Buying Opportunities In The Energy Sector For Yield And Upside Potential (EOG, CHK)

In a challenging market environment such as the one that has been seen recently, it is important to look to tried and true investing strategies have been working for investors.  A prime example of an opportunity-rich area is in the energy sector, where United States has seen a boom in oil and gas production.

There has been a lot of activity in the oil-rich regions of the United States such as Texas’ Eagle Ford shale, as well as Western North Dakota’s Bakken shale.  Oil and gas companies have been benefiting from the recent boom in drilling in spite of recent economic conditions.

Understandably, investors have been nervous to invest in an increasingly more volatile market.  The economic problems plaguing seemingly every corner of the globe, an anemic US recovery and omnipresent threat of sliding back into recession, and the stock market’s wild daily swings have kept many investors out of the market all together.

For investors who are brave enough to wade into the choppy waters of today’s stock market, there are some prime opportunities in the energy sector that offer both growth potential and dividend yield which will serve to pay investors to wait for the economy to turn around, and the markets to calm.

EOG Resources Provides An Excellent Play In US Energy Sector


One of the best ways to play the energy sector and the massive oil discoveries in the United States is with top producer EOG Resources (EOG).  EOG Resources is a stand out producer in both the Eagle Ford shale and the Bakken shale and also has exposure to other hot oil properties.

EOG Resources has been praised for shifting its focus from natural gas and focusing instead on natural gas liquids and higher-priced oil.  The company also has extensive natural gas acreage, positioning it nicely to profit from a rise in natural gas prices.  While the majority of today’s money is made from oil, in the future natural gas could prove to be a huge bonus.

EOG Resources boasts an excellent balance sheet and incredible growth potential, and also pays a dividend of 0.70%, which will rise in the event that share prices fall.  Currently trading at $91.64, EOG Resources has an estimated EPS of $0.77 for the next quarter, and a price target of $114.73.

Undervalued Chesapeake Energy Could See Massive Upside For Patient Investors


Headquartered in Oklahoma City, Chesapeake Energy (CHK) is the second biggest producer of natural gas in the US, and could help investors realize major profits in the energy sector.  The company operates in four segments: exploration and production, marketing, gathering and compression, and service operations including its wholly owned trucking and drilling operations.

Currently, Chesapeake Energy is in the top fifteen producers of natural gas liquids and oil and aims to be in the top five in the coming years.  As the company is the most proactive driller of new wells, it is on its way to achieving that goal, and is considered to be in a prime position to profit from the boom in gas in the United States.

As one of the most aggressive drillers in the United States, Chesapeake Energy is an excellent example of a company that is natural gas oriented making the switch to higher priced liquids such as oil.  Based on its assets, Chesapeake Energy is undervalued by more than two times its current market value, with an intrinsic value in the range of $62.00 per share.

Currently trading at $22.93, with a dividend yield of 1.52%, Chesapeake Energy could benefit greatly from a recently introduced bill in the United States Senate, The Natural Gas Act of 2011, which would supply enhanced support for the drive to deploy a large number of natural gas vehicles in the US.