As oil prices surpassed the crucial $70 per barrel threshold, the spotlight shifted to oil stockpiles. The summer driving season began in the United States over the Memorial Day weekend as Covid-19 immunization rates increased. European restrictions have loosened as nations prepare to welcome vacationers. OPEC decided on June 1 to maintain its strategy to gradually raise oil supplies in response to signs of rising demand. While oil prices have lately increased, the number of Covid-19 cases in Asia and South America continues to rise. Investors must be wary of this development.
When the trading public focuses on a particular industry, the largest winners are occasionally discovered in the OTC marketplaces. Although the stocks are hazardous investments, it is worthwhile to read them for trading possibilities. Penny stock investing and trading is only for the risk-tolerant individual. Even yet, penny stocks covering the oil and gas industry have a risk premium. These oil stocks include corporations engaged in oil and gas production, mining, exploration, and any other associated services.
Nevertheless, this is a cyclical business that is no stranger to extreme price fluctuations in either way. This reality has been evident for the past eighteen months. Certainly, the Covid-19 outbreak caused oil prices to plummet. At one time, a barrel of oil traded in the negative on the futures market. However, that pricing did not endure, and as of the time of writing, oil prices are above $70 per barrel and maybe on the rise.
The reason for this is straightforward: although renewable energy represents the future, traditional fossil fuels are still required to meet our current energy demands. This causes oil stockpiles of all types to increase. Consequently, if you have a speculative itch, five oil penny stocks appear to be winners in light of the current cycle of rising oil prices.
Table of Contents
What are oil stocks?
Did you know that the oil and natural gas industry accounts for 8% of the US gross domestic product? Texas, New Mexico, North Dakota, Oklahoma, and Colorado are the five states that produce the most oil in the United States.
The oil and gas sector consists of enterprises engaged in oil and gas exploration, acquisition, development, refining, and distribution. On the market, there are two primary types of oil and gas companies:
- Integral Oil and Gas Corporations
- Independent Oil and Gas Firms
The business of prominent oil and gas firms, such as ExxonMobil (NYSE: XOM) and Chevron Corporation (NYSE: CVX), are integrated businesses that split their operations into upstream, midstream, and downstream divisions. These integrated prices can hedge their earnings against economic downturns and oil price volatility.
Independent oil and gas firms are organizations that specialize in a single aspect of the oil and gas industry. The majority of small and medium-sized oil and gas enterprises continue to operate as independent businesses in order to maintain their laser-like concentration. However, these autonomous businesses are susceptible to oil price prices and poor market conditions.
Several oil and gas firms with the potential to deliver enormous profits for shareholders are publicly traded. Investors may need to keep a close eye on these firms and buy their stock at the right time. This post will uncover the top inexpensive oil stocks under $1 to monitor.
1. RedHawk Holdings Corp. (OTCMKTS:SNDD)
RedHawk Holdings Corp. recently disclosed its third-quarter results, which were not very impressive, including a net loss from operations of $425,479 for the nine-month period ending on March 31, 2021, on revenues of $867,704. Net of distributor and promotional discounts of $177,095 for the nine-month period ending on March 31, 2021, net sales were $690,745 RedHawk reported a net loss from operations of $211,986 for the twelve months ended March 31, 2021, on gross revenues of $1,831,297 and net revenues of $1,603,035.
2. Viking Energy Group Inc. (OTCMKTS: VKIN)
Viking Energy Group Inc. is an exploration and production firm that focuses on discovering, acquiring, and producing oil and gas resources.
The majority of its revenues come from oil and gas sales.
The company buys interests in low-cost, long-lived oil-producing properties with the potential for future development and positive cash flow through collaborative agreements with other businesses and independently.
The firm started in August 2021 when it acquired a controlling share (60.5%) in Simson-Maxwell Ltd, a global producer of energy-related goods and services.
Additionally, Viking Energy Group said that it had signed an Exclusive Intellectual Property License Agreement with ESG Clean Energy, LLC encompassing ESG’s intellectual property pertaining to stationary electric power generation.
3. Seadrill Limited (OTCQX: SDRLF)
Seadrill Limited is an offshore drilling firm that recovers crude oil and natural gas from shallow and ultra-deep oceans.
The company’s capacity to drill in both pleasant and hostile areas provides it with more opportunities to produce oil and gas than its competitors.
Seadrill reported a 23 percent rise in operational revenues for the second half of 2021, from $452 million to $556 million.
Notably, Seadrill recently reorganized as it emerged from Chapter 11 bankruptcy in early February 2022, despite many of its figures heading in a favorable manner.
The firm declared bankruptcy due to difficulties caused by the COVID epidemic.
