Small-cap Energy Stocks Set for the Delta Boost? (CEI, PDCE, SWN, VKIN, PBF, CPE, SM)

It should be no secret at this point that global policymakers are back on high alert for Covid reasons, with the emergence of the dominant Delta strain now fully in gear. CDC estimates now suggest that over 80% of all new Covid cases in the US are Delta cases.

The variant acts differently – it is more contagious and capable of being contracted and passed through vaccinated populations. While most new cases are among the unvaccinated, as are nearly all hospitalizations and deaths, the fact that case numbers are growing fast again has governments and central banks worried.

But here’s the thing: the people responsible for the majority of consumer spending, including travel and driving, aren’t changing their behavior. Most have been vaccinated, and the specter of catching something that registers roughly on par with the common cold doesn’t appear to be nearly the same kind of psychological hurdle we saw a year ago.

The combination of these ideas could end up being a boon for commodity players, especially in oil and gas. Think about this way: monetary and fiscal policy may remain accommodative for longer, even as consumers continue to drive deficits in energy markets.

The most attractive space in such a context would seem to be the small-cap players in the energy sector, including names like PDC Energy Inc (NASDAQ:PDCE), Southwestern Energy Company (NYSE:SWN), Viking Energy Group Inc (OTC US:VKIN), PBF Energy Inc (NYSE:PBF), Callon Petroleum Company (NYSE:CPE), and SM Energy Co (NYSE:SM).

These stocks have seen underinvestment even as they ramp up production in a durable bull market. Eventually, that paradox will likely resolve itself. As such, we take a look at some of the most interesting recent catalysts in the group below.

 

Southwestern Energy Company (NYSE:SWN) bills itself as a holding company that engages in the exploration, development, and production of natural gas, oil, and natural gas liquids (NGLs). 

The company operates through the Exploration and Production (E&P), and Marketing segments. The E&P segment includes operations in northeast Pennsylvania, West Virginia, and southwest Pennsylvania, The Marketing segment deals in the marketing and transportation of natural gas, oil and NGLs primarily produced in E&P. 

Southwestern Energy Company (NYSE:SWN) recently announced that Carl Giesler Jr. will join the company as Executive Vice President and Chief Financial Officer on July 19, 2021. Michael Hancock, who has served as CFO on an interim basis, will continue as Vice President – Finance & Treasurer.

“I am pleased to welcome Carl to the team at an impactful time for Southwestern Energy,” said Bill Way, President and Chief Executive Officer. “Carl’s distinctive strategic perspective and disciplined approach to driving shareholder value complement the Company’s existing strategy and leadership team and will help build on SWN’s strong momentum. I want to thank Michael for the steady hand he provided these past many months and look forward to more of his exceptional work as a valued leader of the Company.”

The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 5% in that timeframe. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -8%. 

Southwestern Energy Company (NYSE:SWN) managed to rope in revenues totaling $1.1B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 81.1%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($4M against $1.4B, respectively).

 

Viking Energy Group Inc (OTC US:VKIN) is an OTC small-cap energy play with real production and very real prospects for growth in its production footprint, potentially creating greater growth possibilities for investors looking for a more speculative option. The company is in the process of a pending merger with its majority-owner, Camber Energy Inc (NYSEAMERICAN:CEI).

The strategic combination will grant investors strong exposure to historically rich oil and gas properties spread across Oklahoma, Texas, Louisiana, Mississippi, and Kansas, with significant exposure to the Gulf Coast.

Viking Energy Group Inc (OTC US:VKIN) also stands to benefit from recent news on a major funding deal for CEI for $15 million in fresh unencumbered capital in the form of a premium-to-market convertible deal that can’t be dealt by the lender without a major increase in price in shares of CEI. 

Since VKIN is the principal operating subsidiary of CEI, one would anticipate that capital to be plowed into expansion for VKIN. Given the fact that Viking has shown strong recent results, expanding production could drive major operating growth, especially as the value of that production continues to rise with the bull market in oil and gas.

In other words, VKIN now would appear to likely have access to a large tranche of non-toxic, non-dilutive capital to fund expansion in production.

Viking Energy Group Inc (OTC US:VKIN) managed to rope in revenues totaling $10.5M in overall sales during the company’s most recently reported quarterly financial data. That adds up to nearly 20% sequential quarterly topline growth and an adjusted EBITDA of $4.63 million.

 

PBF Energy Inc (NYSE:PBF) engages in the operation of a petroleum refiner and supplies unbranded transportation fuels, heating oil, petrochemical feed stocks, lubricants, and other petroleum products in the United States. The company operates through Refining and Logistics segments.

The Refining segment refines crude oil and other feed stocks into petroleum products. The Logistics segment owns, leases, operates, develops, and acquires crude oil and refined petroleum products terminals, pipelines, storage facilities, and logistics assets. 

PBF Energy Inc (NYSE:PBF) recently commented on the Bay Area Air Quality Management District (BAAQMD) Board members’ decision to adopt Proposed Amended Rule (PAR) 6-5 related to particulate emissions from refinery Fluid Catalytic Cracking (FCC) units in the Bay Area.

Paul Davis, President of PBF Energy’s Western Region, stated, “We have been working closely throughout the rule-making process with BAAQMD staff and anticipated today’s outcome. Importantly, the rule-making requires refineries to meet a specific emissions standard by 2026, without requiring the installation of a wet gas scrubber or any other specific technology.”

Even in light of this news, PBF has had a rough past week of trading action, with shares sinking something like -9% in that time. That said, chart support is nearby, and we may be in the process of constructing a nice setup for some movement back the other way. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -42%. 

PBF Energy Inc (NYSE:PBF) managed to rope in revenues totaling $4.9B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -6.7%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($1.5B against $3.4B, respectively).

Please make sure to read and completely understand our disclaimer at https://www.wallstreetpr.com/disclaimer. We may be compensated for posting this content on our website by EDM Media LLC. For questions, comments or suggestions please contact ir@edm.media.

Published by Benjamin Roussey

Benjamin Roussey is from Sacramento, California. He has two master’s degrees and served four years in the U.S. Navy. His bachelor’s degree is from CSUS (1999) where he was on a baseball pitching scholarship. His second master’s degree is an MBA in Global Management from the University of Phoenix (2006). He has worked for small businesses, public agencies, and large corporations. He has lived in Korea and Saudi Arabia where he was an ESL instructor. Benjamin spends his time in between Northern California and Cabo San Lucas, Mexico, committing himself to his craft of freelance and website writing. http://www.facebook.com/ben.rouss

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