I’m Staying Plugged Into These Energy Stocks
The conflict with Iran hit the six-month mark last Friday. There is no clear resolution on the horizon. At least one that permanently ends the hostilities in the Middle East. Perhaps after the mid-terms? While traffic has picked up recently going through the Strait of Hormuz, it remains far below its pre-war levels. The Strategic Petroleum Reserve has dropped below the 300-million-barrel market for the first time since Ronald Reagan’s first term in office. Reserves fell just over three million barrels in the week last reported. One reason I believe that energy prices will remain higher for longer.
The energy sector has garnered the second largest weighting within the covered-call holdings in my personal portfolios throughout 2026. A good chunk of these positions is tracking to expire in the money during the next monthly expiration date that hits in two weeks. Some energy names like ExxonMobil ($XOM) I will be happy to take profits on but will not be re-entering.
Other names I will be executing new covered-call orders against and will continue to ride going forward. This column will highlight two of these. Some of my holdings in Halliburton ($HAL) were assigned more than two weeks early this week. I will be looking for any dip to reallocate those funds back into this energy services concern.
Halliburton’s Middle Eastern business has been dinged by the current conflict with Iran. But it will be very busy repairing the damage in key facilities throughout the gulf region once hostilities ceased. The company will also play a hand in helping build out the infrastructure that bypasses the Strait of Hormuz in the future. Halliburton also looks like it will benefit from the tens of billions that look like it will soon be going into Venezuela to substantially boost production from their fields consisting of heavy oil. Finally, the company is getting more involved in building the gas-powered power generation needed for the massive AI data center complexes being built across the globe.
I also plan to maintain my weighting in Devon Energy ($DVN) as those positions expire in the money two weeks from today. Devon, which was my stock pick for 2026, is up by a third year to date. The company is still digesting its recent $25 billion takeover of Coterra Energy, which management expects to wring $1 billion in annual synergies. Devon used its adjusted free cash flow of $1.7 billion last quarter to pay down $1.25 billion in debt from the acquisition already and also repurchased nearly $200 million worth of stock during the quarter.
Leadership of this E&P concern will also continue to streamline its production portfolio. It is reportedly mulling $4 billion in asset sales in the Eagle Ford and Powder River basins. Second-quarter earnings blew through top- and bottom-line expectations within its quarterly report early in August. Results beat previous production guidance, and leadership is doing a commendable job of capital expenditure management. Earnings should rise over 35% in fiscal 2026 on close to 45% revenue growth. The stock is trading for nine times forward earnings and also sports a 2.6% dividend yield.
At the time of publication, Jensen was long DVN, HAL and XOM.
