Energy stocks are back in the spotlight as Houthi threats around the Bab el-Mandeb strait choke a key route for Saudi crude and disrupt Red Sea tanker traffic by 34%. When vital shipping lanes are at risk, supply expectations, freight routes, and sentiment across oil and gas producers can all shift quickly. This article looks at three large, financially rated companies from the Energy Sector screener that are directly exposed to this news. It focuses on how their business mix, scale, and geographic footprint could be positively affected by tighter supply expectations and higher pricing power in global crude markets.

Riley Exploration Permian (REPX)

Overview: Riley Exploration Permian is an independent oil and gas producer focused on drilling and production in the Permian Basin, with operations concentrated in Yoakum County, Texas and the Yeso trend in Eddy County, New Mexico. The company acquires, develops, and produces oil, natural gas, and natural gas liquids from these contiguous acreage blocks.

Operations: Riley Exploration Permian generates all of its roughly US$403.4 million in revenue from oil and gas exploration and production activities in the United States.

Market Cap: US$759.4 million

Riley Exploration Permian offers direct exposure to Permian crude at a time when shipping risks and potential supply tightness are front of mind. The company is already scaling output, with Q1 2026 production at 35,600 Boe/d and a full-year guide up to 39,500 Boe/d. Analysts report expectations for strong earnings and revenue growth alongside share buybacks and a US$0.40 quarterly dividend. The current P/E is reported to sit below peer averages, and third-party estimates suggest the shares trade well under fair value. The main risks include a high debt load, a recent quarterly loss driven partly by one-off items, and heavy capital spending on New Mexico infrastructure and ERCOT power projects, which could test cash flows if execution or commodity prices disappoint.

Riley Exploration Permian’s combination of a reported below-peer P/E, share buybacks, and a US$0.40 quarterly dividend suggests a story that pricing screens might not fully capture. Start with the 4 key rewards and 4 important warning signs

Diamondback Energy (FANG)

Overview: Diamondback Energy is an independent oil and gas producer focused on unconventional shale drilling in the Permian Basin, concentrating on liquids rich formations in the Midland and Delaware basins across West Texas and New Mexico.

Operations: Diamondback Energy generates approximately US$14.5b in revenue from its upstream oil and gas operations, all from within the United States.

Market Cap: US$55.0b

Diamondback Energy provides focused exposure to Permian crude at a moment when shipping threats around Bab el Mandeb and the Red Sea are raising concerns about global supply, which can support stronger pricing for low cost U.S. producers. The company has grown through Permian consolidation, emphasizing efficiency and asset quality to support margins and free cash flow, while analysts highlight ongoing debt reduction and substantial cash returns via dividends and buybacks. At the same time, recent profit margin compression, recurring one off items, and rising operating costs in the basin indicate that this is not a risk free story. For investors who can weigh these strengths and vulnerabilities, the next phase of the Diamondback Energy narrative may be important to monitor closely.

Diamondback Energy’s cash returns and basin scale look powerful, yet the real story may be how sustainable they are as costs and one off items build. Combine this with the 2 key rewards and 4 important warning signs (1 is major!) to highlight the aspect investors often miss.

Permian Resources (PR)

Overview: Permian Resources is an independent oil and gas producer focused on crude oil and liquids rich natural gas in the Delaware Basin, with large acreage positions in Reeves County, Texas and Lea County, New Mexico that it develops through horizontal drilling and completions. The company is headquartered in Midland, Texas and concentrates on converting its resource base into production and cash flow.

Operations: Permian Resources generates all of its roughly US$5.1b in revenue from exploration and production of oil and natural gas in the United States.

Market Cap: US$17.0b

Permian Resources gives you pure play exposure to Permian crude at a time when shipping threats around Bab el Mandeb are raising concerns about global supply, which can be helpful for a producer whose cash generation is closely tied to oil prices. The company is working to increase realized pricing through expanded transportation and marketing agreements, while also targeting higher free cash flow and maintaining an investment grade balance sheet. On the other hand, the P/E multiple is higher than many peers, free cash flow coverage of its 3.05% dividend is currently weak, and recent results include a large one off loss and earnings volatility. For investors who can balance those trade offs, the mix of growth, capital returns, and risk at Permian Resources may be worth a closer look.

Permian Resources looks like a growth story with questions, with a higher P/E, a 3.05% dividend and recent earnings swings all pulling in different directions, so the analyst forecasts for Permian Resources could be the missing piece investors are not factoring in yet

The three stocks in this article are only a starting point, as the full screener uncovered 42 more Energy Sector companies with similar scale, balance sheet strength, and business models that could fit the same thesis. Use Simply Wall St to identify and analyze the specific catalysts and narratives that matter most to you, then focus your research with the Energy Sector (Oil & Gas Producers) screener.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.