A setback such as this might deter many investors, but if Seadrill can sustain its pace, they may be rewarded in the future for their patience.
4. Gran Tierra Energy Inc.
Gran Tierra Energy Inc. is a great place to start looking for the finest oil penny stocks.
Gran Tierra Energy Inc is a penny oil company that has been trading for more than a decade and provides a variety of crude oil resources throughout Latin America.
It owns projects in Colombia, Peru, and Argentina, and its estimated reserves exceed 600 million barrels.
According to its Q2 financial report, the business expects to produce more than $100M–$120M in free cash flow in the current semester due to an increase in output throughout its Colombian portfolio.
This firm’s stock has been on our watchlist since it was priced at $0.60, and it has been trading at over $1 for almost a month.
5. Petroteq Energy Inc. (OTCMKTS: PQEFF)
Petroteq Energy Inc. (OTCMKTS: PQEFF), a fully integrated clean technology firm, is focusing on the development and implementation of innovative, unique oil extraction and remediation technologies that have lately been in the news due to a possible purchase by an unidentified German investor. The company’s stock is up significantly from its.045 low and is presently trading at 15 cents with above-average trading volume. It is worthy of observation.
Since 2013, Petroteq Energy Inc has been a small-cap company listed on the OTCMKTS.
Its headquarters are in Canada, although it is principally an oil and gas exploration business based in Utah, United States.
The firm is currently developing its unique technology, CORT, a method for extracting oil sands in a sustainable manner.
Petroteq’s owners may find solace in the fact that the company is affiliated with Petroamerica Corp, a subsidiary of Petroleos de Venezuela SA, one of the largest state-owned oil firms in South America.
When oil prices exceed $84 per barrel for WTI and $85 per barrel for Brent, Petroteq releases oil from US oil sands for as little as $22 per barrel.
6. United Energy Corp. (NASDAQ: UNRG)
United Energy Corp is a small-cap oil and gas firm with over 20 years of experience in the oil sector.
Formerly known as the Aztec Silver Mining Company, the company today controls roughly 300,000 acres of leasehold and 1,100 miles of natural gas pipelines across the United States.
In October 2022, the business made a substantial acquisition when it bought 51 percent of Cherokee Basin assets (Oklahoma).
This purchase provided United Energy with complete control over its operations and was a crucial milestone in our expansion objectives and shareholder value creation, as stated by CEO Brian Guin.
This may be a sign of future growth for this oil penny stock, which might result in enormous returns for investors.
7. Allied Energy Corporation (OTCMKTS: AGYP)
Allied Energy Corp. (AGYP) is an energy exploration and production firm that acquires oil and gas deposits in some of the United States’ most productive hydrocarbon-bearing regions. AGYP specializes in reworking and re-completing ‘existing’ oil and gas wells in the tens of thousands of mature oil and gas producing areas in the United States. AGYP uses its expertise, experience, and effective well-remediation methods to produce larger production volumes, longer well life, and more efficient recovery of proven and accessible oil and gas reserves in fields/projects in which it has an ownership stake.
To increase daily rates and oil & gas recoveries, AGYP will implement modern techniques such as hydraulic fracturing (“fracking”), drilling of lateral (“horizontal”) legs in productive zones, and deploying innovative cased hole electric logging to find bypassed pays. By purchasing stakes in an increasing number of selected projects in various locations, AGYP is diversifying its exposure and successfully mitigating risk as it pursues corporate development and top-and bottom-line revenues to the advantage of all stakeholders. There are proven, recoverable reserves in the several older oil and gas fields that businesses have neglected in quest of deeper, more abundant, but more expensive reserves.
AGYP intends to focus on avoiding oil and gas since there is less competition and, as stated previously, the costs are significantly lower. In addition, AGYP will buy stakes in marginal wells that may be acquired at low cost, of which there are 420 000 in the United States.
Allied Energy Corporation (OTCMKTS: AGYP) recently disclosed news of numerous new wells, which, in conjunction with favorable oil sector news, might result in a short squeeze. The stock is down fifty percent from its highs, and the OTCshortreport reveals a sizable short position. If AGYP experiences purchasing pressure, the situation might get intriguing.
8. Permex Petroleum Corp. (OTCMKTS: OILCF)
Permex Petroleum Corp. is an oil and gas firm established in the United States that has been drilling oil wells for more than two decades.
Currently, the corporation is prospecting for oil deposits in the Rocky Mountains, North Texas, South Texas, the Gulf Coast, Nevada, and New Mexico.
Several firm directors and officials were issued 3,300,000 stock options in October, with the ability to execute stocks at $0.24 per share through October 6, 2031.
