Hillcrest Energy Technologies. (CSE: HEAT)
From concept to commercialization, Hillcrest is investing in the development of energy solutions that will power a more sustainable and electrified future.
In recent months, oil prices have been declining. While falling oil prices affect the profits of oil companies, several producers are well-prepared to handle this downturn. Chevron (CVX) and Devon Energy (DVN) stand out for their ability to thrive even in low oil price environments.
Chevron has established a robust global resource portfolio that allows the company to achieve high profit margins and returns on investment, enabling it to prosper even at lower oil prices. The company has stress-tested its portfolio to withstand significantly lower oil prices. The downside scenario assumes oil prices will stabilize at $50 from 2025 to 2027. In this pessimistic scenario, Chevron would generate enough operating cash flow to cover increasing dividends and planned capital expenditures.
On the other hand, the upside scenario assumes oil prices will stabilize at $70 from 2025 to 2027. In this environment, Chevron could buy back shares at the upper end of its target range, allowing for the repurchase of up to 6% of its outstanding shares each year. This price point would also enable the company’s free cash flow to grow by over 10% annually.
Additionally, Chevron is working to enhance its ability to thrive in a low oil price environment by acquiring energy company Hess. At an oil price of $70, acquiring Hess would help Chevron more than double its free cash flow by 2027.
Due to falling oil prices and delays in acquisition transactions, Chevron’s stock has declined by double digits over the past year, making it appear to be a bargain. With a dividend yield of nearly 4.5%, the stock is particularly attractive to income-seeking investors.
Devon Energy has established a premier multi-basin oil and gas business in the U.S. Its growing scale reduces costs and enhances profitability. Devon can generate substantial free cash flow at an oil price of $70 per barrel, with a free cash flow yield of about 9% at this price point. This yield is more than double that of the S&P 500 and triple that of the Nasdaq, indicating that Devon Energy’s stock is very inexpensive.
Devon Energy is working to expand its scale and profitability through the acquisition of Grayson Mill Energy. This high-value acquisition will further increase Devon’s free cash flow, even in a lower oil price environment.
Devon Energy’s stock has dropped nearly 25% from its highs earlier this year, prompting the company to repurchase more shares. Recently, the company increased its stock repurchase authorization by 67% to $5 billion, with plans to complete this by mid-2026.
