Energy Stocks have been on a tear as demand outstripped supply and the world recovers from a post-COVID reduction in activity. We take a look at the top performing energy stocks over the past year.
TARGA RESOURCES CORP. (TRGP) - 56.77% growth over the past year
MARATHON PETROLEUM CORPORATION (MPC) - 44.14% growth over the past year
DIAMONDBACK ENERGY, INC. (FANG) - 40.48% growth over the past year
THE WILLIAMS COMPANIES, INC. (WMB) - 36.63% growth over the past year
VALERO ENERGY CORPORATION (VLO) - 36.17% growth over the past year
ONEOK, INC. (OKE) - 23.88% growth over the past year
MARATHON OIL CORPORATION (MRO) - 20.33% growth over the past year
The 56.77% over the 12 month period growth of Targa Resources ending in May 2024 can be attributed to several key events and factors:
Strong Organic Growth: Targa Resources has a strong track record of organic growth, driven by the addition of fee-based volumes, successful contract restructurings, and new commercial wins. This has bolstered the stability of their gathering and processing (G&P) business.
Permian Basin Growth:The Permian Basin is poised for continued growth, driven by increasing crude production and robust gas-to-oil ratios. Targa Resources has a differentiated position in the Permian, with a large footprint and significant processing capacity. This growth is expected to drive increasing demand for their midstream services.
Fee-Based Volumes: Targa Resources has successfully transitioned their G&P business to fee-based structures, which provide a more stable and predictable revenue stream. This shift has contributed to Targa Resources's strong financial performance and growth.
Increased Exports: Targa Resources has seen significant growth in their LPG exports, driven by increasing global demand for cleaner fuels and feedstocks. Targa Resources's wellhead to water NGL strategy adds significant barrels into their system, making them well-positioned to support global energy needs.
Strong Balance Sheet: Targa Resources has a strong balance sheet, supported by a low consolidated leverage ratio and a long-term target of Ba1/BB+ credit ratings. This financial flexibility allows Targa Resources to continue investing in attractive integrated opportunities and returning capital to shareholders.
Increasing Cash Flow: Targa Resources expects to return an increasing amount of capital, with 40-50% of cash flow from operations expected to be returned across the multi-year horizon. This includes a 50% increase to their quarterly cash dividend, payable in May 2024.
Sustainability Efforts: Targa Resources has made significant strides in sustainability, with a focus on reducing methane intensity and emissions. This has contributed to their positive environmental and social impact.
Targa Resources Corp., founded in 2005 and headquartered in Houston, Texas, owns and operates a broad portfolio of midstream energy assets in North America. It operates in two segments: Gathering and Processing, and Logistics and Transportation. Targa Resources handles natural gas, natural gas liquids (NGL), crude oil, and refined petroleum products, providing services such as gathering, compressing, treating, processing, transporting, storing, and selling. Targa also offers NGL balancing services and transportation services, managing an extensive network of pipelines, storage wells, railcars, transport tractors, and NGL barges.
The events that contributed to the 44.14% over the 12 month period growth of Marathon Petroleum ending in May 2024 include:
Strong Earnings Performance: Marathon Petroleum reported a net income attributable to MPC of $937 million, or $2.58 per diluted share, for the first quarter of 2024, which represents a significant improvement from the first quarter of 2023.
Adjusted EBITDA Growth: Marathon Petroleum's adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) for the first quarter of 2024 was $3.3 billion, compared with $5.2 billion for the first quarter of 2023, indicating a significant adjustment in earnings estimates.
Midstream Growth Strategy: Marathon Petroleum advanced its midstream growth strategy by opening new processing plants in the Marcellus and Permian basins and acquiring Utica midstream assets, which contributed to its growth.
Return of Capital: Marathon Petroleum returned $2.5 billion of capital through $2.2 billion of share repurchases and $299 million of dividends, demonstrating its commitment to returning value to shareholders.
Earnings Estimate Revisions: Marathon Petroleum's earnings estimates have been revised upward, with a consensus estimate of $6.61 per share for the current quarter, representing a year-over-year change of +24.3%. This upward revision in earnings estimates contributed to the stock's growth over the 12-month period.
Marathon Petroleum Corporation, headquartered in Findlay, Ohio, is a leading U.S. company involved in refining, marketing, retailing, and transporting petroleum products. It operates through three segments: Refining & Marketing, Retail, and Midstream. Marathon Petroleum refines crude oil at 16 U.S. refineries and sells various refined products, including transportation fuels and asphalt. It also manufactures aromatics, propane, propylene, and sulfur, selling these products domestically and internationally. The Retail segment operates convenience stores under the Speedway brand and supplies fuels to ARCO-branded locations. The Midstream segment manages the transportation, storage, and marketing of crude oil, refined products, natural gas, and natural gas liquids. As of December 2019, Marathon owned interests in approximately 17,200 miles of pipelines and operated 3,900 convenience stores, with an additional 6,900 retail outlets run by independent entrepreneurs across 35 states, D.C., and Mexico. Founded in 1887, Marathon is a major exporter of refined products.
