Small oil company stocks have taken a beating over the past year or so. Although most of the small oil & gas stocks have higher P/E ratios than the large (major) oil & gas company stocks, many of the small companies have more potential as the energy crisis deepens. Of course, the small oil stocks, by their very nature, are more speculative than the large oil stocks.
A selected few of the small oil & gas companies - EPEX, TXCO, EPL, CMZ, FTO, UPL, ETE, HK, ARD, EGY, EDNE, etc. - are discussed below. Please note that the individual oil company stocks discussed are not necessarily recommended for purchase. Instead, the small companies are intended to present a cross-section of small oil and gas stocks:
I am not yet into complex oil partnership firms but this one looks pretty good. The analysts think well of it and the message board members are mostly high on it.
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 $6.4 billion, revenue was $6.8 billion, and income was $383 million. The stock is up over 50% during the past year.
This partnership is "small" only if compared to the super giant companies of the oil industry.
Petrohawk Energy Corporation (HK).
Petrohawk is an independent oil company heavily weighted (About 95%) toward the development of natural gas. Petrohawk has jumped into the Haynesville Shale Formation of northwestern Louisiana and eastern Texas with both feet. Approximately 50% of their natural gas potential reserves (Total = over 30 trillion cubic feet: Haynesville = over 15 trillion cubic feet).
Petrohawk is obviously planning to continue concentrating on the Haynesville formation since almost 90% of their capital budget for next year is being directed toward the Haynesville.
But Petrohawk additionally has 9 trillion cubic feet of potential reserves in the Eagle Ford Shale Formation of south-central Texas where they also drilling for oil. The Bossier Formation of northwestern Louisiana is yet another shale formation where Petrohawk has 4 trillion cubic feet of potential natural gas reserves (The Bossier Formation is geologically located just above the Haynesville Formation.) The company is planning to drill their first well into the Bossier Formation in early 2010.
Petrohawk specializes in horizontal shale drilling, a type of drilling that is virtually mandatory in many shale formation.
Petrohawk has a market cap of $7.3 billion. Revenues are about 1 billion and the company operated at a loss during the past year.
Petrohawk appears to be a well-managed company who keeps their eye on their overall goals. Their lease applications have been excellent. As far as natural gas production is concerned, they are producing about 500 million cubic feet per day in 2009 and, in 2010, they are planning to increase their daily production of natural gas to about 700 million cubic feet. That is a whopping increase!
Because of its heavy debt load, Compton was considered a basket case a short time ago. But the firm has taken a number of steps to fix its balance sheet and the outlook for Compton has improved.
Some experts feel the companies like Compton who recover 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 the stock of 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 $122 million, annual revenues are $227 million and there is no income at this time.
CMZ stock is down slightly 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 a 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 $1.4 billion. Its revenues are $4.5 billion per year and net income is about $11 million.
Frontier's stock is unchanged over the past year.
Worth looking at!
UPL has large reserves of oil & gas and is a little larger than most oil exploration companies in the "small" category with a market cap of about $7 billion. The company has been very aggressive and has many followers. However, some critics say the company's stock is now fully priced. UPL is up slightly 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 $7 billion, revenues are $661 million, and the company operated at a loss over the past year.
A small but fast growing small-cap oil company that is very well thought of by analysts.
The P/E of the company is 14.
ARD market cap is $1.6 billion, revenue is $117 million and net income is $4.7 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.
Penny Oil Stocks.
Three penny oil company stocks are discussed below. Two of the companies - EPEXQ.PK & TXCOQ.PK were well thought of prior to the present recession with its resulting oil & natural gas price drops. Now, the two companies are in Chapter 11 bankruptcy.
The third company - EDNE.OB - had dream prospects several years ago. Unfortunately, the dreams are now pretty much broken.
I am not recommending the purchase of any of the three penny stocks although a speculator may be interested in some action with them (particularly TXCOQ.PK).
The performance of EPEX has been a shock to me over the past year. The stock price is down over 75% during this time period and the company is in Chapter 11 bankruptcy.
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 terrible 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 $1 million and annual revenue is $88 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 obvious concerns about the company's lack of income.
Generally referred to as TXCO. The company is headquartered in San Antonio. Most of the company's operations are in Texas but they do have activities outside the state.
The present revenues for TXCO are about $90 million per year.. Market cap for the stock is $4.4 million. TXCOs stock price was down about 95 % over the past year. No net income at this time.
Prior to the collapse of the oil patch during this recession, this company was a small but aggressive oil exploration company with an on-going oil and natural gas production record and with apparent enormous potential, particularly in oil.
One thing I liked about the firm when I first discovered it is that the people who followed the firm literally loved it. I liked that. Some of these investors had gotten to know every little detail about the firm and they didn't mind sharing the information. They apparently felt like they were going to get rich with TXCO stock.
One thing I gathered from reading about the firm prior to its near collapse is that it was 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.
How the mighty have fallen. But, is it now a good bargain as a penny stock?
When I received an advertising brochure four years or so 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 $0.09 per share today (11/11/09) after being as high as $9 about three years or so ago.
Eden has now gotten into some low-risk development projects that are producing some revenue .
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 this one!
Nothing is hotter in the oil business right now than the Bakken Shale 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 only a limited amount of 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-cap 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 recover. The trend of recovering oil prices will probably continue. The oil stock investor should be aware that stocks of the small oil companies are inherently more volatile that the larger oil company stocks..
Web Pages References
Oilfield Services Company Stocks
Alternative Energy Company Stocks
Updated: 03/10/10
E-mail: vanc13@cox.net
Disclaimer
This web site, titled Small Oil Company Stocks , 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.
In regards to the stocks discussed herein, I hereby disclose that Petrohawk has a mineral lease on a few acres of mineral rights I own in Bossier Parish, Louisiana. These lease is associated with the Haynesville shale formation in that area. I presently own no shares of Petrohawk stock but may purchase some in the future since I have a high opinion of the company.
At this time (02-2010), I own no shares of stock in any of the companies discussed herein.
I am not registered as an Investment Advisor nor am I a certified financial advisor. 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.