With conflict escalating in the Middle East after Israel’s attack on Iran, Tehran is threatening to close the Strait of Hormuz, which carries 20% of global oil supply. This could push oil prices to $80-$100 per barrel. This scenario would create significant opportunities for U.S. shale producers, particularly those with efficient operations and strong financials. Below are the top five U.S. shale companies to consider, chosen for their ability to profit from rising oil prices, strong financial health, and favorable stock performance following Friday’s oil price surge.
1. Northern Oil and Gas (NOG)
Stock Price: $32.16
Northern Oil and Gas, a non-operated producer in the Bakken and Permian, benefits from high-margin wells through partnerships with top operators. Its 21.1% stock gain in the past month and $2.94 billion market cap reflect its sensitivity to oil price spikes. NOG’s low-cost structure and debt reduction efforts ensure robust cash flow, making it a compelling choice for investors eyeing Hormuz-related gains.
2. Permian Resources (PR)
Stock Price: $14.93
Permian Resources, a Delaware Basin pure-play, holds 450,000 net acres and reported $460 million in adjusted free cash flow in Q1 2025. Its $608 million acquisition of APA Corporation’s Northern Delaware assets bolsters its low-breakeven inventory, enhancing its ability to thrive at $80-$100 oil prices. PR’s stock has gained 18.5% in the past month, reflecting strong investor confidence. With a leverage ratio of 0.8x and a $0.15 per share quarterly dividend, PR combines growth and income appeal.
3. Matador Resources (MTDR)
Stock Price: $55.69
Matador Resources, focused on the Delaware Basin, produces over 150,000 barrels of oil equivalent per day. Its Q1 2025 production grew 30% year-over-year, driven by efficient drilling and strategic acquisitions, including Ameredev’s assets for $1.9 billion. MTDR’s breakeven costs, around $55 per barrel, ensure strong margins in a high-price environment. With a market cap of $6.4 billion and a 15.5% stock increase over the past month, Matador offers a compelling mix of growth and operational excellence.
4. SM Energy (SM)
Stock Price: $28.26
SM Energy, an independent producer in the Permian and Eagle Ford basins, focuses on high-margin oil production.. With breakeven costs estimated below $60 per barrel and a disciplined capital program, SM Energy generates robust cash flow, making it an attractive option for investors seeking shale exposure. Its operational efficiency supports rapid scaling in a high-price environment.
5. Riley Exploration Permian (REPX)
Stock Price: $28.44
Riley Exploration Permian, a smaller Permian Basin operator, reported Q1 2025 EPS of $1.62, surpassing estimates. Its $142 million acquisition of Silverback Exploration adds over 300 gross undeveloped horizontal locations, boosting its growth trajectory. With a market cap of $599 million and a 10.8% stock gain in the past month, REPX’s focus on debt reduction and midstream investments supports long-term value. It offers high upside for investors comfortable with smaller-cap volatility.
Why These Companies?
NOG, PR, MTDR, SM, and REPX are well-positioned to benefit from a Strait of Hormuz closure due to their low breakeven costs, strategic assets, and financial discipline. NOG and PR provide scale and premium acreage, while MTDR and SM offer operational agility and high margins. REPX, despite its smaller size, delivers speculative upside through recent acquisitions. Risks include potential OPEC+ production increases, which could limit price gains, and domestic regulatory constraints on drilling. Investors should closely monitor geopolitical developments, as a confirmed closure could significantly amplify these companies’ gains.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with a financial advisor before making investment decisions.
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