Small oil company stocks were volatile during the recent recession. ; 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 world's energy crisis deepens. Of course, the small oil company stocks, by their very nature, are more speculative than the large oil stocks.
A selected few of the small oil & gas companies - FTO, UPL, ETE, HK, EGY, MMR, and EXXI. - 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:
. Jim Bob Moffett, head of McMoRan Exploration, is showing that he is willing to take calculated risks when it comes to looking for giant oil and gas fields. It appears that his recent efforts in shallow Gulf Of Mexico waters are paying off....in a big way. The huge Blackbeard, Blueberry, Lafitte, and Davy Jones fields that McMoRan is now drilling in the shallow gulf look great. Indeed, the Davy Jones field may be a "super giant" field. The high pressures encountered in some of the exploration wells did not scare off Jim Bob as it did some of the majors. And, in retrospect, Jim Bob may have outsmarted the major oil companies who overlooked the shallow water of the Gulf and who spent their time and money in the deep-water gulf.
McMoRan may have more good news ahead. Moffett and associates have located 15 or so additional shallow-water prospects they intend to investigate
McMoRan will need enormous amounts of money to fully develop all their prospects. Fortunately, their big brother company - Freeport-McMoRan Copper & Gold Inc. (FCX) - has very deep pockets (They sit on top the largest gold-copper mine in the world!) - and is helping McMoRan (via various means) foot the bill for the drilling expenses
Market cap = 2.6 billion, revenue was $439 million, and there was no income during the past year. The stock more than doubled during the past year.
McMoRan is on a roll with their new discoveries. Will one of the majors try to acquire them? Will the gas fields contain fewer gas reserves than the vast reserves now anticipated?
John Schiller, head of XXI, is also showing that he is (as is his buddy, Jim Bob Moffett, willing to take calculated risks when it comes to looking for giant oil and gas fields. Right now, he is as happy as Jim Bob since it appears that their joint efforts in shallow Gulf Of Mexico waters may start paying off....in a big way! The huge Blackbeard, Blueberry, Lafitte, and Davy Jones fields that McMoRan and XXI (and a few other partners) are now drilling in the shallow gulf look great. Several of these fields, notably the Davy Jones field, could turn out to be "giant" fields. In retrospect, Jim Bob and Schiller may have outsmarted many of the major oil companies who overlooked the shallow waters of the Gulf and spent their money in the deep-water gulf and overseas.
XXI and McMoRan may have more good news ahead. Moffett has located 15 or so additional shallow-water deep or ultradeep prospects. It appears likely that McMoRan and XXI will continue to work together in developing the prospects.
XXI has been busy raising money to develop the prospects which they are working with McMoRan. But, separately, XXI has made some strong moves in the shallow water Gulf. XXI recently purchased approximately one billion dollars of EXXON properties in the shallow-water Gulf.
Market cap = 2.3 billion, revenue was $716 million, and income was $11 during the past year. The small oil company stock more than doubled during the past year.
XXI is on a roll with their new discoveries. The investor should keep in mind, however, that the company is now heavily leveraged (high debt!). Also, it should be kept in mind that, although their operations are not in deepwater Gulf Of Mexico, they are in the shallow Gulf and might "accidently" get cought up in government restrictions actually intended to prevent the type of spill we witnessed in the deepwater Gulf this summer.
I am not yet into complex oil partnership firms but this is one the largest and it looks pretty good. The analysts think well of it and the ETE message board members are mostly high on it.
Natural gas storage and pipeline (17,000 miles of pipelines) transportation of natural gas, and propane retail is the business of ETE and the future of that business looks good. 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 $9.7 billion, revenue is $6.7 billion, and income was $169 million. The stock is up over 40% during the past year.
This partnership is "small" only if compared to the super giant companies of the oil industry.
Petrohawk is an independent oil-gas company heavily weighted (about 95%) toward the development of natural gas formations. Petrohawk has jumped into the Haynesville Shale Formation of northwestern Louisiana and eastern Texas with both feet. Approximately 50% of their extensive natural gas potential reserves (Total reserves = over 30 trillion cubic feet) are in the Haynesville formation. Petrohawk is obviously planning to continue concentrating on the Haynesville formation since a large part of their capital budget for next year is being directed toward the Haynesville.
But Petrohawk additionally has 9 trillion cubic feet of potential natural gas reserves in the Eagle Ford Shale Formation of south-central Texas where they are also finding substantial reserves of oil. (At this time, oil reserves are preferable to natural gas reserves because of the depressed price of natural gas.) The Bossier Formation of northwestern Louisiana and eastern Texas is yet another shale formation where Petrohawk has about 4 trillion cubic feet of potential natural gas reserves (The Bossier Formation is geologically located just above the Haynesville Formation.)
Petrohawk is very strong in horizontal shale drilling technology, a type of drilling that is virtually mandatory in many shale formations.
Petrohawk has a market cap of $7.8 billion. Revenues are about 1.7 billion and the company had a net income of about $80 billion for the past year. Petrohawk is a well-managed company who keeps their eye on their overall goals. Their lease applications have been extensive. As far as natural gas production is concerned, they are producing about 700 million cubic feet per day.
The small oil company stock was up about 25% duringthe past year.
Because of the company's extensive natural gas reserves, Petrohawk is considered a prime target to be acquired by a major oil company.
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 the stock of small oil company Frontier a play on "clean diesel."
The market cap for Frontier Oil is $3.0 billion. Its revenues are $6.5 billion per year and the company had a net income of $218 million over the past 12 months.
Frontier's stock doubled over the past year.
Worth looking at!
UPL has large reserves of oil & especially natural gas and is a little larger than most oil exploration companies in the "small oil company stock" category with a market cap of about $7.2 billion. The company has been very aggressive and has many followers. However, some critics say the company's stock is now fully priced. UPL's stock price is unchanged for the past year although it went through very volatile periods during the 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 the Marcellous shale natural gas play in the eastern US
Market cap is $7.2 billion, revenues are $964 million, and the company operated at a profit of $331 million over the past year. The company stock was essentially unchanged over the past year.
Investors should be alerted that UPL is essentially a natural gas company and that massive new discoveries of natural gas around the world are being developed and could have a depressing effect on natural gas prices. Natural gas companies may have a few years to wait before they can really hope to be rewarded.
A few years ago, Vaalco was one of the fastest growing small oil companies. Growth has slowed but the stock price still doubled over the past year. Somewhat surprising, the analysts only give the stock an average rating although, very recently. many analysts have been upgrading the stock. One opinion expressed is that many of the large investors who were underwater in the stock have jumped overboard and this leaves only the most loyal stock holders. Consequently, the stock may be due a breakout.
EGY has some good looking properties in offshore Africa which are beginning to pay off for EGY.
The firm is headquartered in Houston. The stock has a market cap of $430 million. Revenue is only $151 million per year so EGY is truly a "small" oil company. Net income is $43 million. Market cap is $363 million. Vaalco stock was up about 10% during the past year.
Vaalco has no debt and a large cash position. Conservative investors may like the debt and cash positions of this small oil company stock.
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 giantoil 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 the small oil company stocks are inherently more volatile that the larger oil company stocks..
Two Good Oil Stock Websites:
1. Oil Company Stocks
2. Oilfield Services Company Stocks
3. Oil 101
3. Oil 101
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 small oil company 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 (05-2014), I own less than 10 shares of stock in Freeport McMoRan stock and no shares in any of the other 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.