Oil Price Surge Lifts Diamondback and Devon Energy as Top Investor Picks
Oil prices have climbed sharply this year, rising from around $57 per barrel to nearly $88. This surge has put energy stocks in the spotlight, with Diamondback Energy and Devon Energy standing out as strong options for investors. Both companies offer solid valuations, low break-even costs, and strategies to handle price swings.
Diamondback Energy has built a strategy to protect itself from oil price drops. The company uses hedging to lock in prices, ensuring cash flow even if oil falls below $50 per barrel. This approach also allows it to benefit when prices rise above that level. With a focus on the Permian Basin, strict capital discipline, and operational efficiency, Diamondback keeps its break-even price low. These measures support a steady dividend of $4.20 per share.
Devon Energy is also making moves to strengthen its position. The company's planned merger with Coterra Energy, valued at $58 billion, will nearly double its holdings in the Delaware Basin—a key part of the Permian. Once completed, most of Devon's oil and gas reserves will have a break-even price under $50 per barrel. This merger, reported in early 2026, follows positive trends in Coterra's stock, which recently traded at $26.58, up 0.82%. The recent spike in oil prices has made both companies more attractive. Their low price-to-free cash flow multiples add to the appeal. Yet, uncertainties remain, particularly around geopolitical tensions like the Iran conflict. Predicting how such events will affect oil prices is difficult, making hedging strategies even more valuable.
Diamondback and Devon Energy are well-placed for investors looking for energy exposure. Their low break-even costs, hedging strategies, and strong valuations provide stability in a volatile market. With oil prices near $88, both companies offer upside potential while protecting against future price swings.
