4 Must-Watch Energy Stocks From the Prospering Integrated US Industry

Industry Overview - The Zacks Oil & Gas US Integrated industry includes companies involved in upstream and midstream energy businesses, focusing on oil and natural gas exploration and production, as well as transportation and storage [3] - The upstream business is positively correlated to oil and gas prices, while midstream operations generate stable fee-based revenues from long-term contracts [3] Current Market Conditions - Upstream companies are benefiting from favorable oil prices, with West Texas Intermediate (WTI) crude prices around $80 per barrel, which is advantageous for exploration and production activities [4] - The U.S. Energy Information Administration projects WTI and Brent average prices to be$70.31 and 74.31 per barrel, respectively, in 2025, indicating a continued favorable environment for integrated players [4] Revenue Stability - Integrated companies' midstream segments are less exposed to commodity price volatility due to long-term contracts securing stable fee-based revenues [5] Environmental Focus - Companies in the industry are increasingly focused on reducing greenhouse gas emissions and flaring rates, recognizing climate change as a significant risk [6] Industry Performance - The Zacks Oil & Gas US Integrated industry has a Zacks Industry Rank of 57, placing it in the top 23% of over 250 Zacks industries, indicating a bullish outlook [7][8] - However, the industry has underperformed compared to the broader Zacks Oil - Energy sector and the S&P 500, gaining only 1.2% over the past year compared to 16.8% and 25.4% for the sector and S&P 500, respectively [9] Valuation Metrics - The industry is currently trading at an EV/EBITDA ratio of 4.91X, lower than the S&P 500's 18.23X but higher than the sector's 3.86X [12] - Over the past five years, the industry's EV/EBITDA has ranged from 3.33X to 14.35X, with a median of 5.02X [12] Key Players - ConocoPhillips (COP) has a strong production outlook and lower debt exposure, positioning it well for adverse business scenarios [14] - Occidental Petroleum (OXY) is addressing its debt burden, reducing it from 47.6 billion in 2019 to $25.5 billion by 2024 [17] - Berry Corporation (BRY) operates in low-decline, long-lived reserves and has a strong balance sheet to navigate volatility [19] - Cactus Inc (WHD) benefits from high crude prices and is focused on minimizing environmental impact [21]