We recently published a list of 11 Best Natural Gas Stocks To Buy Now. In this article, we are going to take a look at where EOG Resources, Inc. (NYSE:EOG) stands against other best natural gas stocks to buy now.
The United States of America is the Top Natural Gas Producing Country in the World, courtesy of horizontal drilling and hydraulic fracturing techniques, notably in shale, sandstone, carbonate, and other tight geologic formations. The country’s dry natural gas production reached 103.6 billion cubic feet per day (bcfd) in 2023, up 4.3% from 2022 and the highest for any year on record, dating back to 1930, according to 2023 Natural Gas Annual. The US was also a net exporter of natural gas for the seventh consecutive year in 2023, transporting gas to 42 countries during the year.
After a stellar 2023, the US natural gas output slumped slightly last year due to prices falling to multi-decade lows, but production is expected to climb to 104.5 bcfd in 2025, as a period of strong demand and improved prices spark a resurgence in production. Analysts expect average annual gas prices to increase by more than 40% this year over the levels seen in 2024, as demand is projected to grow mainly due to a jump in LNG exports. The demand surge is largely attributed to new LNG export facilities, like Plaquemines LNG and Corpus Christi Stage 3, coming online, while the Golden Pass LNG project is also anticipated to begin operations by mid-2026.
Europe remains a top destination for American liquified natural gas. The continent has had to rely significantly more on imported LNG and less on gas delivered via pipelines from Russia since the Putin government’s invasion of Ukraine in 2022. The American LNG sector is also set to receive a significant boost after President Donald Trump issued an order last month to lift a freeze on new US licenses to export liquefied natural gas, making good on a campaign pledge to rescind the measure.
The country’s natural gas sector is also expected to benefit significantly from the ongoing AI boom and the accompanying data centers, as several dozen new gas-fired power plants are expected to be built in the US in the next few years. According to energy data provider Enverus, a total of 80 new gas power plants could be constructed in America by 2030, adding about 46 GW of new capacity – 20% higher than the gas capacity additions in the last five years. According to data from S&P Global Commodity Insights, if even a quarter of the projected data center load is supplied by gas-fired generation, this would translate to a 2% increase in total US gas demand in 2040.
The energy sector has witnessed considerable fluctuations over the last few months, surging by over 6% in November before declining around 10% in December. However, the broader energy sector (roughly 1/3rd of which is made up of natural gas companies) ended last year with a return of just 5.72%, significantly lagging behind gains of 25% by the wider market.
Methodology
To collect data for this article, we scanned Insider Monkey’s database of 900 hedge funds and picked the top 11 companies operating in the natural gas sector with the highest number of hedge fund investors in Q3 of 2024. When two or more companies had the same number of hedge funds investing in them, we ranked them by the revenue of their last financial year. Following are the Best Natural Gas Stocks to Buy According to Hedge Funds.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Is EOG Resources, Inc. (EOG) The Best Natural Gas Stock To Buy Now?
An oil rig in action in a vast desert, drilling for natural gas.
EOG Resources, Inc. (NYSE:EOG), one of the largest crude oil and natural gas exploration and production companies in the United States with proved reserves in the US and Trinidad.
EOG Resources, Inc. (NYSE:EOG) reported exceptional results during Q3 2024 with peer-leading US price realizations of $76.95 per barrel of oil and $1.84 per Mcf for natural gas. Moreover, the company’s oil production midpoint increased by 800 barrels per day, natural gas liquids by 2,800 per day, and natural gas by 24 million standard cubic feet per day. The company boasted revenue of $5.97 billion during the quarter, down almost 4% YoY but still above analysts’ estimates by $14.25 million.
EOG Resources, Inc. (NYSE:EOG) boasts a robust balance sheet and since the end of 2020 through Q3 2024, it generated more than $22 billion in free cash flow and more than $25 billion in adjusted net income. The company has also increased its regular dividend rate by 160% and has paid or committed to pay more than $13 billion directly to shareholders and $3.2 billion indirectly through share repurchases, all while reducing debt by 35%. The company has never reduced or suspended its regular dividend in the last 27 years and raised its quarterly dividend by 7.1% to $0.975 per share in November.
Overall, EOG ranks 8th on our list of best natural gas stocks to buy now. While we acknowledge the potential for EOG to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than EOG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
