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10 Best Oil Penny Stocks to Buy in 2022

Daniel Rogers

Jun 23, 2022 16:16

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Oil and gas penny stocks comprise a wide range of small companies involved in the exploration, production, and transportation of crude oil and natural gas. Typically, these stocks trade for less than $5 per share. There are also companies in the oil and gas industry that provide drilling and well maintenance and support.

 

The invasion of Ukraine by Russia at the end of February has interrupted the energy supply and increased oil prices significantly. To reduce gasoline costs, President Biden authorized the most significant release from the U.S. emergency oil stockpile on March 31. Beginning in May, it was planned to launch one million barrels per day (B/D) of oil products from the Strategic Petroleum Reserve (SPR) for six months. 2 However, oil prices are currently higher than when the news was initially made. Biden administration officials assert that the price would have been higher if the SPR had not been utilized.

 

Indeed, the Covid-19 outbreak caused oil prices to plummet. At one time, a barrel of oil traded negatively on the futures market. However, that pricing did not endure, and as of the time of writing, oil prices are above $70 per barrel and may be on the rise.

 

Although renewable energy is the future, traditional fossil fuels are still required to meet our present energy demands. This causes oil stockpiles of all types to increase. Therefore, if you have a speculative itch, here are ten oil penny stocks that appear to be winners in light of the current cycle of rising oil prices.

Why is the Oil Price Increasing?

The Russian invasion of Ukraine is primarily responsible for the recent oil price increase. As news continues to emerge on the impending catastrophe in Ukraine, the global supply of Russian oil remains cut off. As a result, oil prices have reached levels not seen for years.

 

This includes oil selling at about $100 per barrel, a significant gain from only a few weeks ago. Russia is the third-largest oil exporter in the world and the second-largest natural gas exporter. This equates to around 10 percent of the world's oil and 40 percent of Europe's natural gas supply.

 

While sanctions are now required to halt Russia's advance into Ukraine, there is little question that the United States will face retaliation. Tom Barking, president of the Richmond Federal Reserve, indicated that inflation will certainly climb if oil prices continue to rise, and however, this constrains expenditure."

An Overview of Penny Oil Stocks

Penny stocks are not traded on the leading market exchanges, and these small-cap stocks are accompanied by substantial speculation and considerable risk. The exact definition of penny stocks differs from country to country, and Penny stocks in the western market are equities that trade for less than $5.

 

Because their market value is less than $300 million, these stocks are categorized as micro-cap. Similar to other equities, penny stocks provide an investment opportunity.

 

Penny stocks are characterized by the following:

  • They are not liquid.

  • Never is information on penny stocks easily accessible to the public.

  • Most penny stocks lack historical assets, revenue, operating, and product data, and they lack minimal requirements.

 

Two worldwide catastrophes are impacting the oil and gas industry: the COVID-19 epidemic and the oil price warfare. This resulted in a decline in oil and gas stock prices. Due to the prevalence of social distance, motor cars were not in use. Despite the oil industry's concern, it is apparent that oil stockpiles are rebounding.

 

The stock market offers several investment prospects, with oil stocks on the rise. As a result of the low demand for oil in many nations, crude oil production has decreased worldwide. In addition, investors keenly track the tense relationship between the United States and China. If friction leads to the deterioration of the Phase 1 trade deal, this will harm oil prices. Recent violent upheaval in crucial U.S. cities has created increased anxiety in the nation's financial markets.

10 Best Oil Penny Stocks You Could Consider Now

1. Transocean Ltd. (NYSE: RIG) 

RIG stock is one of the most significant gainers of the day. By the end of the trading day, shares of RIG had increased by over 5.5% to more than $3.50 per share. In addition, RIG stock has increased by more than 11.5 percent over the previous month. This significant increase represents both Transocean as a firm and the current oil and gas industry climate. To see why RIG stock is rising, we must examine the firm in further detail. Transocean released its fourth-quarter and full-year 2021 results on February 22.

 

The business reported drilling revenue of around $621 million. Even though the company's sales efficiency declined from 98.1 percent to 94.5 percent, it still managed to generate $250 million in adjusted EBITDA, comparable to the prior quarter's $245 million. In addition, the corporation said its contract backlog as of February 2022 was $6.5 billion. This is all quite fantastic news and demonstrates that Transocean is now in a financially advantageous position.

