3 Stocks To Buy As Oil Prices Collapse, OPEC Panics

The numbers are in, and they do all the talking.

The U.S. is producing more oil than any country in history. The country’s output averaged 12.9 million barrels per day in 2023, smashing the previous record of 12.3 million barrels per day in 2019.

America's oil production is growing so fast, the International Energy Agency says it will cause a production glut that humanity has only seen once before: during the spring of 2020, when oil demand crashed during COVID lockdowns.

You may remember what happened next. After selling off initially, oil and gas stocks went on to be the top performers on the S&P 500 in 2022.

Schlumberger NV SLB, APA Corp (US) APA, Valero Energy Corporation VLO and Halliburton Company HAL took the top four spots on the S&P 500 that year, up 80.4%, 75.2%, 73.3% and 72.4%, respectively.

Now history is about to repeat itself as America's shale boom makes OPEC irrelevant. Here are three ways to play America's new energy dominance.

Shale Boom Play #1: Kinder Morgan

Kinder Morgan Inc KMI is the biggest independent transporter of refined oil and gas in the U.S. It also has an interest in more than 15% of U.S. natural gas capacity.

Not only does it own 10,000 miles of refined and raw crude pipelines, Kinder Morgan also owns 71,000 total miles of pipelines to make up the largest transmission network of natural gas in America.

The shale oil boom simply isn't possible without Kinder Morgan’s infrastructure, and this dynamic allows the company to collect a "toll" on all of the oil and natural gas that passes through its vast
network.

This source of income allowed Kinder Morgan to grow its earnings by 9.9% last year, almost double the earnings growth of the average S&P 500 company.

It also allows Kinder Morgan to pay investors a yield of 5.6% — and analysts expect 12.5% growth this year for the company.

Then again, analysts have underestimated Kinder Morgan's earnings for each of the last two quarters. As America's shale boom accelerates, the massive demand for Kinder Morgan's network could catch analysts and Wall Street off guard once again.

Shale Boom Play #2: ExxonMobil

In March, Exxon Mobil Corp XOM announced plans to build 16 new oil and gas projects through 2026, ramping up drilling operations in Texas, North Dakota and Oklahoma.

Exxon plans to go through with these massive new drilling projects regardless of how oil prices fluctuate through 2026, according to the Dallas Business Journal.

That's important because these new projects will tap into vast amounts of new oil … potentially enough to reset the global energy equation.

In particular, Exxon is betting on improved fracking technologies to double the amount of oil it can pump from shale fields.

As CEO Darren Woods put it, "There's just a lot of oil being left in the ground" with current fracking practices.

Don't count on that being the case for much longer. In the meantime, Exxon offers a 3.4%dividend yield that is more than double what the average S&P 500 company pays out.

Shale Boom Play #3: Occidental Petroleum

The world's greatest investor can't get enough of this $54-billion oil and gas company.

Warren Buffett has bought shares of Occidental Petroleum Corp OXY over each of the last nine trading sessions as we write, padding his already hefty stake in the company to 29%.

Berkshire Hathaway now owns over 255 million shares of Occidental Petroleum. Buffett decided to accrue this massive stake after reading an earnings report conference transcript from Occidental CEO Vicki Hollub, who he says is "running the company the right way."

The numbers bear out this assessment. Occidental Petroleum has nearly doubled its dividend, from 13 cents per share in 2022 to 22 cents per share in 2024.

Strikingly, Occidental has been able to ramp up its dividend even amid a historic acquisition spree. In October, it announced a $12-billion purchase of oil producer CrownRock, expanding its presence in the oil-rich Permian Basin.

We see the same potential Warren Buffett does. Occidental Petroleum is well-positioned to
play a major role in unlocking America's vast shale reserves, and rewarding shareholders many times over along the way.

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