Shell
Shell is first on the list of the most profitable oil companies. The corporation’s free cash flow yield is set to reach 13% in 2022. According to preliminary estimates, Shell’s revenue will increase significantly in the next 3 years. At this point, the company’s shares are being traded at a slight discount compared to Shell’s competitors. High demand for the commodity amid sanctions against the Russian energy sector is likely to boost shareholder returns. The company is planning to reduce its debt, which would help the oil giant to stabilize its business.
Santos Limited
Santos Limited is another promising oil company. It merged with Oil Search in 2021, creating one of the biggest energy companies in the global market with reserves of 1.378 billion barrels. Last year, the company produced 116 million barrels of crude oil. The combined company has a diversified production base, with LNG production accounting for 47% of the company’s products. Natural gas and liquid hydrocarbons account for 35% and 18% of its output, respectively. Experts note the stock’s upside potential, which makes it attractive as a long-term investment.
Range Resources
In 2022, shares of Range Resources surged thanks to prices of gas condensate rising to all-time highs. Analysts say Range Resources has impressive upside potential. Gas condensate production currently constitutes 30% of the company’s total output. Most condensate products are exported, bringing high dividends to shareholders. Higher demand for fossil fuels has brought stable revenue for Range Resources.
ARC Resources
ARC Resources is estimated to generate a free cash flow of $1.6 billion in 2022. Currently, the oil company has put a number of major merger and acquisition deals on hold. ARC is focusing on developing the promising Attachie oil field in British Columbia. The company plans to spend 50-80% of its free cash flow on shareholder dividends, which are tied to revenue growth. Furthermore, ARC Resources has a share buyback program - it can repurchase up to 10% of its outstanding common shares per year.
California Resources Corporation
California Resources Corporation is fifth on the list of profitable oil stocks. It is a promising long-term stock thanks to the supply and demand balance and its high free cash flow potential. The company’s current reinvestment policy is expected to generate FCF of $2 billion in 2022-2025. It would bring steady returns to its shareholders, as well as maintain the company’s strong balance sheet and attract investments. CRC has a stable dividend policy based on its $250 million share buyback program. The oil giant plans to deliver 50% of its FCF to shareholders, thus ensuring a long-term upside potential for its yield.
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