Natural gas is a versatile fossil fuel that powers our daily lives with its clean-burning properties, making it a reliable and sustainable energy source for the future that has emerged as a key player in the global energy market. It is primarily composed of methane and is found underground in deposits or extracted through fracking which makes top natural gas stocks a better opportunity to invest in.
Its importance as an energy source lies in its versatility, affordability, and relatively low carbon emissions compared to other fossil fuels.
Global gas demand is set to rise by a total of 140 billion cubic metres (bcm) between 2021 and 2025, according to the new Gas Market Report.
The Asia-Pacific region is expected to account for half of the expected growth in global gas demand by 2025.
With the increasing demand for cleaner energy sources, top natural gas stocks have great growth potential in the coming years.
Why Investing In Natural Gas Stocks Is A Smart Move In 2023
Natural gas stocks have been a popular investment choice for investors who are looking to diversify their portfolio and gain exposure to the energy industry. Here are some reasons why.
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Natural Gas Is A Clean Energy Source
One of the biggest advantages of natural gas is that it is a clean energy source. Unlike coal and oil, natural gas emits fewer pollutants and is less harmful to the environment.
This makes natural gas an attractive option for companies looking to reduce their carbon footprint.
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High Demand For Natural Gas
The demand for natural gas is expected to continue growing in 2023, especially in developing countries. Natural gas is used for heating, cooking, and generating electricity.
With the world’s population continuing to grow, the demand for energy is also on the rise, making natural gas an essential source of energy.
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Affordable And Abundant
Natural gas is a more affordable energy source compared to other fossil fuels, such as coal and oil. It is also abundant, with vast reserves in many parts of the world, including the United States, Russia, and China.
This abundance makes it a reliable source of energy for many countries, ensuring its continued demand and profitability.
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Technology Advancements
Advancements in technology have made it easier to extract natural gas from underground reserves. This has reduced the cost of production and increased efficiency, making natural gas more profitable for companies.
Additionally, new technologies have made it possible to transport natural gas over long distances, opening up new markets and increasing demand.
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Overview Of The Top Natural Gas Stocks To Invest In
With the growing demand for energy, investing in natural gas companies’ stock is a smart move in 2023. There are several top natural gas stocks that investors should keep an eye on in 2023.
Here’s a closer look at some of the top natural gas stocks to invest in:
Company Ticker Current Price YTD Market Cap EPS Growth (this Year) EQT Corporation EQT $34.84 2.99% 12.09 B 223.20% Range Resources Corporation RRC $26.45 5.72% 6.05 B 191.40% ExxonMobil Corporation XOM $118.34 7.29% 474.25 B 146.40% Marathon Oil Corporation MRO $24.16 -10.75% 14.63 B 338.00% Evolution Petroleum Corporation EPM $ 6.59 -12.72% 214.77 M 298.20%
Factors To Consider When Investing In Natural Gas Stocks
Considering natural gas stocks to buy has become a popular option for investors looking for long-term returns. However, before investing in top natural gas stocks, there are several factors that investors should consider.
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Understanding The Natural Gas Industry And Its Cycles
Natural gas prices are highly volatile and are often affected by supply and demand imbalances. Therefore, understanding the natural gas industry and its cycles is crucial when investors consider natural gas stocks to buy.
Investors should be aware of seasonal trends, weather patterns, and geopolitical events that can affect natural gas prices.
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Analyzing Company Financials And Performance Metrics
Investors should analyze a company’s financials and performance metrics before investing in natural gas companies stock. Factors to consider include revenue growth, earnings per share, debt-to-equity ratio, and cash flow.
It is also important to evaluate the company’s management team and its ability to execute its business strategy.
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Keeping An Eye On Regulatory And Environmental Factors
The natural gas industry is highly regulated, and changes in regulations can significantly impact the industry’s profitability.
Investors should keep an eye on regulatory changes and environmental factors that could affect natural gas production and consumption.
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Evaluating The Competition And Market Trends
Finally, investors should evaluate the competition and market trends when investing in liquefied natural gas or LNG stocks. Factors to consider include the number of competitors in the market, market share, and new market entrants.
It is also important to evaluate emerging technologies and their potential impact on the natural gas industry.
The Best Top Natural Gas Stocks To Invest In Right Now
Listed below is a brief analysis of the 5 top natural gas stocks we listed for their potential in 2023.
EQT Corporation
Overview
EQT Corporation is a leading energy company focused on natural gas exploration, production, and transportation.
