CXO - 5 Oil Stocks Poised to Cash In on $50 Crude Oil
Oil prices started 2021 off with a bang, rallying nearly 8% during the first week of the year, thanks to some unexpected additional support from Saudi Arabia. That pushed crude above $50 a barrel for the first time since last February. While all oil companies will benefit from higher oil prices, some will produce a gusher of cash if crude maintains its current level above $50 a barrel. Here's a look at five oil stocks that could prosper this year if oil stays above this crucial price point.
ConocoPhillips (NYSE: COP) agreed to buy rival Concho Resources (NYSE: CXO) in an all-stock deal valued at $9.7 billion in October. The primary driver is that the combined company can reduce costs, enabling it to generate more cash at lower oil prices. For example, at $40 oil ConocoPhillips/Concho can produce a combined $7.5 billion to $7.8 billion in cash flow from operations. That's enough money to fund the capital needed to maintain their current production level and Conoco's 3.8%-yielding dividend with room to spare. At $50 oil, the combined company can produce an additional $3 billion in cash. It could use that money to restart its growth engine by drilling more wells to boost production and return more cash to shareholders via share repurchases and special dividends.
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5 Oil Stocks Poised to Cash In on $50 Crude Oil