The oil and gas sector provided investors stellar returns in 2022 when the rest of the market failed to perform. The S & P Oil & Gas Exploration & Production Index was up 45% last year. In contrast, the broader S & P 500 index fell by 19% over the same period. The sector index has also risen in 2023, up by more than 9% despite a fall in crude oil prices. But how long can the rally last? Analysts and fund managers say several key factors may push up oil prices in the near future. For example, the U.S. has to replace 180 million barrels of strategic reserves that were drawn down to meet demand. In addition, energy markets could be squeezed further if the Chinese economy rebounds and the Russian oil industry struggles under sanctions. With that in mind, CNBC Pro looked for stocks in the oil and gas sector that are well liked by analysts, with a majority rating them a “buy,” according to FactSet. The average analyst price target calls for at least a 50% gain in the next 12 months. Here is a list of those names. Vertex Energy Vertex , a Houston-based company focused on producing conventional and alternative fuels, has the biggest upside potential among the stocks screened. Analysts expect the shares to go up by 90% to $15 over the next 12 months. The company’s stock closed at $7.86 on Friday. The Nasdaq-listed firm sold its used motor oil recycling business for $90 million earlier this month. The small-cap company expects to redeploy capital into more profitable new ventures. VTNR 1Y line “Vertex has announced a transformational deal that we expect will transition the company into an independent refiner with a focus on the attractive renewable diesel market,” said Michael Hoffman, research analyst at Stifel, in a note to clients on Feb. 1. Earthstone Energy Shares of Earthstone , a Texas-headquartered independent oil and gas company, are expected to go up by 85.8% by analysts over the next year. The firm focuses on growth through developing oil and gas reserves and acquisitions. Last year, it purchased 8,000 acres in the Permian basin for more than $600 million. Before that, the firm spent $860 million to acquire a privately held oil and gas producer Bighorn Permian Resources. The company, whose shares are traded under the ticker ESTE, now hopes to find “synergies” at its newly acquired assets and extract more value from investors. ESTE 1Y line “ESTE is one of our top picks for 2023, due to our view of the strength of management, the strong balance sheet and management’s commitment to maintaining a strong balance sheet. We view the valuation as compelling,” wrote John White, an analyst at Roth Capital Partners, in a note to clients on Jan. 26. EQT Corporation EQT , the largest of the three companies CNBC Pro screened, has had lackluster share price performance over the past six months. EQT shares have declined by 30% thanks to significantly weaker gas prices and delays in approval from the Federal Trade Commission of its $5.2 billion acquisition of gas basil in West Virginia. Meanwhile, the benchmark S & P Oil & Gas Exploration & Production Index has risen by 3% over the same period. “Despite those concerns, we expect management to provide a good path on its strategies with the 2023 outlook,” said Scott Hanold, RBC Capital Markets analyst in a note to clients on Jan. 22. “We think the company has some of the most economic natural gas assets in North America and benefits from low royalty rates, low operating costs, and premium geology.” “We believe that EQT shares should outperform peers over the next 12 months,” Hanold added. The analysts’ consensus price target points toward 51.6% upside for the stock. EQT 1Y line
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