In addition, the business announced the acquisition of assets related to oil production in the Breedlove “B” Field in Martin County, Texas.
Permex improves its financial and operational strength through this transaction by acquiring a high-quality, low-decline (5 percent) oil asset base that can provide robust free cash flow as the company undertakes further workover and drilling programs.
9. 88 Energy Ltd (OTCMKTS: EEENF)
88 Energy Ltd is an Alaska-centric oil exploration and evaluation company.
It has estimated reserves of over 1,600,000 barrels and intends to grow its portfolio through additional investigation.
The company’s operations are concentrated in the North Slope region of Alaska.
The latest Merlin-1 evaluation conducted by 88 Energy Ltd revealed the existence of oil (NO12 and NO18) in the Cretaceous Nanushuk Formation.
10. US. Well Services Inc. (NASDAQ: USWS)
This oil penny stock is a Texas-based provider of fracturing services.
It last appeared on my Robinhood penny stock watchlist in March…
It saw a large increase on March 8 but failed to maintain its gains. With a float of over 41 million, this stock requires a substantial volume to move…
In March, its volume surpassed the float twice. The USWS has been severely affected by the outbreak, and its financials are not particularly impressive. This may be excellent news for penny stock traders seeking an inexpensive method to participate in a hot market.
11. Evolve Transition Infrastructure LP (AMEX: SNMP)
Formerly known as Sanchez Midstream Partners LP, Evolve Transition Infrastructure LP focuses on the purchase, development, and ownership of infrastructure essential to the transition to lower-carbon energy sources. Evolve Transition Infrastructure LP acquires, develops, and produces oil and natural gas resources and associated assets. The company operates in the Midstream and Production sectors. The Midstream section is responsible for natural gas collecting, processing, and transportation, and the Production section includes oil and gas resources located in Texas and Louisiana. On February 7, 2005, the firm was started in Houston, Texas.
In South Texas, the company owns natural gas collection infrastructure, pipelines, and processing facilities. Its activities are Western Catarina Midstream, Carnero Gathering Line, Raptor Gas Processing Facility, and Seco Pipeline. The Western Catarina Midstream system is located in the counties of Dimmit and Webb. Carnero Gathering Line is owned by Carnero G&P LLC, in which the Company holds an equity stake. The pipeline distributes natural gas from Mesquite Energy’s Catarina and Comanche properties to the Raptor Gas Processing Facility over a gas of 45 miles. Additionally, Carnero G&P LLC owns the Raptor Gas Processing Facility. The Raptor Gas Processing Facility in La Salle County, Texas, is a cryogenic natural gas processing plant.
In the midstream and production areas, SNMP is active. It has had a rough few years. The value of the stock increased by about 300 percent between February and March as a result of a surge in February and March, and its float and share price are modest enough for it to move again.
Should you invest in penny oil stocks?
As global energy use grows, so will the need for oil. Long-term, this might be favorable for the value of oil stocks, although the market has been volatile during the past several years.
Therefore, if your portfolio can tolerate the dangers associated with trading oil penny stocks, you may choose to invest in them.
Most oil and gas corporations hedge their output prices. Companies may lock in future cash flows at predetermined prices by utilizing this method. This implies they are somewhat protected against a significant decline in oil prices. Unfortunately, it also restricts price increases.
EnQuest has locked in 8.6 mmbbls of oil output for this year at an average floor price of c.$63/bbl and an average ceiling price of c.$78/bbl, according to its most recent trading statement.
If the company is able to hit the top end of its daily production target of 51,000/bbl in 2022, it will have hedged almost 50 percent of its production at these prices. With the current average price of oil over $100/bbl, EnQuest may realize windfall gains this year.
Even if oil prices fall significantly, the company’s choice to lock in a baseline price of $63/bbl should mitigate risk.
Rising oil prices are one reason why this group is now the most popular oil penny stock to purchase. Another element is the company’s debt. Due to EnQuest’s high debt level, investors have avoided the company for years. The company’s net indebtedness was $1.2bn (£900m) at the end of December, compared to its market capitalization of £421m.
The management anticipated that the company’s debt would decrease this year due to decreased expenses and increased oil prices. With oil prices rising beyond the firm’s anticipated range, it appears that the corporation will have greater flexibility to cut its borrowings.
Conclusion
This article identifies the leading oil businesses that are financially solid and operationally efficient. They are always searching for ways to reduce debt and increase operating cash flows. One cannot dispute that stocks trading for less than $1 are volatile. However, a thorough analysis of these organizations’ operational activities, financial stability, dividend yield, and future development potential helps us determine if investing in them is feasible.
