OTCStockReview published an article on SeekingAlpha.com that included industry commentary based on the recent OPEC developments taking place in the Energy Sector that included companies such as: Exxon Mobil Corporation (NYSE: XOM), EOG Resources, Inc. (NYSE: EOG), Devon Energy Corporation (NYSE: DVN), Petro River Oil Corp. (OTC: PTRC) and Abraxas Petroleum Corporation (NASDAQ: AXAS)Read More
As markets continue to soar post-election day, with shipping company DryShips Inc. (ticker: DRYS) leading the charge with astounding 1600% gains, market watchers are closely scrutinizing sectors including banking, energy and defense as President-Elect Donald Trump has promised to overhaul regulations across the board.
The oil and gas industry is by nature optimistic, and with the recent strength shown by oil prices reaching the $50 range, shale producers have begun re-deploying capital into projects that just a few months ago were in hibernation.
The Trump Effect
Myron Ebell, director, Center for Energy and Environment, Competitive Enterprise Institute. Photo: Competitive Enterprise Institute
By appointing noted contrarian and Washington insider Myron Ebell, director of the Center for Energy and Environment at the Competitive Enterprise Institute, to lead the transition of the Environmental Protection Agency (EPA), Donald Trump has signaled that major energy policy changes are on the way.
In fact, Scientific American believes that “Ebell’s participation in the EPA transition signals that the Trump team is looking to drastically reshape the climate policies the agency has pursued under the Obama administration.”
U.S. government policies have restricted companies from commencing projects that could produce millions of barrels of oil, particularly in places like Alaska where Arctic drilling is prohibited, and in Oklahoma, where outdated policies have bogged down permitting and production across historic fields.
Ebell has long called for the opening of federal land for oil exploration, whereas the outgoing administration in 2012 shut down 1.6 million acres to oil shale development. If policies like these are reversed, drilling on federal lands could spark much-needed job growth across the sector. The federal government has been accused of intentionally slowing the permitting process on public lands. A Department of Interior Inspector General report revealed the fact that obtaining drilling permits on federal lands is a long process to say the least. Most state regulators take about 80 days to approve oil and gas drilling permits, while the U.S. government’s Bureau of Land Management (BLM), takes about 225 days to approve a permit, the report said.
The Trump Effect
Harold Hamm, chairman and CEO of Oklahoma City-based Continental Resources. Photo: Continental Resources
In addition to Ebell, Trump energy advisor and oilman Harold Hamm, Chairman and CEO of Oklahoma-based Continental Resources (ticker: CLR) was mentioned as an early favorite for Energy Secretary, although Hamm says he plans to stay focused on Continental.
All of this means oil producers, including majors like ExxonMobil (ticker: XOM) and Chevron (ticker: CVX) and independents like Resolute Energy (ticker: REN) have plenty of reason to be optimistic.
The Bureau of Indian Affairs’ pace for issuing drilling permits on the Osage Reservation in Oklahoma has been slow, but companies are in the permitting process and drilling rigs have been contracted to begin work in Osage County, the birthplace of Phillips Petroleum.
New York-based Petro River Oil (ticker: PTRC) is a small oil and gas company that has begun operations in the region by reworking wells on its Osage concession. Petro River has locked up more than 106,000 acres in Osage County on land that abuts the original Oklahoma mega-discovery—the Burbank field. The Oklahoma Historical Society said that from 1901 through 1930 alone 319 million barrels of Oklahoma crude were pumped from the ground in Osage County.
Petro River has applied for permits to drill four exploration wells on its Osage concession prior to year-end, or as soon as drilling permits are issued by the BIA.
Petro River’s Osage play is strictly conventional and the company has mapped out a program for shallow, vertical drilling which it hopes to begin in January 2017. No horizontal drilling and no complex completions are required to generate oil production from the Osage concession, and Petro River has pinpointed the drilling locations using 3D seismic data. The shallow depths of the reservoirs and lower operating costs make Petro River’s 106,000-acre position attractive in today’s oil price environment.
The so-called “Trump Rally” has made some unlikely market darlings of late, and if the new president is successful in rolling back restrictive regulations and is able to speed up permitting on federal and Indian lands, a slew of independent E&P companies could be next up.
