ExxonMobil Stock And EOG Look Most Attractive As Traders Look To Get Back Into Oil Stocks

With gasoline prices falling below $2/gallon in many U.S. cities  and crude oil selling for well below production costs it may seem a strange time to consider going back into the oil patch in search of profit. Which is why it may exactly be the right time to get back into oil stocks.

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The Best Oil Stocks Look Very Strong

Oil companies with strong balance sheets never fell in value by as much as oil itself. Exxon Mobil (NYSE:XOMExxon Mobil (NYSE:, for instance, is down only 30% from its high in July 2014, back when West Texas Intermediate was near $100/barrel. (It’s now hovering around $45.)

Source: ExxonMobil stock price data by amigobulls.com

The company has managed to eke out a profit throughout the downturn, helped by trading, refining, and marketing operations. For the June quarter, for instance, it managed to earn $4.2 billion on revenues of $71.4 billion, a margin of nearly 6%. A lot of retailers would love those kinds of margins.

It’s true that the revenue was down 30% from the comparable figure in the June quarter of 2014, $105.7 billion, but the company can still defend its 73 cent dividend with $1/share of net income, and its total debt of $33.8 billion is matched by over $348 billion in assets.

The assumption in the oil pits is that, by this time next year, oil will be trading much, much higher than it is now because the number of drilling rigs in operation has fallen so far and so fast. The most recent rig count from Baker Hughes (NYSE:BHIBaker Hughes (NYSE:, the oilfield services firm Halliburton (NYSE:HALHalliburton (NYSE: is working to acquire, shows 842 drilling rigs in operation in the U.S., against 1,950 a year ago. Drilling is down 40% in Texas and 35% in North Dakota. Production has finally started falling.