The company has a strong presence in several states, including Pennsylvania, West Virginia, and Ohio, and has become one of the largest natural gas producers in the United States.
Key Financials
- In 2022, EQT reported total annual revenue of $7.50 billion and a net income of $1.77 billion, driven by the strong demand for natural gas in the United States.
- The company’s total assets were $22.67 billion, and its total liabilities were $11.46 billion.
Recent Performance
- EQT’s recent performance has been strong, with revenue of $1.84 billion in the first quarter of 2023, a 25% increase from the same period in the previous year.
- The company’s net income for the quarter was $1.22 billion, compared to a net loss of $1.52 billion in the same period in the previous year.
Growth Prospects
The company’s growth prospects look promising, as EQT has a strong presence in the Marcellus and Utica shale regions, which are expected to continue producing significant amounts of natural gas in the coming years.
EQT recently announced a strategic partnership with Context Labs to advance the development of verified low-carbon intensity natural gas products and carbon offsets.
The company also announced its first nature-based, verifiable carbon offset initiative via a partnership with Wheeling Park Commission, Teralytic, and Climate Smart Environmental Consulting.
Range Resources Corporation (RRC)
Overview
Range Resources Corporation (RRC) is a Texas-based independent natural gas and oil company that explores, develops, and produces natural gas, natural gas liquids, and oil from various locations in the United States.
The company has operations in the Marcellus Shale, Appalachian Basin, and North Louisiana, among other regions.
Key Financials
- In terms of financials, RRC’s total revenues for 2022 were $5.34 billion, while its net income was $1.18 billion.
- The company’s EBITDA for the year was $1.93 billion.
- As of December 31, 2022, RRC had total assets of $6.63 billion and total liabilities of $3.75 billion.
Recent Performance
- In terms of recent performance, RRC has reported revenue of $883.13 million for the first quarter of 2023, with a net income of $239 million.
- RRC accumulated a cash balance of $228 million and achieved a production average of 2.14 Bcfe per day, out of which approximately 70% was natural gas.
Growth Prospects
However, RRC has a positive outlook for growth prospects, driven by its strong presence in the Marcellus Shale, which is one of the largest natural gas fields in the world.
RRC has identified approximately 1,400 high-return drilling locations in the Marcellus Shale, which could provide a significant boost to the company’s production and revenues in the coming years.
ExxonMobil Corporation (XOM)
Overview
ExxonMobil Corporation (XOM) is the next stock in our list of top natural gas stocks, which is a multinational oil and gas company headquartered in Irving, Texas.
It is one of the largest publicly traded companies in the world and has operations in more than 50 countries.
Key Financials
- In terms of key financials, ExxonMobil reported total revenues of $398.66 billion in 2022.
- This was an increase of $113.05 billion from the previous year due to higher oil and gas demand and production volumes.
- The company’s net income was $55.74 billion, compared to that of $23.04 billion in 2021.
Recent Performance
- Despite the challenges faced in 2022, ExxonMobil has demonstrated resilience and adaptability in its recent performance.
- The company remained on track to deliver $9 billion of structural cost savings by the end of 2023 relative to 2019, having achieved cumulative structural cost savings of $7.2 billion to date.
- ExxonMobil announced that it has reduced greenhouse gas emissions intensity and methane intensity of its operated assets by more than 10% and 50%, respectively, relative to a 2016 baseline.
- Additionally, ExxonMobil has entered into a long-term commercial agreement with Linde to capture, transport, and permanently store up to 2.2 million metric tons of carbon dioxide each year, starting in 2025.
Growth Prospects
Looking ahead, ExxonMobil’s growth prospects are promising.
The company has a strong portfolio of assets and projects, including several major offshore projects in Guyana and Brazil, and is well-positioned to capitalize on the rising demand for energy in emerging markets.
Furthermore, its investments in low-carbon energy and advanced materials could position the company for long-term success in a rapidly evolving energy landscape.
Marathon Oil Corporation (MRO)
Overview
Marathon Oil Corporation (MRO) is a US-based independent exploration and production company that operates in the United States, Equatorial Guinea, and the United Kingdom.
The company’s primary focus is on the exploration and production of crude oil and natural gas.
Key Financials
- In terms of key financials, Marathon Oil had revenues of $7.54 billion and a net income of $3.61 billion in 2022.
- The company has a market capitalization of approximately $14.63 billion, with a price-to-earnings (P/E) ratio of 4.66 as of May 1, 2023.
Recent Performance
- Marathon Oil Corporation exceeded its commitment to return 40% of adjusted CFO to shareholders in 2022, by returning 55% of adjusted CFO (75% of adjusted FCF).