The 40.48% over the 12 month period growth of Diamondback Energy ending in May 2024 was driven by several key events:
Strong First Quarter 2024 Earnings: Diamondback Energy reported impressive financial results for the first quarter of 2024, with revenue reaching $2.22 billion, a 23% increase from the same period in 2023. Net income was $763 million, a 7.9% increase from the previous year's first quarter. Earnings per share (EPS) rose to $4.28, up from $3.89 in the first quarter of 2023.
Revenue Growth: Diamondback Energy's revenue growth was driven by increased oil production and higher realized prices. Diamondback Energy's average daily production in Q1 2024 was 461,100 barrels of oil equivalent, which fell short of analysts' expectations but still showed significant growth.
Capital Expenditures and Drilling Plans: Diamondback Energy plans to drill between 265-285 gross, 244-263 net wells and complete between 300-320 gross, 273-291 net wells in 2024, with an average lateral length of approximately 11,500 feet. Diamondback Energy expects capital expenditures of $2.3 billion-$2.55 billion in 2024.
Return of Capital Framework: Diamondback Energy continues to return meaningful capital to its stockholders through a sustainable and growing base dividend, opportunistic share repurchases, and variable dividend. Diamondback Energy returned approximately 50% of its free cash flow to stockholders in the first quarter of 2024.
Hedge Strategy: Diamondback Energy's hedge strategy is designed to maximize upside exposure to commodity prices while protecting against extreme downside risks. Diamondback Energy has a mix of crude oil hedges, costless collars, and basis swaps in place to manage its exposure to price fluctuations.
Diamondback Energy, Inc., founded in 2007 and headquartered in Midland, Texas, is an independent company focused on acquiring, developing, and exploiting unconventional oil and natural gas reserves in the Permian Basin. Concentrating on the Spraberry and Wolfcamp formations in the Midland basin and the Wolfcamp and Bone Spring formations in the Delaware basin, Diamondback Energy held approximately 455,378 gross acres and estimated proved reserves of 1,127,575 thousand barrels of crude oil equivalent as of December 31, 2019. Additionally, Diamondback holds interests in numerous wells and owns extensive midstream infrastructure, including pipelines and an integrated water system, across the Permian Basin and Eagle Ford Shale.
The Williams Companies achieved a 36.63% stock price increase over the 12 month period ending in May 2024, driven by several key factors:
Continued strength in base business: Williams delivered another year of record financial results in 2024, with GAAP net income up 60% vs 2022, adjusted EBITDA up 6% to $6.779 billion, and cash flow from operations increasing 24% to $6.055 billion. This strong operational performance across its gathering, processing and transmission assets boosted investor confidence.
Expansion projects: Williams made significant progress on several major transmission expansion projects in 2023-2024 that will drive additional business growth. This includes placing phase one of the Regional Energy Access expansion in service ahead of schedule in Q4 2023, with the remainder expected by Q4 2024. Williams also received FERC certificates for several other projects like the Commonwealth Energy Connectors and Southeast Energy Connector.
Strategic acquisitions: Williams completed strategic acquisitions of highly contracted take-or-pay transmission and fee-based storage assets in 2024. These accretive transactions added to Williams's stable cash flows and growth outlook.
Dividend growth: Williams raised its dividend by 6.1% to $1.90 annualized in 2024, marking 50 consecutive years of dividend payments. Williams's strong financial position and growth prospects enabled it to continue rewarding shareholders.
Positive analyst sentiment: Analysts were bullish on Williams' prospects, citing its extensive pipeline infrastructure, strategic acquisitions, financial stability, and opportunities in the energy transition. This favorable analyst coverage likely boosted investor demand for the stock.
The Williams Companies, Inc., together with its subsidiaries, operates as an energy infrastructure company primarily in the United States. It operates through Atlantic-Gulf, Northeast G&P, and West segments. The Atlantic-Gulf segment comprises Transco, an interstate natural gas pipeline; and natural gas gathering and processing, and crude oil production handling and transportation assets. The Northeast G&P segment engages in the midstream gathering, processing, and fractionation activities. The West segment comprises Northwest Pipeline, an interstate natural gas pipeline; and gas gathering, processing, and treating operations. Williams owns and operates 30,000 miles of pipelines, 28 processing facilities, 7 fractionation facilities, and approximately 23 million barrels of NGL storage capacity. The Williams Companies, Inc. was founded in 1908 and is headquartered in Tulsa, Oklahoma.
The 36.17% over the 12 month period growth of Valero Energy ending in May 2024 was driven by several key events:
Strong Refining Performance: Valero's Refining segment reported operating income of $4.3 billion for the fourth quarter of 2022, compared to $1.3 billion for the fourth quarter of 2021. This significant increase was due to higher refining margins and increased refining throughput volumes.
