<div id="readability-page-1"><p>There's a major fault line running through the U.S. oil and gas sector, and I'm not talking about geology here. Simply put, <strong>Devon Energy</strong> <span>(DVN<span> -1.76%</span>)</span>, <strong>Vitesse Energy</strong> <span>(VTS<span> -1.18%</span>)</span>, and <strong>Chord Energy</strong> <span>(CHRD<span> -2.20%</span>)</span> are trading on lowly valuations and colossal dividend yields because investors are pricing in Bakken oil field assets at a discount to other assets such as in the Permian Basin. However, all three stocks now trade on attractive valuations and are worth picking up.</p> <h2>The top five oil-producing regions in the U.S.</h2> <p>Here's a look at the top five oil-producing regions in the U.S. to get a sense of why investors favor the Permian over other assets.</p> <div><table> <thead> <tr> <th> <p><strong>Region</strong></p> </th> <th> <p><strong>Location</strong></p> </th> <th> <p><strong>Oil Production in June 2024 (thousands of barrels per day)</strong></p> </th> </tr> </thead> <tbody> <tr> <td> <p>Permian</p> </td> <td> <p>Texas and New Mexico</p> </td> <td> <p>6,187</p> </td> </tr> <tr> <td> <p>Bakken</p> </td> <td> <p>North Dakota and Montana</p> </td> <td> <p>1,313</p> </td> </tr> <tr> <td> <p>Eagle Ford</p> </td> <td> <p>Texas</p> </td> <td> <p>1,106</p> </td> </tr> <tr> <td> <p>Niobrara</p> </td> <td> <p>Northeast Colorado and Southeast Wyoming</p> </td> <td> <p>697</p> </td> </tr> <tr> <td> <p>Anadarko</p> </td> <td> <p>Texas and Oklahoma</p> </td> <td> <p>383</p> </td> </tr> </tbody> </table></div> <p>Data: U.S. Energy Information Administration.</p> <p>Not only is the Permian region the most important in terms of production, but it has also increased production the most in recent years. This stands in contrast to the mediocre growth in production in the Bakken.</p> <p><img src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/8dc87722bf823a25b55f8865d4d4c93b.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="720" height="380" original-src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/8dc87722bf823a25b55f8865d4d4c93b.png"/></p> <p>Permian Region Total Oil Production data by YCharts</p> <p>The maturing nature of the Bakken oil field is recognized in the North Dakota Energy Report 2023:  &#34;The Bakken formation is now considered &#34;mature&#34; by the industry -- meaning that many of the operators in the state are dedicated to producing their acreage on a consistent and steady pace but that radical growth in production is less likely.</p> <h2>Devon Energy, Vitesse Energy, and Chord Energy</h2> <p>It's not hard to see that investors may take a glass-half-empty viewpoint of these stocks. While Vitesse Energy is up 18% this year, it still trades on an 8.1% dividend yield, and stocks don't trade on such yields unless the market is concerned about <em>something.</em></p> <p><img src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/fedc355428e62f9899fa87129b3727ff.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="720" height="380" original-src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/fedc355428e62f9899fa87129b3727ff.png"/></p> <p>Permian Region Total Oil Production data by YCharts</p> <p>Similarly, Devon Energy and Chord Energy also trade on attractive yields, and part of that reason probably comes down to significant deals both companies have done to add assets in the Bakken oil field. All three have announced deals in the Bakken this year. It's part of a current trend in the industry whereby oil and gas companies are using cash flows gushing from a relatively high price of oil to acquire assets at a time when the market continues to accord energy companies lowly valuations.</p> <p>It's not hard to see what all three have in common this year.</p> <div><table> <thead> <tr> <th>Company</th> <th> <p><strong>Market Cap</strong></p> </th> <th> <p><strong>Deal Announced in 2024</strong></p> </th> <th> </th> </tr> </thead> <tbody> <tr> <td> <p>Vitesse Energy</p> </td> <td> <p>$763 million</p> </td> <td> <p>Agreed to acquire $40 million worth of assets in the Williston Basin (Bakken).</p> </td> <td> </td> </tr> <tr> <td> <p>Chord Energy</p> </td> <td> <p>$9.2 billion</p> </td> <td> <p>Combined with Williston Basin-focused Enerplus in an $11 billion enterprise deal, Chord shareholders own 67% of the new company, and Enerplus shareholders hold 33%.</p> </td> <td> </td> </tr> <tr> <td> <p>Devon Energy</p> </td> <td> <p>$28 billion</p> </td> <td> <p>Acquiring Grayson Mills' Williston Basin assets for $5 billion, consisting of $3.25 billion in cash and $1.75 billion in shares.</p> </td> <td> </td> </tr> </tbody> </table></div> <p>Data source: Company presentations.</p> <p>All three stocks look like a great value, and it appears that the market is being overly pessimistic here.</p> <h2>Vitesse Energy</h2> <p>Vitesse Energy is an unusual oil and gas company that doesn't fully own or operate assets. Instead, it uses a proprietary technology system and management's experience to invest in interest in wells operated by larger companies, primarily in the Bakken. These include Chord Energy and Grayson Mill. </p> <p>In addition, it uses hedging to protect against a fall in the price of oil. The strategy provides diversification across 7,000 producing wells, and Vitesse is almost an ETF on Bakken. </p> <div><p><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy83ODkzOTQvb2lsZmllbGQtd29ya2VyLmpwZyZ3PTcwMA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="360" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy83ODkzOTQvb2lsZmllbGQtd29ya2VyLmpwZyZ3PTcwMA"/></p><p>Image source: Getty Images.</p> </div> <h2>Chord Energy</h2> <p>Chord Energy now expects $1.2 billion in adjusted free cash flow (FCF) in 2024, and management believes it has a &#34;footprint of 10 years of low breakeven locations delivering peer-leading oil-weighted production&#34; in the Williston Basin. Given that the $1.2 billion in FCF represents more than 13% of its market cap, the stock looks capable of delivering its entire market cap and more in FCF within a decade.</p> <div><p><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy83ODkzOTQvb2lsLWJhcnJlbHMuanBnJnc9NzAw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="525" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy83ODkzOTQvb2lsLWJhcnJlbHMuanBnJnc9NzAw"/></p><p>Image source: Getty Images.</p> </div> <h2>Devon Energy</h2> <p>It's a similar story at Devon Energy, where Wall Street expects the company will generate $10.9 billion in FCF over the next three years. Management expects the Grayson Mill deal will add 15% to FCF generation. With the current market cap at just $28 billion, it won't take long for Devon to generate a significant part of its market cap in FCF, either.</p> <p>All told, while the Bakken is maturing, and there's no guarantee the price of oil will stay high, these three high-yield stocks look like an excellent value.</p>  </div>

<p>The article discusses three undervalued, high-yield oil stocks for September: Devon Energy, Vitesse Energy, and Chord Energy. These companies are trading at low valuations due to market concerns over Bakken oil field assets compared to the more profitable Permian Basin. Despite this, they present attractive dividend yields and growth potential, especially with recent acquisition deals. The Permian region leads in production, while Bakken's growth has stagnated. Investors may be overly pessimistic, providing a buying opportunity in these stocks regardless of the market's cautious stance.</p>

3 Top High-Yield Oil Stocks to Buy in September