Energy Stocks Poised to Benefit from Rising Oil Prices

With inflation on the rise and oil prices surpassing $100 per barrel, certain energy stocks are poised to benefit from this trend. Natural Gas Services Group (NGS), Cactus (WHD), and RPC (RES) are three U.S. companies that have significant exposure to higher oil and fuel prices. These companies' business models are tied directly to the plumbing of the U.S. energy system, with a focus on providing equipment and services necessary for drilling and production activities.

Natural Gas Services Group generates most of its revenue from rental compression equipment, which is used by producers when commodity economics improve. The company's market value is approximately $488 million, with a revenue breakdown of around $182 million from rental compression equipment, $4 million from aftermarket services, and $3 million from sales.

However, the company faces challenges from labor shortages and input cost inflation in the Permian Basin, which may erode operating efficiencies and increase maintenance costs. The key issue for Natural Gas Services Group is how it balances accelerating opportunity with potential cost pressure.

Cactus, on the other hand, is closely tied to drilling and production activity when crude remains expensive. With a market value of about $5.6 billion, Cactus earns around $991 million from Pressure Control and approximately $375 million from Spoolable Technologies. The company's acquisition of a majority interest in Baker Hughes' Surface Pressure Control business is expected to expand its geographic footprint and customer base into the Middle East.

RPC plugs directly into the higher-oil-price story, providing pressure pumping, cementing, and rental tools that support U.S. drilling and well work when producers keep wells turning. The company's heavy exposure to U.S. exploration and production activity means higher oil and diesel prices can translate into stronger demand for its well completion and maintenance work.