Many small oil company stocks have taken a beating over the past year. Although most of the small oil & gas company stocks have higher P/E ratios than the large (major) oil & gas company stocks, many of the smaller companies have more potential as the energy crisis deepens. Of course, the small oil & gas stocks, by their very nature, are more speculative than the large companies.
A selected few of the small oil & gas companies - EPEX, TXCO, EPL, CMZ, FTO, UPL, and others - are discussed below. Please note that the individual company stocks are not necessarily recommended for purchase. However, the companies represent a cross-section of small oil and gas stocks:
The performance of EPEX has been a shock to me over the past year. The stock price is down about two-thirds over the past year.
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 fine company but, with the 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 $120 million and annual revenue is $175 million.
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. Recently, I returned to the message board after an absence and found the tone of the message board had changed somewhat due to many of the poster's growing concerns about the lack of profit of the company.
Generally referred to as TXCO. This company (highly recommended by the analyst) is a small and aggressive company with an on-going oil and gas production record and with enormous potential, particularly in oil. The company is headquartered in San Antonio. Most of the company's operations are in Texas but they do have activities outside the state. One of their promising fields in Texas involves recovery of oil from oil sands.
The present revenues for TXCO are about $94 million per year.. Market cap for the stock is $426 million. TXCOs stock price has risen about one-third over the past year.
One thing I gathered from reading about the firm is that it is 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.
Another thing I like about the firm is that the people who follow the firm literally love it. I have never seen an oil company so well-liked by its investors. I like that. Some of these investors have gotten to know every little detail about the firm and they don't mind sharing the information. They feel like they are going to get rich with TXCO stock.
The TXCO message board is another interesting message board. Several oil patch and small cap experts post there.
Another recommended small oil company headquartered in my hometown of New Orleans. The stock price has dropped over the past year but its day will soon come say its many supporters. It is a dynamic company with big ideas. EPL is heavier in the oil sector than the natural gas sector.
EPL has a market cap of $321 million and annual revenue of $450 million.
I am not yet into complex oil partnership firms but this one looks good. The analysts think pretty well of it and the message board members are mostly high on it. It has interesting very positive leverage with its partnership arrangements and some of the message board members discuss the leverage aspects on the message board.
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 $6.5 billion, revenue is $7.0 billion, and income is $339 million.
This partnership is "small" only if compared to the super giant companies of the oil industry.
Some experts feel the companies recovering 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 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 $1.5 billion, annual revenues are $398 million and net income is about $70 million.
Although CMZ stock is up about one-third over the past year and the company appears to be both well located and managed well. Reserves of oil and gas are 249 million barrels oil equivalent as of 12/06/06.
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 an 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.
The market cap for Frontier Oil is $4.0 billion. Its revenues are $5.2 billion per year and net income is about $500 million.
Frontier is enjoying record earnings, has a buyout plan in place, and is selling for a P/E of only 6. Frontier's stock is down slightly over the past year.
Worth looking at!
UPL has large reserves of oil & gas and is a little larger than most oil companies in the "small" category with a market cap of almost $11.5 billion. The company has been very aggressive and has many followers. However, some critics say the company's stock is now fully priced (P/E over 30) after rising about 1000% over the past 5 or 6 years
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 $11.5 billion, revenues are $567 million, and net income is $189 million.
A small but fast growing oil company that is well thought of by analysts.
The P/E of the company is over 30, which is characteristic of small, fast growth oil companies.
ARD market cap is $1.2 billion, revenue is $81 million and net income is $30 million.
ARD is located in Tulsa.
A year or so ago, this was one of the fastest growing small oil companies. Now it is lagging.
The stock price has been volatile but is at about the same price as one year ago.. Analysts are giving the stock an average rating.
EGY has some good looking properties in Africa but they have not paid off yet.
The firm is headquartered in Houston. The stock has a market cap of $279 million. Revenue is only $125 million per year so EGY is truly a "small" oil company. Net income is $20 million.
When will Vaalco get going again.
When I received an advertising brochure over two years 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 must say a great deal of potential looks to be there. They have a top notch geologist running the operation. Also, some well-heeled investment folks have jumped onto the oil company stock. They think it is a good investment. I don't own the stock at this time because it is the type stock that has (in the past!) been too speculative for me.
I am not a geologist but the descriptions I have read on the Internet make the geology of the Nevada areas leased by Eden look promising.
Then, again, there may be no oil there. We will find out when they drill their first well in Nevada within the next year or so. Investment (speculation?) in this oil company is for people who have a little cash they can gamble with and can afford to lose. Don't bet the farm on it. Due diligence is advised.
The Eden stock price was at about $0.80 per share today (4/18/08) after being as high as $9 over two years ago.
Eden has also gotten into a low-risk oil well development project in Colorado and that project is bringing in some revenue.
Still, the company is operating at a loss.
As I said above, I usually just throw the get-rich-quick brochures away. Did they hook me this time? Am I going to grab Eden if the stock drops back a little bit? Or will I just continue to watch it?
Nothing is hotter in the oil business right now than the Bakken 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 little 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 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 rise. The trend of rising oil prices will probably continue. The oil stock investor should be aware that small oil stocks are inherently more volatile that the larger oil company stocks..
Updated: 05/08/08
E-mail: vanc13@cox.net
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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.
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.
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