Successful Operations of New DGD Plant: Valero successfully commenced operations of the new Diamond Green Diesel (DGD) Port Arthur plant in the fourth quarter of 2022, which contributed to higher sales volumes and operating income in the Renewable Diesel segment.
Debt Reduction: Valero reduced its debt by $2.7 billion in 2022, bringing the total debt reduction since the second half of 2021 to $4.0 billion. This reduction in debt helped improve Valero's financial health and contributed to its growth.
Disciplined Investments: Valero focused on return-driven investments in its core refining and low-carbon fuels businesses, which strengthened its competitive advantage and drove long-term shareholder returns.
Valero Energy Corporation, headquartered in San Antonio, Texas, is a leading manufacturer and marketer of transportation fuels and petrochemical products with operations in the U.S., Canada, the U.K., Ireland, and internationally. Operating through its Refining, Ethanol, and Renewable Diesel segments, Valero produces a wide range of products, including conventional and premium gasolines, diesel fuels, jet fuels, petrochemicals, and lubricants. Valero owns 15 refineries with a combined capacity of approximately 3.15 million barrels per day and markets its products through wholesale and around 7,000 retail outlets under various brand names. Additionally, Valero operates 14 ethanol plants producing 1.73 billion gallons annually and a renewable diesel plant processing animal fats and vegetable oils. Founded in 1980, Valero was formerly known as Valero Refining and Marketing Company until 1997.
The 23.88% growth of ONEOK over the 12 month period ending in May 2024 was primarily driven by the following events:
Higher Year-Over-Year Rocky Mountain Region Volumes: ONEOK reported higher volumes in the Rocky Mountain region, which contributed to the growth.
Volume Momentum and Synergy Expectations: ONEOK's volume momentum and synergy expectations from the Magellan acquisition also contributed to the growth.
Increased Financial Guidance: ONEOK increased its financial guidance for 2024, reflecting favorable industry fundamentals and continued confidence in its synergy expectations.
Record Rocky Mountain Region Volumes: ONEOK reported record volumes in the Rocky Mountain region, which further supported the growth.
Higher Earnings from All Business Segments: ONEOK's 2024 financial guidance included higher earnings from all business segments, excluding the Medford insurance settlement in 2023.
ONEOK, Inc., headquartered in Tulsa, Oklahoma, engages in the gathering, processing, storage, and transportation of natural gas and natural gas liquids (NGL) across the United States. It operates through three segments: Natural Gas Gathering and Processing, Natural Gas Liquids, and Natural Gas Pipelines. ONEOK owns extensive infrastructure, including pipelines, processing plants, and storage facilities in regions such as the Mid-Continent and Rocky Mountains, as well as NGL distribution networks in several states. ONEOK serves a variety of clients, including exploration and production companies, propane distributors, ethanol producers, and industrial companies. Founded in 1906, ONEOK also operates a parking garage and leases office space in Tulsa.
The events that contributed to the 20.33% over the 12 month period growth of Marathon Oil ending in May 2024 include:
Strong Financial Performance: Marathon Oil reported strong financial results, with net income of $1,554 million in 2023 and adjusted net income of $1,587 million. This financial performance helped drive Marathon Oil's growth over the 12-month period.
Capital Efficiency and Shareholder Returns: Marathon Oil focused on improving capital efficiency and returning value to shareholders. Marathon Oil achieved a 40% return of capital to equity investors in a $60/bbl WTI or higher price environment, which contributed to its growth.
Increased Production and Refining Capacity: Marathon Oil increased its oil production and refining capacity, which helped drive growth. Marathon Oil reported a 190,000 net bopd production target at the midpoint of its 2024 guidance range, with no impact to its flat oil production guidance for the full year.
Environmental and Social Progress: Marathon Oil made significant progress in environmental and social initiatives, such as achieving a record-low annual Total Recordable Incident Rate (TRIR) of 0.21 and reducing its greenhouse gas (GHG) intensity by 50% ahead of schedule. These efforts helped maintain a positive reputation and contributed to Marathon Oil's growth.
Marathon Oil Corporation operates as an independent exploration and production company in the United States and Equatorial Guinea. Marathon Oil engages in the exploration, production, and marketing of crude oil and condensate, natural gas liquids, and natural gas; and the production and marketing of products manufactured from natural gas, such as liquefied natural gas and methanol, as well as owns and operates 32 central gathering and treating facilities and the Sugarloaf gathering system, a 42-mile natural gas pipeline through Karnes and Atascosa Counties. As of December 31, 2019, it had estimated proved developed reserves totaling 721 million barrels of oil equivalent (mmboe); and estimated proved undeveloped reserves totaling 484 mmboe. Marathon Oil was formerly known as USX Corporation and changed its name to Marathon Oil Corporation in July 2001. Marathon Oil Corporation was founded in 1887 and is headquartered in Houston, Texas.
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