Yesterday, the price of oil bounced back from the session low ($65.25) following a larger-than-expected decline in US inventories, but the double-top formation established earlier this month remains largely intact as the rebound from the May low ($61.56) fails to spur a test of the March high ($67.98).
With that in mind we’ve decided to highlight a few Oil & Gas stocks that may be ready to bounce back.
Wednesday, negative press for several oil giants (Exxon, Dutch Shell, and Chevron) could lead bullish oil & gas investors to focus on smaller more innovative companies.
There are three I have been researching for various reasons; each company is low-priced and have recently (over the past year) shown investors rapid price increase.
Allied Energy Corporation (OTCMKTS:AGYP)
AGYP is interesting because one of it’s exploration strategies involves reworking shallow wells. Shallow wells, defined as any oil well drilled to a depth of 10,000 feet or less, while most expect shallow wells to dry up sooner than deeper ones, this isn’t always the case. Some shallow wells last 50 years or more.
Shallow oil wells are less expensive to drill, maintain and produce from. They also tend to come with fewer complications at every stage — pooling is easier and less costly, permits are cheaper and easier to get and equipment is easier to maintain and replace. In total, the oil well drilling cost breakdown comes out in favor of shallow wells. One drilling specialist estimated that the average cost for a shallow well was around $200,000, while a deep well’s cost totaled in the millions. This is especially true when comparing shallow oil wells to offshore platforms, which require even more money annually to maintain. The key to keeping costs low, however, is ensuring that the shallow well meets local regulations in order to avoid fines and litigation costs.
AGYP is quite volatile, settling between a low of .0095 and a high of 62 cents at its current share price of 30 cents.
Ring Energy (NYSE:REI)
REI is another oil and gas exploration and production company operating in Texas (New Mexico as well). As of December last year, it had proven reserves of 76.5 million barrels of oil equivalent. It’s one of the best-performing penny stocks in the oil & gas sector, as REI like AGYP has made amazing gains for investors at almost 200%.
The company did relatively well despite the unfavorable business conditions in 2020. It reduced its debt by $47 million in its fourth quarter and has plans to reduce its leverage further this year.
REI looks interesting from a technical perspective, recently overtaking the 50-day moving average which is a highly bullish signal.
The 50-day simple moving average is one of three major moving averages, and is widely considered the first sign of an up or down trend.
88 Energy Limited (OTCMKTS:EEENF)
Finally, EEENF which made a massive move back at the beginning of April has settled around what looks to be support and may be showing signs of a turnaround soon.
EEENF is an Alaska-focused oil exploration and appraisal company across ~440,000 net acres on the Alaskan Central North Slope and NPR-A regions, with a diversified portfolio of four highly prospective project areas: Project Icewine, Yukon Leases and Project Peregrine and the Umiat oil field.