Oil Isn't Going Anywhere - 10 Stocks to Play the Sector

Bolton Flautt |

Oil_Drilling.jpg

Small-cap oil and gas stocks can often be an investor’s best friend, especially since simple economic theory of supply and demand drive oil prices up or down. Also, investors may want to focus on companies with current production due to the higher uncertainty and associate risk of the exploration stocks.

The world runs on fossil fuels, and that isn’t changing anytime in our lifetime, so it only makes sense to diversify your investment strategy with several oil and gas companies to balance out your technology rich, social medial-laden portfolio. That being said, it also makes more sense going with small-cap oil and gas stocks instead of the Big Three ($XOM, $CVX and $COP) in order to maximize your return on investment in a desirable time frame.

Supply versus demand is the root of everything in business, and since oil is still the lifeblood of this planet, and more importantly, of the US, demand will almost always be higher than supply. I liken the human dependence on oil to substance abuse, where an addict or alcoholic can never get enough of what he/she believes is a good thing, though in reality, the instant gratification received from that last drink or extra horsepower has no tangible, positive effect whatsoever on the body or planet.

Spiritual and political metaphors aside, making money, building your retirement and accumulating wealth are characteristics of every good investor. These goals are not easily obtained. They require hard work, time, diligence, and let’s face it…luck. The trick is to limit the ‘luck’ factor as much as possible by treating your hard-earned money like your children’s college education and future depended on it. The best way I know of to do that is to take an active role in your potential and current investments by doing some outside research, participating in quarterly conference calls and actually reading the investor packets.

A good place to start the search is by giving these ten small-cap oil and gas stocks a solid once-over. They all have outstanding growth over the past month, and could possibly warrant a closer look:

  • EXCO Resources (XCO) is up more than 35 % for the month at $1.34 per share and has a market cap of $379 million. Founded in 1955 and headquartered in Dallas, Texas, EXCO Resources has interests in East Texas and North Louisiana. As of December 31, 2014, it had proved reserves of approximately 1.3 trillion cubic feet equivalent; and operated 6,559 gross wells.

  • Midcoast Energy Partners (MEP) is up six percent for the month at $11.34 per share and has a market cap of $523 million. Founded in 2013 and headquartered in Houston, Texas, Midcoast Energy Partners engages in gathering, processing, treating, transporting, and marketing natural gas and natural gas liquids (NGL) in the United States.

  • California Resources ($CRC) is up 44% for the month at $4.05 per share and has a market cap of $1.56 billion. Headquartered in Los Angeles, California, California Resources holds interests in approximately 2.4 million net acres in California. It also gathers, processes, and markets oil and gas products, as well as produces and sells power.

  • Genie Energy (GNE) is up 37% for the month at $12.59 per share and has a market cap of $310 million. Founded in 2001 and headquartered in Neward, New Jersey, Genie Energy resells electricity and natural gas to residential and small business customers primarily in the Eastern United States and has properties in Colorado, Israel and Mongolia.

  • Denbury Resources (DNR) is up 41% for the month at $3.86 per share and has a market cap of $1.37 billion. Founded in 1951 and headquartered in Plano, Texas, Denbury Resources has properties located in Mississippi, Texas, Louisiana, Alabama, Montana, North Dakota and Wyoming. As of December 31, 2014, it had 437.7 million barrels of oil equivalent of estimated proved oil and natural gas reserves.

  • Clayton Williams Energy (CWEI) is up 37% for the month at $58.72 per share and has a market cap of $715 million. Founded in 1991 and headquartered in Midland, Texas, Clayton Williams Energy has properties in Texas, Louisiana, and New Mexico. As of December 31, 2014, it had estimated proved reserves of 75,430 thousand barrels of oil equivalent.

  • Baytex Energy (BTE) is up 28% for the month at $4.40 per share and has a market cap of $912 million. Founded in 1993 and headquartered in Calgary, Canada, Baytex Energy has properties in the Western Canadian Sedimentary Basin and the United States. As of December 31, 2014, it had proved reserves of 283 million barrels of oil equivalent (mmboe); and proved plus probable reserves of 432 mmboe.

  • Sanchez Energy (SN) is up 25% for the month at $6.97 per share and has a market cap of 431 million. Founded in 2011 and headquartered in Houston, Texas, Sanchez Energy has properties in Texas, Mississippi and Louisiana.

  • Bonanza Creek Energy (BCEI) is up 31% for the month at $6.23 per share and has a market cap of $310 million. Founded in 2010 and headquartered in Denver, Colorado, Bonanza Creek Energy has properties in Colorado and Arkansas.

  • Carrizo Oil and Gas (CRZO) is up 16% for the month at $37.51 per share and has a market cap of $1.95 billion. Founded in 1993 and headquartered in Houston, Texas, Carrizo Oil and Gas has properties in Texas, Colorado, Ohio and Pennsylvania. As of December 31, 2014, it had proved crude oil and NGL reserves of 114.2 million barrels of oil equivalent; proved natural gas reserves of 221.0 billion cubic feet; and operated 388 gross productive oil and gas wells.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
CVX Chevron Corporation 112.91 -0.35 -0.30 1,831,760
CRZO Carrizo Oil & Gas Inc. 41.03 0.38 0.93 730,411
CRC California Resources Corporation 17.59 -0.38 -2.09 524,146
COP ConocoPhillips 49.54 0.66 1.34 2,515,507
XCO EXCO Resources Inc. Exco Resources Inc. 1.06 0.02 1.44 288,180
BCEI Bonanza Creek Energy Inc. 1.38 -0.09 -6.12 2,564,474
MEP Midcoast Energy Partners L.P. representing limited 6.60 0.05 0.76 7,346
CWEI Clayton Williams Energy Inc. 98.56 -3.42 -3.35 125,493
DNR Denbury Resources Inc. 3.89 0.04 0.91 4,096,182
XOM Exxon Mobil Corporation 87.18 -0.30 -0.35 3,788,363
SN Sanchez Energy Corporation 9.13 0.07 0.72 1,125,913
GNE Genie Energy Ltd. Class B Stock 5.55 -0.06 -1.07 9,529
BTE Baytex Energy Corp 4.61 -0.04 -0.86 2,077,572

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