Small oil company stocks have taken a beating over the past year. Although most of the small stocks have higher P/E ratios than the large (major) oil & gas company stocks, many of the smaller companies have more potential as the energy crisis deepens. Of course, the small oil & gas stocks, by their very nature, are more speculative than the large stocks.
A selected few of the small oil & gas companies - EPEX, TXCO, EPL, CMZ, FTO, UPL, ETE, ARD, EGY, EDNE, etc. - are discussed below. Please note that the individual listed oil company stocks are not necessarily recommended for purchase. Instead, the companies represent a cross-section of small oil and gas stocks:
The performance of EPEX has been a shock to me over the past year. The stock price is down about 95% over the past year.
EPEX is a small company with interests in both oil & natural gas, however, the natural gas interests are larger and, for that reason, the stock generally moves as the price of natural gas moves. EPEX appears to be a credible company but, with the stock price decline it has suffered, something is not going right!
Most of EPEX's activities are in Texas, Louisiana, New Mexico, Mississippi, and Michigan.
EPEX's market cap is $6 million and annual revenue is $160 million. EPEX is presently operating at a loss.
I became interested in EPEX several years ago because of its message board which I found very informative. I often lurked there as its oil patch experts freely discussed many promising small oil and gas companies in detail. After an absence, I recently returned to the message board and found the tone of the message board had changed significantly due to many of the poster's growing concerns about the company's lack of income.
Generally referred to as TXCO. This company is a small and aggressive company with an on-going oil and gas production record and with enormous potential, particularly in oil. The company is headquartered in San Antonio. Most of the company's operations are in Texas but they do have activities outside the state. One of their promising fields in Texas involves recovery of oil from oil sands.
The present revenues for TXCO are about $142 million per year.. Market cap for the stock is $27 million. TXCOs stock price was down about 95 % over the past year. No net income at this time.
One thing I gathered from reading about the firm is that it is an honest, hard working firm and not some fly-by-night firm being promoted for the sole purpose of relieving you of your money. That means a lot to me.
Another thing I like about the firm is that the people who follow the firm literally love it. I like that. Some of these investors have gotten to know every little detail about the firm and they don't mind sharing the information. They apparently feel like they are going to get rich with TXCO stock.
The TXCO message board is another interesting message board. Several oil patch and small cap experts post there.
I am not yet into complex oil partnership firms but this one looks good. The analysts think well of it and the message board members are mostly high on it. It has interesting very positive leverage with its partnership arrangements and some of the message board members discuss the leverage aspects on the message board.
Natural gas storage and pipeline transfer, and propane retail is the business of ETE and I like the future of that business. But the partnership arrangement is too complex for my taste. If partnerships are your cup of tea, you may want to look at this.
Market cap is $5.2 billion, revenue was $9 billion, and income was $374 million. The stock is down over one-third during the past year.
This partnership is "small" only if compared to the super giant companies of the oil industry.
Some experts feel the companies recovering oil from the Canadian oil sands are fully priced. But, an enormous amount of natural gas is used in recovering and processing the oil sands so why not buy a company with significant natural gas reserves located near the oil sand operations? Compton is located primarily in Alberta, the heart of oil sand country. Their market cap is $99 million, annual revenues are $400 million and there is no income at this time.
CMZ stock is down 90% over the past year.
Frontier Oil is a Houston-headquartered independent refining company rather well-regarded because of its ability to refine low quality crude oil. Because of its refining skills, one analyst called Frontier a play on "clean diesel." (not being an crude oil refining expert, I am not sure how that designation was arrived on.)
Frontier has two major refineries - one in El Dorado , Kansas and another in Cheyenne, Wyoming. Refining capacity of the two refineries is about 162,000 barrels per day.
The market cap for Frontier Oil is $1.6 billion. Its revenues are $6.5 billion per year and net income is about $80 million.
Frontier's stock is down about 50% over the past year.
Worth looking at!
