Elon Musk says the world needs more oil and gas and he is right. People take note when one of the world’s richest men, who made a fortune developing an automobile that has reduced the planet’s fossil fuel needs, says that more oil and gas production is needed.
In fact I think we need to use oil and gas in the short term because otherwise civilization will be doomed, said Tesla CEO at an energy conference in Norway.
Musk is a proponent of renewable energy, but believes the world will need both fossil fuels and renewable energy to meet the planet’s growing energy needs, and the transition to renewable energy will take decades to complete.
Musk says one of the biggest challenges the world has ever faced is the transition to sustainable energy and a sustainable economy.
Is Musk right?
The US Energy Information Administration agrees with Musk, projecting that oil and other liquid fuel consumption will increase to 99.4 million barrels in 2022 and 101.5 million in 2023. In addition, the International Monetary Fund has predicted that demand for oil will peak around the year. 2040. However this means that the demand for oil will eventually decrease, i.e. 18 years from now, oil will be needed for a long time to come as population growth and economic expansion in developing countries will increase demand.
With that in mind, here are three of the top oil and gas stocks that investors can buy and hold over the long term while this transformation takes place.
1. Natural Resources of Canada
Canadian Natural Resources NYSE: CNQ is one of Canada’s leading oil and gas companies, with an extensive presence in the oil sands of Alberta, as well as offshore operations in the North Sea and Africa.
The organization has major areas of strength for a to restoring cash-flow to investors and making an incentive for investors on a for each offer premise. Shares yield more than 4%, and management recently announced a special dividend of 1.50 Canadian dollars ($1.15) per share. A special dividend is a reward to shareholders when a company doubles its cash flow during the second quarter.
The company is also targeting to use 50% of free cash flow, which it defines as adjusted fund flow minus base capital expenditures and dividends, for share repurchases and another 50% for its balance sheet. When the company reduces net debt to $8 billion, it will increase its return to shareholders.
If oil prices fall, it could put a damper on Canadian Natural’s plans, but the company deserves credit for making the most of 2022’s high oil prices to reward shareholders and improve its balance sheet. In addition, the company’s assets in the oil sands of Alberta are known for their long life and low cost of extraction, meaning that Canada’s natural resources have an attractive cost profile on production.
ExxonMobil (NYSE:XOM) is the world’s largest integrated oil and gas company, with a market cap of more than $400 billion. The company has paid dividends for more than 100 consecutive years, and has increased its payout over the past 39 years. When other oil companies suspended or reduced their dividends during the pandemic, the company continued to pay and increase its dividends.
In addition to this reliable payout, ExxonMobil is returning capital to shareholders through share buybacks, which recently announced a $30 billion repurchase authorization, tripling the size of its previous program and the company’s current market capitalization. Is. is approximately equal to 7.5%.
3. Total Energy
While ExxonMobil and Canadian Natural Resources exchange at appealing valuations, Total Energies (NYSE:TTE) is considerably less expensive. The shares trade at just 7 times earnings and less than 5 times consensus forward earnings. The company is based in France, so some leeway is likely given the risks associated with the French government’s proposed unexpected taxes on Russian liquefied natural gas (LNG) and resource companies, but the stock looks like a bargain.
Shares of Total Energies offer a higher yield than the two stocks above, with a dividend yield north of 5%. The company is returning capital to shareholders through share buybacks, repurchasing more than $2 billion of its own shares last quarter.