Shares of certain U.S. energy producers are becoming increasingly attractive investments as oil prices fall along with the broader market, Seaport Global's Mike Kelly told CNBC on Thursday.
Large swaths of the oil sector have been pummeled as concerns about a supply glut and global economic pressures have weighed on energy-related equities. Kelly, who leads Seaport's energy exploration and production research team, suggested that the declines are largely tied to the market's volatility in the last several months.
"Energy is so tied right now to the overall health of the economy," he said as oil prices slid Thursday after rallying 8 percent in Wednesday's trading session. "The fear right now is that demand is going to fall off a cliff."
Wednesday's historic surge, he added, "took oil up with it, simple as that."
Even so, some well-positioned U.S. fracking stocks are starting to look like bargains in the wake of lower oil prices, Kelly said on "Power Lunch."
"One I always come back to" is Diamondback Energy whenever the stock falls under $90 a share, he said. Shares of the independent oil and gas producer fell as low as $88.47 in Thursday's trading session before reversing to gain 0.97 percent into the close. The stock is down nearly 27 percent year to date.
Even if oil fell to $15 a barrel from its current $45 level, Diamondback would be "the last E&P standing here," Kelly said. "The low-cost producer ultimately wins in this sector, and that's Diamondback."
At the same time, Kelly said, U.S. oil producers such as Diamondback and PDC Energy, another one of his stock picks, were responsible for oil's collapse in 2018.
They "are the reason we're at $45 oil right now," the analyst said, but mainly because of "how good they've gotten at taking oil out of the ground."
For longer-term investors, Kelly noted that oilfield service companies, particularly Halliburton and Schlumberger, "look very, very compelling right now" despite some concerning short-term data points, such as tapering U.S. growth or oversupply.
"Longer-term they do look like very, very compelling values," the analyst said.
Halliburton and Schlumberger both sank in Thursday's trading session, losing 0.26 and 0.76 percent, respectively, after rebounding from their intraday lows. Both stocks are down more than 46 percent for 2018.