Read the full article on Oil & Gas 360Read More
A new conference presenter with a reasonably contrarian twist was Petro River Oil Corp. (ticker: PTRC;PetroRiverOil.com), a junior E&P that is flying in the face of the industry’s love affair with shale by ignoring shale and investing in a portfolio of conventional, vertically drilled plays in Kern County, California, and Osage County, Oklahoma.Read More
Northern Ireland’s Larne basin is sparsely explored, with only one oil and gas exploration well drilled in 1971 in the main fairway of the basin. New seismic technology and a recent gas show in a gas storage site test, however, are leading to new conventional exploration.Read More
When Scot Cohen founded Iroquois Capital Opportunity Fund, the seasoned portfolio manager kept an eye open for contrarian opportunities.
These days Cohen is focused on Petro River Oil Corp. (ticker: PTRC; Petro Riveroil.com), a junior oil and gas company that’s on a different path from most small E&Ps. Cohen recapitalized Petro River in 2015, and now he serves as the company’s executive chairman.Read More
When other major players in the oil-and-gas industry zigged, Scot Cohen zagged.
Unconventional drilling, such as fracking across shale plays, has become the popular route for most energy explorers in recent years. Cohen, however, did the opposite: the New York-based investor has put his money into straight conventional drilling using 3D-seismic geology.Read More
Petro River Oil Corp. is focused on lower-risk conventional drilling in Osage County, Oklahoma, that does not require costly horizontal drilling or hydraulic fracturing techniques.Read More
Petro River Oil executive chairman Scot Cohen and president Stephen Brunner’s conference call transcript.
The shale revolution has been the driving force behind America’s resurgence as a leading oil producer. However, given the costly nature of shale projects, Petro River has shunned them. Instead, the New York-based company targets conventional oil that can turn a profit no matter where crude is tradingRead More
The Energy Information Administration (EIA) has issued a forecast for oil prices of $52 to $53 per barrel throughout 2017. If that prediction holds true, some beaten-down oil stocks may rise above the $1-per-share mark.
The fact that these low-priced energy stocks have survived the oil slump may speak to their resilience. They were chosen based on their longevity and potential to profit from higher oil prices, as well as the EIA’s prediction for higher natural gas prices through 2017. All figures are current as of January 16, 2017.
EnerJex Resources Inc.
EnergJex (ENRJ) is listed on the New York Stock Exchange. It was a $10 stock in 2013, but has since fallen to $0.31 per share as of this writing. The slide occurred at the same time most energy stocks fell, suggesting the drop in oil prices was to blame.
ENRJ makes its living producing oil and gas through leases in Kansas, Colorado, Nebraska, and Texas. The company has been paring its net operating income losses for the past four quarters.
With a market cap of $2.61 million, this is definitely a small oil company, but for those looking to invest in turnaround stocks, ENRJ could head back toward its previous price if oil continues to rebound.
Petro River Oil
The stock price for Petro River Oil (PTRC) saw a dramatic drop since 2013, down to around $0.50 a share. With a 52-week high of $2.90, the stock could have some potential for significant returns to investors if it takes advantage of rising oil prices. The company develops oil internationally, with a presence in Oklahoma, California, Ireland, England and Denmark. The company uses 3D seismic analysis to find oil resources.
PTRC has shown increased cash reserves in the past 5 quarters, so it could be in a position to acquire assets to take advantage of higher oil prices.
PTRC’s chart suggests it may be forming a base that could be a bottom. Investors should watch for some sideways action for a few weeks and then a sharp upward breakout on increased volume. This could signal that PTRC is ready for recovery.
Exco Resources Inc.
Exco Resources (XCO) is another penny stock currently trading on the New York Stock Exchange. It dropped below $1 per share in late December of last year. Operating income turned positive in the last quarterly report on September 30, 2016. Total revenues have been increasing for the past four quarters.
The consensus recommendation from analysts is a “sell.” However, the company gets 90% of its revenue from natural gas, and positive forecasts for that commodity in 2017 bode well for the company. It has consistently beat analysts’ earnings estimates in recent quarters.
Vanguard Natural Resources LLC
The company has been swimming in debt, and is trying to restructure that debt to keep out of bankruptcy. It is also selling assets, delaying drilling and seeking lending sources other than traditional banks. (See also: Vanguard Warns Cash Flow Won’t Cover Debts.)
This is one that will require due diligence. Watch for the debt restructuring news to see if the stock responds positively. The risk here is well above average, even for penny stocks.
The Bottom Line
There is a saying among investors that goes, “a rising tide lifts all boats.” The rising tide of oil prices won’t lift a leaky boat. Penny oil stocks on this list have seen better days. They are not startups, they are has-beens. In other words, these plays are for those who see significant odds that the companies can turn around.
To be sure, the drop in oil prices was not the fault of any of these companies, but that doesn’t change the fact that they will have to make some quick moves to reverse their financial fortunes.
Read the full article on Investopedia.