three hedge fund holders of Southwestern Energy Company (NYSE:SWN) increased their stake in the company during Q1 2023. D E Shaw is the biggest hedge fund investor in Southwestern Energy Company (NYSE:SWN), with a stake of around $155.62 million as of the first quarter of the year.
Dollar Value of Billionaire Holdings: $1,255,909,737
Number of Hedge Fund Holders: 73
Exxon Mobil Corporation (NYSE:XOM) is one of the largest publicly traded multinational oil and gas companies in the world. The company came into being in 1999 through the merger of Exxon and Mobil, two prominent companies with long histories in the oil and gas industry.
In an update issued to investors on May 18, Piper Sandler's analyst increased the price target on Exxon Mobil Corporation (NYSE:XOM) from $134 to $145 and reiterated an Overweight rating on the stock. The analyst sees a bottom of the commodity cycle in sight after the company significantly slashed its refining earnings estimates for FY23.
In addition to Exxon Mobil Corporation (NYSE:XOM), Occidental Petroleum Corporation (NYSE:OXY), ConocoPhillips (NYSE:COP), and Chevron Corporation (NYSE:CVX) are also among the best oil stocks billionaires are investing in as of Q1 2023.
