Oil prices are hovering around $75 per barrel with OPEC and its allies failing to reach a deal on their output policy amid a disagreement on the matter between Saudi Arabia and the UAE. While OPEC+ had voted to increase oil production by two million barrels per day beginning in August, the UAE rejected this proposal, leading to an indefinite postponement of talks regarding the cartel’s oil production and output.
Given the rising demand for crude oil on the back of the reopening global economy, oil prices have rallied more than 45% in the first half of 2021 and are likely to hit the $80 per barrel mark soon. Declining inventories amid tight production should allow oil prices to rise further. Current inventory levels are expected to decline by another 100 million barrels by the end of this year to well below pre-pandemic levels. According to Wall Street analysts, oil prices might reach triple digits by next summer.
Thus, we think lesser-known oil exploration companies ARC Resources Ltd. (AETUF), California Resources Corporation (CRC), SilverBow Resources, Inc. (SBOW), and Goodrich Petroleum Corporation (GDP) should benefit significantly in the coming months.
ARC Resources Ltd. (AETUF)
Based in Canada, AETUF explores, develops, and produces crude oil, natural gas, and natural gas liquids. The company is also focused on the Montney resource play in Alberta and Northeast British Columbia and the Pembina Cardium in Alberta. AETUF has a market capitalization of $5.83 billion.
On April 6, AETUF announced its strategic Montney combination with Seven Generations Energy Ltd. Following this business combination, ARC becomes the largest condensate producer, third-largest natural gas producer, and sixth-largest upstream energy company in Canada.
AETUF’s revenue increased 93.1% year-over-year to CAD518.60 million ($412.45 million) in the fiscal first quarter, ended March 31. Its net income stood at CAD178 million ($141.57 million), up 131.9% from the same period last year. The company’s EPS increased 131.6% year-over-year to CAD0.50. Its cash and cash equivalents balance rose 17,648.3% from the prior year quarter to CAD1.06 billion ($0.84 billion) over this period.
A $3.14 billion consensus revenue estimate for the next year indicates an 11% improvement from the current year. Analysts expect the company’s EPS to come in at $0.95 in the next year, representing a 2.13% rise year-over-year. Furthermore, the company’s EPS is expected to increase 4,816% year-over-year to $0.27 in the current quarter, ending September 2021.
AETUF has gained 109.1% over the past year. The stock has gained 63.4% year-to-date.
AETUF has an overall A rating, which equates to Strong Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
AETUF has an A grade for Momentum, and B for Growth, Value, Sentiment, and Quality. Among the 95 stocks in the Energy – Oil & Gas industry, AETUF is ranked #1.
Beyond what we’ve stated above, we have also rated AETUF for Stability. Click here to view all AETUF ratings and other details.
California Resources Corporation (CRC)
CRC is a Bakersfield, Calif.-based independent oil and natural gas exploration and production company that sells crude oil, natural gas, and natural gas liquids to marketers, California refineries, and other purchasers that have access to transportation and storage facilities.
On May 13, CRC authorized a share repurchase program to acquire up to $150 million of common stock by March 31, 2022. Thus, the earnings per share for existing shareholders should rise significantly over this period.
CRC’s adjusted net income increased 1,375% year-over-year to $102 million in its fiscal first quarter in 2021. The company’s adjusted EPS increased 862.5% year-over-year to $1.22.
Analysts expect CRC’s revenues and EPS to come in at $1.63 billion and $4.73, respectively, in the period ending December 2021. The company’s revenue is also expected to increase 11.8% in the next year.
CRC has gained 17.5% year-to-date. The stock has gained 11% over the past six months to close yesterday’s trading session at $27.71.
CRC has an overall B rating, which equates to Buy in our proprietary rating system. CRC has an A grade for Momentum, and B for Quality. It is ranked #21 in the Energy – Oil & Gas industry.
Beyond what we’ve stated above, we have also rated CRC for Growth, Value, Sentiment, and Stability. Click here to view all CRC ratings.
SilverBow Resources, Inc. (SBOW)
SBOW is a leading independent oil and natural gas exploration and production company and engages in acquiring and developing assets in the Eagle Ford shale located in South Texas. SBOW is based in Houston, Tex.
On April 19, SBOW announced an extension of its senior secured revolving credit facility. The company also reported reduced credit facility borrowings to $200 million on March 31, indicating a 13% reduction quarter-over-quarter and a 30% reduction year-over-year. This reflects SBOW’s substantial balance sheet strength.
SBOW’s sales increased 62.5% year-over-year to $86.74 million in its fiscal first quarter, ended March 31. Its operating income grew 161.6% from its year-ago value to $53.66 million, while its net income improved 584.5% year-over-year to $28.38 million. The company’s EPS increased 562% year-over-year to $2.31.
Analysts expect SBOW’s revenues to increase 53.9% year-over-year to $273 million in the current year. A $8.83 consensus EPS estimate for the current year indicates a 66.9% rise compared to the prior year. SBOW has an impressive earnings surprise history as well; it beat the consensus EPS estimates in three out of trailing four quarters. Shares of SBOW have gained 481.2% over the past year, and 290.8% year-to-date.
It is no surprise that SBOW has an overall A rating, which equates to Strong Buy in our proprietary POWR Ratings system. The stock also has an A grade for Growth and Momentum, and a B grade for Value, Sentiment, and Quality. It is ranked #2 in the Energy – Oil & Gas industry.
To see SBOW rating for Stability and for additional details, click here.
Goodrich Petroleum Corporation (GDP)
GDP operates as an independent oil and natural gas company. The Houston, Texas company is involved in the exploration, development, and production of oil and natural gas properties.
GDP’ oil and natural gas revenues increased 38.7% year-over-year to $31.87 million in its fiscal first quarter, ended March 31. Its operating income grew 348.8% from its year-ago value to $10.62 million, and its net income came in at $4.50 million, indicating a 48.3% rise year-over-year. The company’s EPS increased 36.4% year-over-year to $0.30.
The Street expects GDP’s revenues to rise 71.2% year-over-year to $42 million in the current quarter, ending September 2021. A $0.7 consensus EPS estimate for the current quarter indicates a 1,500% improvement year-over-year. Shares of GDP have gained 126.3% over the past year, and 57% year-to-date.
It’s no surprise that GDP has an overall B rating, which equates to Buy in our POWR Ratings system. GDP has an A grade for Sentiment and Momentum, and a B for Growth. It is ranked #11 in the Energy – Oil & Gas industry.
To see additional POWR Ratings for Value, Stability, and Quality, click here.
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AETUF shares were trading at $7.60 per share on Friday afternoon, down $0.17 (-2.13%). Year-to-date, AETUF has gained 60.00%, versus a 16.19% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...
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|CRC||Get Rating||Get Rating||Get Rating|
|SBOW||Get Rating||Get Rating||Get Rating|
|GDP||Get Rating||Get Rating||Get Rating|