3
Small-Cap Stocks To Play The Oil Recovery
The oil markets have been held hostage since entering into its
latest bear market, which began in July 2014 when the price of oil
was still around $100 per barrel. The subsequent bearish
fundamentals pushed oil prices all the way to the low $20s by early
2016.
However, oil prices are making a major comeback in 2017. Over the
past six months, WTI crude oil has
jumped 24.43% and Brent crude oil has surged 31.01%, as rising
geopolitical concerns around the world give oil producers a chance
to benefit from higher prices.
Saudi Arabian Crackdown
Leads To Rallying Oil Prices
Middle Eastern oil powerhouse, Saudi Arabia, is the latest source
of oil price appreciation. On Saturday, November 4, 2017, Saudi
Arabia began to crackdown on high-level officials in an effort to
curb corruption. Among the prominent leaders arrested was the
billionaire investor, Prince Alwaleed bin Talal, which would be the
equivalent of the U.S. government arresting Bill Gates or Warren
Buffet.
The major crackdown and potential
political destabilization of Saudi Arabia is one of the most
bullish factors for underlying oil prices right now. As commodity
markets opened on the Monday following the crackdown, oil prices
surged over 2% in early trading. Other major geopolitical issues,
such as the escalating Kurdish-Iraqi violence, could easily help
provide further gains for oil prices.
Bullish Analyst
Projections
The latest developments have prompted many analysts to revise their
oil outlooks upward. Phil Streible, a senior market strategist at
RJO Futures, told clients that the oil outlook remains bullish.
"A combination of internal political trouble in Saudi Arabia
combined with another decline in U.S. rig operating counts and a
definitive extension in 'risk on' psychology leaves the path of
least resistance pointing upward," added Streible.
Furthermore, analysts at several major
brokerages collectively raised their oil price targets. Jefferies
analysts are now estimating WTI prices of $55 per barrel by the end
of 2018. Bank of America (NYSE:
BAC) chose to raise its fourth quarter 2017 oil price target to
$49 from $47.
As oil prices rebound and look to be coming out of their bearish
trend, here are three small-cap oil stocks to keep on your
radar:
American Patriot Oil & Gas, Ltd. (OTCQB:
ANPOF) (ASX:
AOW): American Patriot Oil & Gas, Ltd. operates as
an oil & gas production company. The company has been making
major acquisitions over the past
several months that have bolstered the company’s U.S. oil & gas
production assets. After its latest oil acquisition in East Texas,
American Patriot Oil & Gas, Ltd. now has independent proven oil
reserves of around 2.1 million barrels of oil equivalent.
The company’s acquisition spree has led to seven active oil and gas assets
with the focus on the Texas and Gulf Coast Regions.
Furthermore, American Patriot Oil & Gas, Ltd. is now on track
to produce 500 barrels of oil per day by the end of the year. Under
production estimates ran by management, reports indicate they could
earn $50 million in revenue at $50 oil. If oil can continue to rise
and even break $60 per barrel, the company could be on track to
generate tens of millions more in revenue.
American Patriot Oil & Gas, Ltd. recently provided an update on
its $40 million financing facility. The facility is nearly
finalized and should be closed within the next 40 days, subject to
further due diligence. However, the company has already been able
to utilize the financing facility for its recent major Texas
acquisitions.
American Patriot Oil & Gas, Ltd. may be an under-the-radar
stock right now, but the company’s well-executed growth plan will
likely help make 2018 a very profitable year with an aggressive oil
and gas production acquisition plan underway.
Petro River Oil Corp. (OTC
Pink: PTRC): Petro River Oil operates as an
independent energy company, which maintains the majority of its
assets in Osage County, Oklahoma and Kern County, California. The
company made headlines in first half of 2017, after making several
sizable oil field discoveries while utilizing its 3D seismic
imaging technology.
The company recently announced that it has acquired an additional
46.81% stake in its Osage Project. Management plans on drilling
nine new development wells and three exploration wells at the
Osage Project. In order to fund the drilling
program, the company closed a $2.5 million secured debt financing
agreement with Petro Exploration Funding II, LLC. Under the terms
of the deal, there will be a three-year note holding a 10% annual
interest rate and 2% in overriding royalty interest. Furthermore,
the financing company received warrants to purchase $1.25 million
shares of the common stock at a price of $2.00 per share.
Petro River Oil Corp. is moving from the exploration phase to the
development phase, after making several discoveries earlier this
year. Overall, the company appears to have a solid strategy in
finding “untouched” oil reserves.
MMEX Resources Corporation (OTCQB:
MMEX): MMEX Resources Corporation is engaged within
the acquisition, exploration and development of oil and gas
properties across Texas, Peru, and other Latin American
countries.
The company is set to begin building its 10,000 barrel-per-day oil refinery
located near Fort Stockton, Texas. It will take about 15 months to
complete, but it will serve as a major revenue generator once it is
operational. In addition, the company recently completed a
successful uplisting to the OTCQB Venture
Market, which will help increase investors’ trust in the company.
Overall, MMEX Resources Corporation is well positioned to generate
sizable revenues from its oil refinery located near the highly
prized Permian Basin formation.
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