10 Energy Stocks That Could Outperform

NEW YORK ( TheStreet) -- Energy XXI (Bermuda) ( EXXI), Halliburton ( HAL), Chevron ( CVX), Eni SpA ( E), Complete Production Services ( CPX), Total SA ( TOT), Schlumberger ( SLB) and InterOil Corporation ( IOC) are among the energy stocks that could log significant gains over the next year, according to analyst price targets.

Based on consensus analyst price targets, these stocks -- along with two others -- are expected to generate a mean return of 55% over the next year.

The stocks are listed in ascending order of potential upside, based on analysts' price targets.

10. Chevron is a $200 billion energy major with both upstream and downstream operations.

Sales for the second quarter of 2011 rose to $69 billion from $53 billion in the year-ago quarter, boosted by higher crude oil prices. Net income was reported at $7.7 billion, improving from $5.4 billion in the same quarter a year before.

During the second quarter, Chevron announced that it had completed the sale of its fuels marketing and aviation business in three Central American countries, as well as other assets in North America and China.

Regarding probable sales, John Watson, the company's CEO, said, "We reached an important milestone in streamlining our downstream asset portfolio with receipt of government approval for the planned sale of our refining and marketing assets in the United Kingdom and Ireland."

Chevron's capital outlay was $13.4 billion for the first six months of 2011, and it is actively pursuing projects in the upstream segment.

The stock gained 8% during the last year and is trading with a price-to-earnings ratio of 7.3, based on estimated 2011 earnings. Among analysts covering the stock, 81% have buy ratings on it. The average analyst one-year price target is about 25% greater than the stock's current levels.

9. Chesapeake Energy ( CHK), the second-largest producer of natural gas in the U.S., is focused on discovering and developing conventional and unconventional natural gas and oil fields onshore in the U.S. Chesapeake has major stakes in the Barnett, Fayetteville, Haynesville, Marcellus and Bossier natural gas shale wells and other unconventional liquid plays.

Revenue for the second quarter of 2011 was $1.79 billion, vs. $1.16 billion in the same quarter a year ago. Net income was $467 million compared with $235 million in the year-ago quarter.

By the end of the second quarter, Chesapeake developed the largest combined inventories of onshore leasehold (14.48 million net acres). Net production from the property is 320 million cubic feet equivalent (MMCFE) a day with an operating rig count of 30.

According to Bloomberg, 54% of analysts covering the stock give it a buy rating. Shares have appreciated nearly 20% over the past year, and the stock is trading with a P/E of 10.8 based on estimated 2011 earnings. The average one-year price target of analysts covering the stock is 28% greater than current levels.

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8. BP ( BP) is a global integrated oil and gas company.

The company swung to a net profit of $5.62 billion in the second quarter from a year-earlier loss of $17.15 billion. Net sales stood at $101.4 billion, increasing from $73.7 billion during the same period last year. Higher realization boosted sales, thereby neutralizing the 11% year-over-year drop in production during the second quarter

Including the impact of the Gulf of Mexico oil spill, net cash from operating activities stood at $7.8 billion during 2011 second quarter, compared with $6.8 billion in the prior-year period.

Capital expenditures for the quarter was $8.2 billion. The debt-capital ratio was 20% compared with 21% a year ago.

On average, analysts expect the stock to gain an average of 37% over the next year. Shares are trading with a P/E ratio of 5.7 based on estimated 2011 earnings. Seventy-one percent of analysts covering the stock give it a buy rating.

7. Total is an integrated oil and gas company with operations in more than 130 countries. Overall, Total has interests in 24 refineries located in Europe, the U.S., and a retail network of over 16,000 stations worldwide.

For the second quarter of 2011, the company's revenue and adjusted operating income increased 9% and 8%, respectively, from the same quarter a year earlier.

The company is actively pursuing deals in the upstream business segment, has experienced exploration success in Angola and Bolivia and has launched two projects in Norway. Besides, Total has acquired SunPower, a U.S.-based solar company.

Analysts are positive on the stock and on average expect it to rise 46% in the next year. Shares are trading with a P/E ratio of 6 based on estimated 2011 earnings, and 71% of analysts covering the stock give it a buy rating.

6. Eni SpA is an Italy-based energy major with activities ranging from oil and gas exploration and production, gas marketing, management of gas infrastructure, power generation, petrochemicals and oil field services.

Adjusted operating profit was up 7.6% during the first half of 2011, due to better operating performance reported by the exploration and production segment. Adjusted net income for the period was up 4% over the first half of 2010, resulting from a lower group tax rate and better operating performance.

Operating cash flow stood at $6 billion at the end of the second quarter and was used to fund capital expenditure and repay net borrowings from the December quarter of 2010.