UPL has large reserves of oil & gas and is a little larger than most oil companies in the "small" category with a market cap of almost $6 billion. The company has been very aggressive and has many followers. However, some critics say the company's stock is now fully priced (P/E of 15). UPL lost 50% of its stock value over the past year.
UPL is headquartered in Houston but is very active in the Green River Basin of Wyoming. The company is also getting very active in offshore China (increasing the speculative risk/reward of the stock).
Market cap is $6 billion, revenues are $1.1 billion, and net income is $414 million.
A small but fast growing oil company that is very well thought of by analysts.
The P/E of the company is 14.
ARD market cap is $1.2 billion, revenue is $209 million and net income is $84 million. The stock is down over one-fourth over the past year.
ARD is located in Tulsa.
A year or so ago, this was one of the fastest growing small oil companies. Growth has slowed but the stock price still increased about 40 % over the past year. Somewhat surprising, the analysts only give the stock an average rating.
EGY has some good looking properties in Africa but the properties have not yet paid off for EGY.
The firm is headquartered in Houston. The stock has a market cap of $304 million. Revenue is only $170 million per year so EGY is truly a "small" oil company. Net income is $30 million.
When I received an advertising brochure over two years ago describing this very small oil company and their supposedly bright prospects (possible 6 billion barrels of oil) on their +200,000 acre lease in Nevada, I almost threw the brochure away. I assumed it was another "pump and dump" operation that seldom pans out. But this brochure looked so interesting, I researched Eden and the Nevada prospect and a great deal of potential looked to be there. They had a top notch geologist running the operation. Also, some well-heeled investment folks jumped onto the oil company stock.
Unfortunately, a limited amount of drilling on the Nevada project apparently found nothing of commercial value and Eden has decided to abandon the Nevada leases
The Eden stock price was at about $0.05 per share today (04/16/09) after being as high as $9 three years ago.
Eden has now gotten into a low-risk oil well development project in Colorado and that project is bringing in much-needed revenue. The Colorado development project is not as glamorous as the Nevada project but, at least, there is definitely some oil there. Eden thinks highly of the project.
Still, the company is operating at a loss.
I continue to follow this small company and its technical staff but it is strictly a very speculative stock at this point. Don't mortgage your home to buy the stock.
Nothing is hotter in the oil business right now than the Bakken Formation of North Dakota, Montana, Manitoba, and Saskatchewan where high oil prices are allowing a possibly giant oil field to be developed. A few large oil companies and many smaller oil companies are flocking into the Bakken Formation area. Unfortunately, I can find little reliable information on the companies and their involvement in the Bakken Formation so you will have to do your own research. Some of the smaller firms are Paramount Resources, Primary Petroleum, Whiting Petroleum Corp., Brigham Exploration Company, Continental Resources, Enerplus, Crescent Point Energy Trust, and Pennant Petroleum. This is only a partial list. There are other small oil companies rushing in!
It should be noted that Continental Resources and Enerplus are not that small with each having a market cap of about $7 billion.
Happy hunting with the Bakken! Fortunes will be made there, and fortunes lost there!
Small oil company stocks may represent a good energy investment as oil prices have continued to rise. The trend of rising oil prices will probably continue. The oil stock investor should be aware that small oil stocks are inherently more volatile that the larger oil company stocks..
Web Pages References
Oilfield Services Company Stocks
Alternative Energy Company Stocks
Updated: 05/14/09
E-mail: vanc13@cox.net (Author: Van Cook)
Disclaimer
This web site, titled Small Oil Company Stocks-Are Small Oil Stocks a Good Buy? , and the information included herein, is intended to provide information only and should not be construed as investment advice. The information provided is meant to broaden your knowledge and enable you to make better investment decisions within your portfolio.
Sometimes I give an opinion on the quality of an investment. This information is based solely on my own investment goals and investment needs and might not reflect your goals and needs and might not be an appropriate investment for your portfolio.
Please consult with your financial manager/consultant/accountant before actually purchasing any of the investments discussed herein.
Small Oil Stocks