- The total shareholder returns amounted to $3.0 billion, with a distribution yield of 17% on current market capitalization.
- The company also executed $2.8 billion of share repurchases, which reduced the outstanding share count by 15%.
- The company’s oil and oil-equivalent production for the full year 2022 was 169,000 net bopd and 343,000 net boed.
Growth Prospects
Looking ahead, MRO’s growth prospects are promising as the company continues to focus on expanding its operations in the United States and other key markets.
Additionally, the company is committed to investing in new technologies and innovations to improve its operational efficiency and reduce costs.
Marathon Oil Corporation increased its year-end 2022 proved reserves to 1,338 million barrels of oil equivalent, which is an addition of 232 mmboe, or 21%, compared to year-end 2021.
Evolution Petroleum Corporation (EPM)
Overview
Evolution Petroleum Corporation (EPM) is last but not least on our list of top natural gas stocks. EPM is an independent energy company that specializes in the acquisition, exploitation, and development of oil and natural gas resources.
The company primarily focuses on properties located in the United States, with a particular emphasis on the Gulf Coast region.
Key Financials
- As of May 1, 2023, Evolution Petroleum Corporation had a market capitalization of approximately $214.77 million.
- The company’s key financials for the fiscal year ending June 30, 2022, included revenues of $108.93 million and a net income of $32.633 million.
- Additionally, EPM had cash and cash equivalents of $8.28 million with total current assets of $36.37 million. Total current liabilities were $30.29 million.
Recent Performance
- In terms of recent performance, EPM has seen an increase of $20.92 million in its revenues for the quarter ended September 30, 2022, to $39.80 million from revenue of $18.88 million in the previous quarter.
- The company’s net income doubled to $10.71 million from $5.22 million in the corresponding quarter of 2021, thanks to its cost management initiatives and the favorable commodity price
Growth Prospects
Looking ahead, Evolution Petroleum Corporation has a promising growth outlook, driven by its strategic initiatives aimed at expanding its production base and diversifying its asset portfolio.
The Company acquired non-operated interests in the Jonah Field in Wyoming from Exaro Energy III, LLC for $26.4 million, which was accounted for as an asset acquisition and allocated to proved oil and natural gas properties.
Additionally, the Company acquired non-operated working interests in the Williston Basin in North Dakota from Foundation Energy Fund VII-A, LP and Foundation Energy Management, LLC for $25.2 million, which included $0.3 million of capitalized transaction costs.
Risks And Challenges Of Investing In Natural Gas Stocks
Investing in natural gas or LNG stocks can be a lucrative opportunity, but it also carries a number of risks and challenges that investors need to be aware of. Here are some of the key factors to consider:
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Price Volatility And Market Fluctuations
Natural gas prices are subject to fluctuations due to a number of factors, including supply and demand, weather patterns, and geopolitical tensions.
These fluctuations can have a significant impact on the profitability of natural gas companies and the value of their stocks.
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Regulatory And Environmental Risks
The natural gas industry is subject to a range of environmental and regulatory risks, such as stricter emissions standards and increased scrutiny of hydraulic fracturing, or fracking, operations.
These risks can lead to increased costs, decreased profitability, and potential legal liabilities for natural gas companies.
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Technological Advancements And Competition From Other Energy Sources
Technological advancements in renewable energy and energy efficiency, as well as competition from other fossil fuels like oil and coal, pose a threat to the long-term viability of the natural gas industry.
Natural gas companies need to stay competitive and adapt to changing market conditions to remain profitable.
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Geopolitical Factors And Global Energy Demand
The global energy landscape is influenced by geopolitical factors such as political instability, trade tensions, and the energy policies of major nations.
Global energy demand also fluctuates, driven by economic growth and shifts in consumer behavior. These factors can impact the demand for natural gas and its long-term profitability.
Conclusion
In conclusion, investing in natural gas stocks can be a profitable opportunity for investors in 2023.
With the ongoing global shift towards cleaner energy and the increasing demand for natural gas, the natural gas sector presents a promising growth potential.
The top natural gas stocks to consider for investment include established companies with a strong track record, as well as emerging players with innovative technologies.
It’s essential to conduct thorough research and consider market trends before investing in any stock.
By taking a cautious approach and diversifying your portfolio, you can benefit from the minimized risk but also from the growth potential of the natural gas demand which is set to rise by a total of 140 billion cubic metres (bcm) between 2021 and 2025.