The stock is trading with a P/E ratio of 6.3 based on estimated 2011 earnings. On average, analysts expect shares to rise 53% over the next year. Sixty percent of analysts covering the stock have buy ratings on it.

5. Schlumberger is a supplier of technology, integrated project management and information solutions to the oil and gas industry.

Net income for the second quarter of 2011 stood at $1.18 billion, up 22% from the same quarter last year. During the quarter, the company repurchased shares worth $700 million.

Revenue from oilfield services grew 51% year over year during the quarter, contributing 90% towards revenue. Overall, net revenue was $9.6 billion, compared with $5.9 billion in the same quarter a year before.

The stock's key growth drivers in 2011 are technology upgrades required for exploration and deepwater operations. Surging oil prices could support additional drilling activity in North America and the Middle East, led by Saudi Arabia and Iraq.

Eight-nine percent of analysts covering the stock rate it a buy, and their average price target is 59% greater than the stock's current level. Shares are trading with a P/E of 13, based on estimated 2012 earnings.

4. Energy XXI (Bermuda) is an independent oil and natural gas exploration and production company with business interests in the U.S. Gulf Coast and Gulf of Mexico.

Energy XXI reported earnings before interest, tax, and depreciation of $166 million for its fourth quarter of fiscal 2011. That compares with $79 million in the same quarter of fiscal 2010.

Net profit was $36 million on revenue of $282 million and production of 42,100 barrels of oil equivalent (boe) per day. The results include contributions from acquisitions made in certain Gulf of Mexico properties.

Higher cash flows and improved production strengthened the company's balance sheet as it has managed to reduce debt by $200 million during the final six months of fiscal 2011.

The stock has gained 32% in the last year and is trading with a P/E of 9.6, based on estimated 2011 earnings. Of the 14 analysts covering the stock, 13 rate it a buy. The stock is expected to gain 61% over the next one year, according to analysts' surveyed by Bloomberg.

3. InterOil Corp. is an independent energy company operating in the upstream, midstream and downstream business segments.

For the second quarter of 2011, the company's operating segments of corporate, midstream refining and downstream were profitable and yielded an aggregate $34.5 million, whereas the development segments of upstream and midstream liquefaction recorded combined net losses of $11 million. Overall, net profit reported was $23.5 million, compared with $7.8 million during the same quarter last year.

Improved performance of the refining and downstream segments contributed toward higher gross profits. Earnings before interest, taxes, depreciation and amortization for the quarter were $39 million, compared with $15 million in the year-ago quarter. Total revenue increased to $304 million during the period from $225 million in the same period prior year.

The company recently proposed supplying one million tons per annum of liquid natural gas to Noble Clean Fuels from its Gulf LNG project in Papua New Guinea.

Of analysts polled by Bloomberg, 83% rate the stock a buy. Their average one-year price target is 71% greater than current levels.

2. Halliburton is an oil-field services company providing services and products for the exploration, development and production of oil and natural gas.

For the second quarter of 2011, consolidated revenue improved to $5.9 billion from $4.4 billion in the same quarter last year. On the geographies that delivered strong performance, Dave Lesar, the company's CEO, said, "North America revenue grew by 16% sequentially compared to United States rig activity growth of 6%, with incremental operating margins of greater than 50% for both divisions. International revenue grew 8% from the prior quarter, with 18% operating income growth, excluding the impact of Libya and employee separation costs. Strong sequential operating income improvement was driven by seasonal recovery in the North Sea and Russia as well as improved activity in Latin America and Asia."

Net income for the second quarter was $741 million, vs. 483 million in the second quarter of last year. Operating income increased to $1.2 billion from $762 million in same quarter of 2010 due to robust prices and improved equipment utilization.

At the end of the quarter, the company's cash balance was $1.4 billion. Ninety-two percent of analysts covering the stock rate it a buy, and their average one-year price target is 82% greater than current levels. It is trading with a P/E of 11.4, based on estimated 2011 earnings.

1. Complete Production Services provides oil and gas companies products and services to develop hydrocarbon reserves.

Adjusted EBITDA margin for the second quarter of 2011 was 29.5%, benefiting from accelerated activity in the upstream business and deployment of the company's third frac fleet in July. Reported net income increased to $54.5 million from $15.7 million in the same quarter last year.

Enhanced activity and new asset deployment saw revenue increase 53% year over year to $552 million during the quarter.

During the second quarter, CPX incurred capital expenditures of $93 million and completed the acquisition of a $15.6 million hydraulic snubbing and production testing business.

The stock is expected to gain 88% over the next year, according to analysts surveyed by Bloomberg. It is trading with a P/E of 9.3 based on estimated 2011 earnings. Of analysts polled by Bloomberg, 91% rate it a buy.

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