Earthstone Energy, Inc. ESTE has witnessed upward earnings estimate revisions for 2021 and 2022 in the past 60 days. Also, the upstream energy company’s stock price has increased 89.8% year to date versus the industry’s surge of 85.2%.
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Factors Favoring the Stock
The price of West Texas Intermediate crude, trading at more than $69 per barrel mark, has improved drastically from the pandemic-hit April of 2020 when oil was in the negative territory. With the coronavirus vaccines being rolled out at a massive scale, the demand for fuel will possibly improve further. This has paved the way for further oil price recovery.
Overall, the massive improvement in oil price is a boon for oil explorers and producers. Earthstone Energy, having a strong footprint in the Midland basin of west Texas and the Eagle Ford trend of south Texas, is well-placed to capitalize on the favorable pricing scenario. Most importantly, by hedging roughly 88% of 2021 oil production, the company has not exposed itself to volatility in oil prices.
Moreover, Earthstone is focused on cost-reduction initiatives, boosting its bottom line. Notably, from 2016 through the March-end quarter of 2021, the company’s operating expenses (comprising lease operating expense per barrel of oil equivalent & cash general, and administrative expense per barrel of oil equivalent) in the Midland basin declined roughly 48%.
The upstream firm carrying a Zacks Rank #2 (Buy) at present, also has a strong balance sheet. In fact, the company’s balance sheet has lower debt exposure as compared to composite stocks belonging to the industry. Notably, it has total liquidity of approximately $253 million, considering $251.6 million of undrawn borrowing base capacity and $1.4 million in cash.
Other Stocks to Consider
Some other top-ranked players in the energy space are Whiting Petroleum Corporation WLL, Callon Petroleum Company CPE and Oasis Petroleum Inc. OAS. All companies currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Whiting Petroleum has witnessed upward earnings estimate revisions for 2021 in the past 30 days.
Callon Petroleum is expected to witness earnings growth of 129% in 2021.
Oasis Petroleum has witnessed upward earnings estimate revisions for 2021 in the past 30 days.
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