 

Given the current dynamic energy investment climate, it is evident that RIG is popular with investors. Whether it belongs on your watchlist of penny stocks is up to you.

2. Kosmos Energy Ltd. (NYSE: KOS)

KOS stock is one of the day's other significant gainers thus far. By the end of trading on February 28, shares of KOS soared by more than 8 percent, raising the price to $4.86 as of the 28th's market closure. Today's rise for Kosmos is primarily due to the company's announcement of its fourth-quarter and full-year 2021 results. The corporation earned $99 million in the final quarter of 2021, or $0.22 per share.

 

During the quarter, the business acquired several stakes in Ghana for approximately $460 million after adjustments. For the fourth quarter, Kosmos earned more than $573 million in sales and incurred $134 million in production costs. This is incredibly exciting since KOS stock has repaid investors more than 100 percent over the previous six months. Do you believe it is worthwhile to add KOS stock to your list of penny stocks to purchase? 

3. Gran Tierra Energy (GTE)

Gran Tierra Energy is the last business on this list of penny stocks, selling at just 67 cents at the time of this post. This past year, it looks like GTE stock was involved in some meme-stock activity. However, short interest has decreased significantly, allowing investors to examine the company on its merits.

 

Gran Tierra Energy works like a business in South America, specifically in Colombia and Ecuador. Recent demonstrations and blockades temporarily shut down the company's oil wells, increasing the inherent risk associated with oil and gas equities.

 

Possibly more crucially, GTE was compelled to reduce its oil production forecast from 28,000 to 30,000 barrels per day to between 27,500 and 28,500 barrels. Investors should thus pay close attention to observe if the lower guidance alters analyst perceptions. Today, two experts on Tipranks are covering GTE stock and have assigned a potential upside of almost 65 percent from its current price.

4. Tetra Technologies (TTI)

Tetra's outstanding success over the previous year has gained almost 637 percent in the past year. However, TTI stock did decline significantly in late June. However, investors still have a year-to-date return of nearly 300 percent (YTD).

 

Bullish investors should also take note of the stock's substantial institutional buying. In its first-quarter financial release, the business's sales were down 42 percent year-over-year (YOY). The company must demonstrate to investors that it is beginning to increase its revenue.

 

Tetra operates as a provider of oil and gas services. The corporation in Texas works as two separate business entities. Completion Fluids & Goods manufactures and offers completion fluids and related products and services to the oil and gas sector. Water & Flowback, on the other hand, provides resources for water management services to onshore oil and gas companies.

5. Contango (MCF)

Like most penny companies on our list, Contango stock has declined during the past month. One reason is the significant increase in MCF's short interest over this period. MCF stock is up 69 percent so far in 2021, partly because of the company's news that it would acquire low-decline conventional gas assets in the Wind River Basin from ConocoPhillips (NYSE: COP).

 

The recent announcement that Contango would perform a $5.8 billion stock-for-stock merger with Independence Energy LLC may also have contributed to the increase in the stock price. KKR manages Independence Energy, a diversified upstream oil and gas firm (NYSE: KKR). The merged enterprise will generate roughly 105,000 barrels of oil and gas equivalents per day.

 

Analysts do not frequently follow the stock of MCF. Nonetheless, one expert tracked by Tipranks has assigned Contango a "buy" recommendation with a $5 price target. In its most recent fiscal quarter, Contango also posted impressive sales figures, and today, it trades at around $3.80.

6. Nextdecade (NEXT)

Nextdecade is a firm I recommend looking into if you are looking for oil and gas renewable energy options.

 

This firm is a developer of liquefied natural gas (LNG); LNG is not a genuine renewable energy source. However, because of the relative simplicity of LNG production and its substantially reduced carbon emissions, this resource is viewed as a bridge between renewable energy and the future.

 

In particular, Nextdecade has two commercial divisions and concentrates its development efforts in two areas. Regarding LNG, NEXT operates the Rio Grande LNG port in southern Texas. It is also focused on a carbon capture and storage (CCS) project.

