Oil Moving Back Toward $85 – 2 Energy Stocks With Potential 15% Ultra-Yield Dividends

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24/7 Insights

• Worries of continued fighting in the Middle East have kept a floor under oil this year.
• Increasing demand from China is also a tailwind to the energy sector.
• Grab this free report now: Access 2 legendary, high-yield dividend stocks Wall Street loves .

While most investors have been fixated on the parabolic rise of the Nasdaq, the S&P 500, and Bitcoin, hardly any of the big money has been watching energy. That's about to change as West Texas Intermediate (WTI) climbed above the $80 mark for the second time in 2024, and OPEC+ announced it will be extending the current production cuts until at least the end of the year. This presents a promising opportunity for high returns in the energy sector.

With the war in the Middle East and Ukraine expanding, demand and consumption worries have been the only things keeping the benchmark price for oil below $80. With summer officially here and travel for the 4th of July long weekend setting all-time records, demand should continue to pick up.

We screened our 24/7 Wall Street energy stock research database and found two top companies rated Strong Buy by top Wall Street analysts and pay massive, dependable, ultra-yield dividends.

Mach Natural Resources is an independent upstream oil and gas company that acquires, develops, and produces oil, natural gas, and NGLs.

This 2023 IPO is trading below the initial price and will pay a reported gigantic 15.21% dividend based on estimates for the rest of the year. Mach Natural Resources L.P. ( NYSE: MNR ) is an independent upstream oil and gas company focused on the acquisition, development, and production of oil, natural gas, and natural gas liquids reserves in the Anadarko Basin region of Western Oklahoma, southern Kansas, and the Texas panhandle.

The analysts at Raymond James noted that Mach is led by Tom Ward, Co-Founder of Chesapeake Energy. Mach is another entrant into the E&P MLP space. It is a pure-play operator in the Anadarko Basin, leveraging its strong position (1 million net acres) to become the primary consolidator in the region.

Mach’s midstream position and lower base decline (~20%) allow the company to target a lower reinvestment rate (~30%) relative to the overall industry. Deutsche Bank Has 4 Sizzling ‘Fresh Money’ Dividend Stock Picks for Q3

TXO Partners

TXO Partners is focused on the acquisition, development, optimization, and exploitation of oil, natural gas, and natural gas liquid reserves in North America.

This company had a recent secondary offering, which could add huge production, and the current distribution is expected to jump by over $1 per share in 2025. TXO Partners L.P. ( NYSE: TXO ) is an oil and natural gas company focused on the acquisition, development, optimization, and exploitation of conventional oil, natural gas, and natural gas liquid reserves in North America.

Its acreage positions are concentrated in the Permian Basin of West Texas and New Mexico and the San Juan Basin of New Mexico and Colorado.

The company recently completed an offering of 6,500,000 common units representing limited partner interests in TXO  common units at a price to the public of $20.00 per common unit. The offering size was increased from the previously announced offering size of 5,000,000 common units.

The analysts at Raymond James are very bullish on the deal and noted this in a recent research report.

Last week, TXO entered into an agreement to purchase assets in the Bakken from two private operators. Total consideration is ~$296 million and looks to add ~4,600 boe/d to TXO’s 2025 estimated production (>85% liquids) with a very shallow 14% base decline rate. TXO management is very familiar with the asset, having operated in the Williston Basin during their time at XTO Energy. The deal is funded using their revolver and equity.

The equity portion consists of ~$130 million from the recent equity offering price and 2.5M shares (~$51M) to the acquired company. Despite the incoming debt, TXO will remain comfortably below 1x levered and plans on continuing to distribute ~100% of FCF.

The overall impact from the transaction is a huge bump to free-cash-flow and an estimated 2025 distribution of ~$3.27/share for a ~16% yield. Given their very low required reinvestment rate and only ~10% overall base decline rate, we view TXO as quite undervalued

While the current yield is already a whopping 11%, investors will have to wait until 2025 to enjoy the massive increase in the distribution. It will be very much worth the wait, as the stock still trades well below the 52-week high of $23.56.

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