Introduction
Oil and gas stocks have returned to the spotlight. After a period of uncertainty, the energy markets are showing signs of renewed opportunity since it’s driven by rising demand, supply constraints, and shifting regulatory dynamics. If you’re looking for exposure to the energy sector without going directly into oil wells, smart stock picks can offer both upside potential and liquidity, and dividends too.
In this article, you’ll get four promising oil and gas stocks to watch right now. We’ll explore what makes each company stand out, what risks are involved, and how to evaluate them. Whether you’re building a long-term portfolio or just seeking a sector tilt, understanding these names can help you get a sense of what matters when investing in oil and gas stocks.
What Makes an Oil & Gas Stock Worth Watching
Before diving into specific names, it helps to have a checklist of what to look for when evaluating oil and gas stocks.
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Financial stability. You want companies with strong balance sheets, manageable debt levels and healthy cash flow. In a volatile sector, weak finances amplify risk.
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Production cost profile. The lower the cost to produce oil or gas (per barrel or per barrel of oil equivalent, BOE), the better the margin cushion when prices dip. Efficiency matters.
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Favorable geography or basin exposure. Some basins (e.g., the U.S. Permian, Gulf Coast, Appalachian for gas) offer lower cost, good infrastructure, and export potential. A company with strong assets matters.
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Dividend yield and history. For many investors, income from dividends helps buffer volatility. Look for companies with sustainable payout ratios, not just high current yields.
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Growth potential. That means reserve replacement (finding new reserves), a strong development pipeline, or innovation in production technology.
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Environmental/regulatory readiness. With increasing focus on emissions, carbon taxes, and ESG concerns, companies that are ahead of regulatory risks are safer bets.
If a company checks many of these boxes, it is more likely to hold up or outperform in the oil and gas space. But again, nothing is guaranteed.
Four Oil & Gas Stocks to Watch Now
XOM (ExxonMobil)
Company profile:
Exxon Mobil Corporation is one of the largest public oil and gas companies in the world. It’s vertically integrated, covering upstream (exploration & production), midstream (transportation), downstream (refining and marketing), plus chemicals.
Why it stands out now:
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Its scale and diversification help it weather downturns better than many smaller producers.
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It has access to low-cost, “advantaged” assets, recently leaning into major plays like the Permian Basin and Guyana (according to recent corporate plans) which improve its cost profile.
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For an investor, owning XOM gives exposure to both oil and gas plus downstream refining and chemicals, which can dampen the effect of straight oil price declines.
Risks:
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Large capital expenditures (capex) are required upstream on an ongoing basis. If oil prices stay weak, these expenditures increase risk.
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ESG/regulatory pressure is intense. Being a big legacy oil company means more scrutiny on emissions, climate risk, stranded asset risk.
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Because it’s so large and diversified, sometimes the growth upside is more modest versus smaller nimble companies.
What to monitor:
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Production cost per barrel or BOE and how new asset acquisitions affect it.
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Dividend payout and whether cash flow supports it.
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Upstream vs downstream earnings mix (should downstream earnings remain stable).
CVX (Chevron)
Company profile:
Chevron Corporation is a major integrated oil and gas company with global operations in exploration, production, refining, marketing, and chemicals.
Why it stands out:
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Strong reserves and global reach give it flexibility to tap different markets and pivot regionally if needed.
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Reliable dividend history and an integrated structure (upstream + downstream) help reduce pure oil-price risk.
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Good positioning in several large basins and a reputable name could mean relatively lower risk among peers.
Risks:
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Foreign operations bring political/regulatory risk (taxes, sanctions, environmental regulation).
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If oil prices fall, integrated majors still suffer upstream losses—downstream margins may not always offset.
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Similar to Exxon, heavy capex burden and long project lead-times can delay returns.
What to monitor:
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Exploration success in key basins, cost per barrel trends.
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Refining/chemical margins (which affect downstream earnings).
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Dividend stability and payout ratio.
If you like the idea of energy exposure with some global diversification but still want to keep risk moderate, CVX is among the meaningful oil and gas stocks to consider.
EQT (EQT Corporation)
Company profile:
EQT Corporation is a large U.S.-based natural gas producer, focused primarily in the Appalachian Basin. It is vertically integrated (production + gathering + transmission) of gas, natural gas liquids (NGLs) and some oil.
Why it stands out:
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For investors looking for exposure to natural gas (and NGLs) rather than just oil, EQT is a strong option.
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Gas demand is likely to grow (for power generation, LNG exports, industrial use) which gives a potential structural tailwind.
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Vertical integration means better control of costs and margin capture across the value chain.
Risks:
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Natural gas prices tend to be more volatile and can be heavily influenced by weather, supply glut, or regulatory changes.
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Because much of the focus is U.S. Appalachia, regional infrastructure or regulatory issues could impact results.
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If the global energy transition accelerates away from fossil fuels faster than expected, gas companies may also face valuation pressure.
What to monitor:
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Gas price outlook (domestic and international via LNG).
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Reserve replacement, cost per Mcf (thousand cubic feet) or per BOE.
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Infrastructure investments (pipelines, transport) and how they affect margins.
EPD (Enterprise Products Partners L.P.)
Company profile:
Enterprise Products Partners L.P. is a major midstream energy partnership in North America. It provides services such as pipelines, storage, transportation and processing of crude oil, natural gas liquids, refined products and natural gas.
Why it stands out:
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Mid-stream companies tend to have more stable cash flows, since they earn fees for transport/storage rather than relying directly on commodity prices. This may make EPD comparatively lower risk among oil and gas stocks.
