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The Imbalance that Could Spark Oil Stocks

The crude oil market is in an interesting spot right now. Some would say: it has moved too far too fast on assumptions of a great reopening that could falter in the face of growing evidence of difficult Covid variants emerging in low-vaccination-rate markets like Brazil, India, and most parts of Africa.

However, major firms have started to rapidly upgrade their price targets for oil for a simple reason: the supply won’t meet the demand when we “reopen” because we have spent the past year worried about variants, new lockdowns, and the failure of the vaccine program, and the small slice of faith that avoided that was focused on the distant future impact of electric vehicles. As a result, we haven’t invested enough in cultivating currently developed and new sources of production for basic petroleum products.  And now we are staring at a likely shortfall with no time left and a blazing reopening process just around the next corner. It’s time to think about plan B: put capital in the hands of alternative producers and see what happens. With that in mind, we have put together some interesting names for your consideration, including: Cimarex Energy Co (NYSE:XEC), Allied Energy (OTCMKTS:AGYP), and SM Energy Co (NYSE:SM).

 

Cimarex Energy Co (NYSE:XEC) is an independent oil and gas exploration, production company, and an interesting name in the space with nearly 620 million barrels of proven reserves and owned interests in roughly 2,800 productive oil and gas wells. The stock has also been very popular over the past 13 months, rising as much as 420% in that time.

The company’s principal operations in the Permian Basin and Mid-Continent areas of the U.S.

Cimarex Energy Co (NYSE:XEC) most recently announced that Megan Hays will join Cimarex as Vice President of Investor Relations. Megan joins Cimarex from Concho Resources Inc., where she most recently served as Vice President of Investor Relations and Public Affairs. According to the release, she has 15 years of experience in strategic communications, sustainability, corporate development and capital markets within the energy industry. Megan will report to Senior Vice President and Chief Financial Officer, Mark Burford.

Mr. Burford, said, “We are excited to have Megan join our team. She is an accomplished leader with a strong network of relationships across the financial community. Megan’s experience in the industry – from strategy to sustainability – will make her a great addition to our company.”

And the stock has been acting well over recent days, up something like 6% in that time.

Cimarex Energy Co (NYSE:XEC) generated sales of $434.7M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 8.2% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($273.1M against $660.2M, respectively).

 

Allied Energy (OTCMKTS:AGYP) is an emerging player in the oil and gas space that has been gaining attention as the company stacks up a widening exposure profile for an interesting and rare approach that balances both the shortfalls of declining investment in new production and rising concerns with the unsustainability of traditional petroleum production methods.

The company specializes in the business of reworking and re-completing existing oil and gas wells located in the thousands of mature oil and gas producing fields across the United States, with the objective of mobilizing its expertise and technology to drive higher production volumes, longer well life, and more efficient recovery of proven and available oil and gas reserves in acquired wells.

Allied Energy (OTCMKTS:AGYP) has made a series of recent moves, recently announcing that it has submitted and posted its bond for the P-4 and P-5 applications to the Texas Railroad Commission, Allied is waiting on the Texas Railroad Commission to accept their bond and active the P5 operating permit.

According to the company’s release, Allied has secured Oil Cat Energy Services for the filing of the necessary Underground Injection Permit for saltwater injection for the Green lease. Allied will use Oil Cat Energy Services as the go-to solution for surveying the plat for the precise injection well location, for securing the drilling permit for the injection well, for engineering services and consulting, and workover engineering for new production well set ups for increased fluid production rates.

Allied Energy Corporation CEO, George Montieth added: “We are extremely excited about our recent acquisition of the Palo Pinto wells and have a high confidence that these wells will become part of Allied Energy Corporation’s oil production numbers. These formerly producing wells are perfect candidates for modern reworking and recompleting technology that will give these old wells new life. In many cases, the most productive days are still ahead for some of these wells!”

Allied Energy (OTCMKTS:AGYP) shares have been in a sturdy upward trend over the past four months, rising as much as 500% in that time as the company ramps up its operations. Given the potential for an oil shortage this year, AGYP is well positioned for further gains as the company expands its reach and scale.

 

SM Energy Co (NYSE:SM) is a key player of focus in the oil and gas space. 

The company bills itself as an independent energy company engaged in the acquisition, exploration, development, and production of oil, gas, and NGLs in the state of Texas. SM Energy routinely posts important information about the Company on its website.

SM Energy Co (NYSE:SM) most recently announced that it expects to release its first quarter 2021 financial and operating results after market on April 29, 2021.

Last time around, the company announced Fourth quarter 2020 production volumes at 122.4 MBoe/d, 51% oil, including production that exceeded guidance, predominantly due to better-than-expected base production from existing Midland Basin wells.

It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, the stock is net flat, and looking for something new to spark things. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -17%. 

SM Energy Co (NYSE:SM) pulled in sales of $320.3M in its last reported quarterly financials, representing top line growth of -29%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($10K against $583.7M, respectively).

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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