Oil prices have soared this year. Brent crude, the global price benchmark, has risen more than 30% this year, from $60 a barrel to around $80. Concerns that a protracted war with Iran could affect oil supplies were a major factor driving the surge in crude prices.
While the current conflict is likely to continue to push crude prices higher, Oil prices may not stay high for long. Here are three oil companies that are still thriving even as oil prices fall. This makes them stand out The best oil stocks to buy In March this year, the global oil market faced many uncertainties.
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Chevron(NYSE: CVX) Is a global oil and gas giant. Its massive scale and abundance of low-cost resources enable it to thrive in virtually any market environment. Chevron With Brent crude averaging below $50 a barrel by 2030, the company could generate enough cash to cover its capital spending plans and dividends.
The company expects to deliver industry-leading free cash flow growth this year without any boost from oil prices. The combination of recently completed expansion projects, completion of the merger with Hess and cost-saving initiatives puts it on track to generate an additional $12.5 billion in free cash flow this year if Brent crude oil prices average $70 per barrel (similar to last year’s average). Chevron, meanwhile, expects its free cash flow to grow more than 10% annually through 2030, driven by continued completion. main Capital projects.
Chevron’s growing free cash flow will give it more money to return to shareholders. Last year, the company returned $27.1 billion to investors through stock buybacks and dividends. The oil giant recently increased its dividend by another 4%, extending its growth streak to 39 years. Even if oil prices cool, Chevron’s growing free cash flow and cash returns should create plenty of value for investors in the coming years.
ConocoPhillips(NYSE:COP) It also has large amounts of low-cost oil and natural gas resources. Its pre-dividend free cash flow breakeven level is currently around $40. At the same time, its dividend increased the breakeven level by about $10. The company’s low break-even level allows it to generate significant free cash flow. Last year, the company generated $7.3 billion in free cash at an average Brent crude price of just over $69 a barrel, easily covering the $4 billion it paid in dividends.
The oil giant expects to boost free cash flow by $1 billion this year, driven entirely by its cost-saving initiatives. ConocoPhillips, meanwhile, expects its three global LNG investment startups to generate an additional $1 billion in annual free cash flow in 2027 and 2028. Finally, free cash flow is expected to increase by another $4 billion when the Willow oil project in Alaska comes online in 2029.
ConocoPhillips’ growing free cash flow will steadily reduce its breakeven level, which will fall to around $30 by 2030. At the same time, its dividend may increase by another $8 to $10 per barrel. While the company expects dividend per share growth to be within the top 25% S&P 500 Index During this period, the company’s meaningful stock repurchase program should steadily reduce the dividend burden.
Exxon Mobil(NYSE: XOM) It is one of the best-run oil companies in the world. The oil giant is the most profitable company in the industry, posting industry-leading earnings ($28.8 billion) and operating cash flow ($52 billion) last year.
The oil giant expects to become even more profitable in the coming years. ExxonMobil expects to achieve $25 billion in earnings growth and $35 billion in cash flow growth by 2030 compared with the same commodity prices and margins in 2024. The company expects the completion of major expansion projects and industry-leading cost-saving initiatives to drive its growth.
ExxonMobil’s growing cash flow will give it more money to return to shareholders. last year, Exxon Mobil Delivered industry-leading shareholder distributions ($37.2 billion), including $17.2 billion in dividend payments, ranking second among S&P 500 companies. It has also maintained industry-leading dividend growth for 43 consecutive years.
Chevron, ConocoPhillips and Exxon Mobil expect their already strong cash flows to continue growing at a strong pace through the end of the decade without benefiting from higher oil prices. They are well protected against the downside risks of falling oil prices while also being perfectly positioned to take advantage of rising crude prices. These characteristics make it the best oil stock to buy this month.
Before buying Exxon Mobil stock, consider the following factors:
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Matt DiLallo works at Chevron and ConocoPhillips. The Motley Fool holds a position and recommends Chevron. The Motley Fool recommends ConocoPhillips. The Motley Fool has a disclosure policy.
The 3 Best Oil Stocks to Buy in March Originally published by The Motley Fool