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High distributions (dividends) are common in midstream companies, which can appeal to income-oriented investors.
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As U.S. oil and gas production has grown, infrastructure demand has grown too—which could benefit companies like EPD.
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EPD’s asset utilization, especially in NGL systems, is near full capacity.
Risks:
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Volume risk: midstream earnings depend on volumes transported. If production drops or pipelines are underutilised, returns suffer.
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Regulatory / ESG risk: pipelines, storage and environmental scrutiny can create delays, cost overruns or restrictions.
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While less exposed to oil price swings than upstream, midstream still isn’t immune to sector downturns or demand shifts.
What to monitor:
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Utilization rates of pipelines and storage capacity.
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New infrastructure build projects, especially in major basins (Permian, Gulf Coast).
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Distribution (dividend) sustainability and coverage.
If you’re more income or infrastructure-focused but still want exposure to the oil and gas stocks, EDP is among the more conservative plays.
How to Evaluate When to Buy Oil & Gas Stocks
Timing matters. Here are some triggers and evaluation metrics to consider when deciding when (and if) to buy oil and gas stocks.
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Oil & gas price outlook. If you believe oil or gas prices are headed higher (due to supply cuts, demand growth, export expansion), then upstream and integrated stocks become more attractive. For midstream, growth in production matters because that translates into volumes.
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Earnings reports and reserve announcements. Positive reserve replacement news or successful production from new wells are good signals.
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Valuation metrics. Don’t just look at P/E—use metrics tailored for energy stocks like EV/EBITDA (which includes debt), cash flow per barrel or per BOE, production cost curves, reserve life, payout ratio for dividends.
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Dividend sustainability. Check how much of earnings or cash flow is going toward dividends. A high yield is good, but not if the company is cutting into its capital expenditures to maintain the dividend.
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Infrastructure/trend developments. For example, export terminal approvals, pipeline expansions, LNG contracts can be catalysts for oil and gas stocks.
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Management disclosures and strategy. Look for companies actively adapting to regulatory change (ESG), controlling costs, reducing debt, innovating.
Risks & Downside to Keep in Mind
Even strong stocks carry risks, especially in the oil and gas stocks sector:
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Volatility in commodity prices. Oil and gas prices can swing sharply due to supply shocks (geopolitical, weather), demand changes (economy slows), or new production (shale).
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Regulatory and ESG pressures. Carbon taxes, emissions regulation, litigation, community opposition—all can affect cost, permit timelines, social license to operate.
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Capital expenditure needs. Upstream production, exploration, drilling require large spending. If commodity prices drop, the investment may not pay off.
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Stranded-asset risk. As the transition to cleaner energy advances, some oil & gas assets may lose value or become obsolete faster than expected.
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Dividend cut risk. Especially if the company’s earnings or cash flows decline, dividends may be reduced, impacting income-oriented investors.
How These Stocks Fit in Your Portfolio Strategy
Here’s how you might think about incorporating these stocks into your portfolio:
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Diversification: Don’t concentrate only on oil and gas. It doesn’t have to be oil stocks vs renewable energy but a combination of both. You can also be involved with other sectors or other parts of the energy value chain.
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Time horizon: If you expect a turnaround in oil/gas prices over several years, then a 5-10 year hold may make sense (especially for upstream/integrated names). If you’re seeking dividends and lower volatility, midstream may fit better.
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Risk tolerance: Are you comfortable with swings of ±20-30%? Upstream stocks will be more volatile. If you prefer a smoother ride, choose midstream/integrated with stronger cash flows (like EPD).
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Complement with ETFs or funds: If you’re unsure about picking individual stocks, you can get exposure via energy sector ETFs and then allocate maybe 10-20% of that to individual names. That gives broader coverage plus upside from specific picks in oil and gas stocks.
Conclusion
We looked at four stocks: ExxonMobil (XOM), Chevron (CVX), EQT Corporation (EQT), and Enterprise Products Partners (EPD), each with its own angle in the oil & gas sector. What makes them strong: scale, diversified operations, favorable basins or infrastructure, and income potential. But they’re not without risk: from commodity swings, regulatory change, capital cost burdens, to the energy transition.
If you’re considering oil and gas stocks, these names are worth watching. Make sure you monitor the right metrics (cost profile, production, dividends, infrastructure), align your time horizon and risk tolerance, and stay informed about the broader energy landscape.
Frequently Asked Questions
What’s the difference between upstream, midstream, and downstream oil and gas stocks?
Upstream = exploration & production (finding and drilling wells). Midstream = transportation, storage, pipelines. Downstream = refining, distribution, retail. Each has different risk/return profiles.
Are oil and gas stocks good for dividend income?
Yes, many oil & gas companies, especially integrated and midstream ones, pay attractive dividends. But dividend sustainability depends on cash flow, commodity prices, and company discipline.
How much do oil and gas stocks move with crude oil prices?
Quite closely for upstream and pure production companies. Integrated and midstream firms may have some buffer, but they are still influenced by commodity prices, demand cycles, and cost structures.
Should I consider environmental risks when buying oil and gas stocks?
Absolutely. Regulatory changes, emissions limits, social license to operate can affect profitability and valuation. Companies that are better prepared for the transition tend to be lower risk.
What valuation metrics are most relevant for oil and gas stocks?
Besides the usual (P/E, P/B), look at EV/EBITDA (which includes debt), production cost per barrel or BOE, reserve replacement ratio, cash flow coverage of dividends, and debt-to-capital ratio.