With Oil & Gas Prices on the Rebound, Here’s Four Penny Stocks Making Moves

At this time last year, oil prices were negative. It’s wild to even think about – how does a commodity become so worthless that the seller PAYS you to take it off their hands?

Yet, that was the world we found ourselves in last April. Four months into the COVID pandemic and most of the world was locked down. A virus we knew nothing about threatened health & lives, so travel was off the table. And for anyone who could work-from-home, so was commuting.

Oil & Gas

Fast forward to the present. We’re still dealing with COVID and its mutant variants. But vaccines are now available, and already, deaths and new infections are starting to fall. And as vaccinations continue to proceed, restrictions will start lifting.

This news has spurred on oil markets, sending West Texas Intermediate and Brent Crude above 60 USD/barrel. Over the next year, surging demand will lift many oil & gas stocks.

But what if you can’t afford to buy up loads of ConocoPhillips stock? Then consider investing in O&G penny stocks. In this post, we’ll talk about four companies we have our eye on.

88 Energy (OTCMKTS: EEENF)

2020 was a quiet year for drilling crews. Within a month, the pandemic idled more than half of America’s rigs. But, as oil prices have steadily climbed, firms aren’t just uncapping wells – they’re drilling new ones too.

88 Energy is one of many energy companies currently operating on Alaska’s North Slope. However, they aren’t focusing on heavily-drilled Prudhoe Bay. Instead, they’ve established a leasehold on the Nanushuk Formation. Merlin-1 is their first well there – already, they’ve struck oil. The light-free-flowing kind.

According to seismic data, Merlin-1 could conceivably pump 650 million barrels. The same data suggests that Harrier-1, a planned well, could produce over 450 million barrels of oil. But things don’t always go smoothly in the oil patch. In early April, the company experienced technical difficulties when attempting to retrieve hydrocarbon samples.

This setback caused EEENF’s price to tumble. However, the fundamentals of 88 Energy’s leasehold remain solid. If you’re looking for an oil & gas play that has a real chance of success, EEENF is an unmissable opportunity.

Pulse Seismic (OTCQX: PLSDF)

Oil & gas is a high-risk, high-reward industry. From equipment to wages, costs are through the roof. So if you have the opportunity to save a buck somewhere, you take it. That’s a major part of Pulse Seismic’s sales pitch to drillers.

And given the current state of the industry, they have a powerful selling proposition. Rather than gambling with scarce capital, exploration firms can just buy access to Pulse’s extensive library of seismic data.

Pulse has amassed a trove of 2D and 3D data through their own seismic imaging and acquisition of rival firm’s libraries. This mapping, which spans much of Western Canada, includes a whopping 829,000 square kilometres of 2D and 65,000 square kilometres of 3D data. In all, Pulse values its data at over 2 billion CAD.

So, as drillers navigate a cash-starved environment (even as demand rises), PLSDF stands to profit significantly. Dollar-for-dollar, Pulse is one of the better value plays in the oil & gas sector.

ProPetro Holding Corp. (NYSE: PUMP)

For generations, the West Texas Permian Basin has supplied the North American market with easy-to-access light oil. Even today, thanks to advanced drilling techniques, oil fields in this region continue to be productive.

Of all the companies in the area, ProPetro is one of the better-positioned. Not only do they drill traditional wells, but they also do hydraulic fracturing – this allows them to exploit tight shale oil formations.

They also have a balance sheet that is the envy of the Texas oil patch. Thanks to conservative pre-pandemic financial decisions, they are debt-free and have 69 million USD cash-on-hand. So when COVID whacked the entire industry, they were able to weather the storm.

And now that prices are rebounding, they are positioned to capitalize on increased demand for oil. After bottoming out at 2.78 USD during the 2020 COVID crash, they’ve since shot up to over 9 USD/share. While they’re a little pricey, PUMP still has fantastic upside potential through the remainder of 2021.

Ultrapar Participacoes SA (NYSE: UGP)

People tend to invest in what they know. That’s no surprise to us, as it’s a bedrock concept of investing. However, this tenet causes many to miss solid investment opportunities, like obscure-sounding foreign companies. By doing your homework, you can find some diamonds in the rough.

Ultrapar Participacoes SA is one such firm. Founded in 1937, it is Brazil’s fourth-largest company. As such, it has many irons in the fire, but its fuel distribution and petrochemicals businesses are among the hottest.

As the world emerges from this pandemic, demand for liquid fuels will rise everywhere – Brazil included. As they do, net revenues will likely rise. In 2020, Ultrapar did almost 4 billion USD in business – and yet, UGP sits at just under 4 USD on the NYSE.

We won’t sugarcoat their past performance – this company had struggled in recent years. But with the coming post-COVID boom, it’s going to be tough for anybody in the oil & gas industry to lose money. If you’re looking for a speculative gamble, give UGP a look.

The Window for the Post-COVID Energy Boom is Short

The medium to long-term oil & gas prognosis isn’t good. Climate action and shifting consumer habits mean that in the decades ahead, oil demand will decline. But over the next one to three years, an explosion of pent-up demand will likely bring the “good times” back.

But this may be the last boom – so if you’re to make an O&G play, now is the time to act.

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