 

Following the trend of these penny companies, NEXT stock has declined around 11 percent over the past month. However, it was still up about 75% YTD in 2021. Two analysts have rated the company on Tipranks, with a consensus "buy" recommendation and an average price objective of $6 per share. This would be an almost 64 percent increase from its current level.

7. Vaalco Energy (EGY)

Vaalco Energy is a reminder that oil industry investments are not for the faint of heart. This corporation is a Houston, Texas-based oil and gas exploration and production enterprise. Off the coast of West Africa, its drilling activities have been concentrated over the past few years. This might be a significant reason to consider purchasing EGY stock.

 

Why? It all boils down to regulation, or more particularly, to which nations will give fewer environmental laws to access oil riches. Because certain African nations are still establishing their infrastructure and other similar aspects, the area might meet this description and serve as a powerful stimulus for EGY stock.

 

EGY stock has declined by more than 14 percent in the past month. Nonetheless, Vaalco is up 58 percent year-to-date due to increased profitability and revenue reports. The firm did not meet analysts' forecasts for profits per share (EPS) of 20 cents in the most recent quarter. Nonetheless, the EPS of 17 cents was higher year-over-year. Vaalco also outperformed in terms of revenue.

 

Like many oil penny stocks, EGY is trading on a lesser volume. However, as a stock that has increased by over 141% in the past year, it is a name to keep an eye on.

8. Viking Energy Group Inc. (OTCMKTS: VKIN)

Viking Energy Group Inc. is an exploration and production firm focusing on discovering, acquiring, and producing oil and gas resources.

 

The majority of its revenues come from oil and gas sales.

 

The company buys interests in low-cost, long-lived oil-producing properties with the potential for future development and positive cash flow through collaborative agreements with other businesses and independently.

 

The firm started in August 2021 when it acquired a controlling share (60.5%) in Simson-Maxwell Ltd, a global producer of energy-related goods and services.

 

Additionally, Viking Energy Group said it had signed an Exclusive Intellectual Property License Agreement with ESG Clean Energy, LLC encompassing ESG's intellectual property about stationary electric power generation.

9. Aemetis (AMTX)

If you are interested in narrative stocks, you may find the potential with Aemetis, the following company on this list of penny stocks, intriguing. This oil and gas refiner has a subsidiary developing a market niche for liquid and gel sanitizers. As expected, the epidemic has contributed to AMTX stock's increase of nearly 1,100 percent over the past year.

 

Moreover, although hand sanitizer is no longer affected by supply-chain problems, its demand is unlikely to diminish. Aemetis just announced that it would hire Chevron's (NYSE: CVX) former Environmental Technical Expert to lead its "Carbon Capture and Renewable Jet/Diesel Projects." This news adds to the positive narrative, which should be of interest to investors who wish to guarantee that this is not a one-trick pony.

 

Currently, AMTX stock is significantly oversold. Consequently, investors should be wary of the short interest in AMTX, which stands at around 17 percent now. This was a significant factor in the stock's rise to above $20 earlier this year.

10. Kolibri Global Energy Inc.

Kolibri Global Energy is a global energy provider that focuses on developing oil, gas, and clean and sustainable energy projects. The firm released its financial results for the first quarter of its fiscal year (FY) 2022, which concluded on March 31, at the beginning of May. The company's net loss grew from $0.5 million in the prior-year quarter to $2.5 million, despite total revenue net of royalties increasing by 69.7 percent year-over-year. The company's financing expenditures increased by more than three times year-over-year, adding to the increased quarterly net loss. 

Are Oil Penny Stocks Profitable?

Before investing in oil penny stocks, you should gather as much information as possible, and analyst information should be included in your trading approach. Due to their volatility, it is crucial to continually be aware of the most recent oil penny stock news. Your trading approach for penny stocks might be advantageous in a high-risk trading environment. Consistent research will enable you to make better-educated trading decisions.

Final Thoughts

Demand for oil and gas has increased steadily over the past several decades. With global oil consumption expected to rise in the foreseeable future, this trend is unlikely to change very soon.

 

With the epidemic abating, it might be a perfect moment to buy in inexpensive oil companies. If you want to capitalize on the oil industry's expansion and can tolerate volatility, penny oil stocks might be your entry point.