While WTI Crude Oil Is Tanking, These Oil & Gas Penny Stocks Are Heading Higher
When it comes to 4/20, you’d think everything would be high. But for WTI Crude Oil stocks, it’s been a tough go. Before we start talking about the oil and gas penny stocks, we have to discuss an unprecedented event in the energy sector and what just happened. Monday saw crude oil prices plunging as concerns grew over reduced oil demand. While last week’s market breakout was seemingly due to subsiding fears of the coronavirus, it’s been these exact same fears triggering concern in the oil and gas sector.
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Thanks to the COVID-19 pandemic, the price of oil coupled with an overly abundant supply has created the perfect storm for what we’re seeing today. If you were ever wondering how to buy oil when it was above $50 a barrel, consider this: the buy crude oil right now might be less expensive than that package of toilet paper you fought to buy. If you’re asking yourself, “Should I buy oil stocks now?” you may want to do some research first.
In a bizarre series of events, one oil futures contract actually went negative on April 20th. In fact, one user on Reddit explained that Ice Cream is now 10x more expensive than oil.
But all joking aside, some of the biggest names in oil and gas took massive hits on Monday. Names like Chevron Corporation (CVX Stock Report) and Exxon Mobil stock (XOM Stock Report) shed more than 4% at points during the day.
US oil prices plunged, falling below $0 Monday to $-38 a barrel. That’s the lowest level since NYMEX opened oil futures trading in 1983. Even amid this chaos in the energy sector, there were several penny stocks that actually performed well.
Best Penny Stocks To Watch: Top Ships Inc.
Shares of Top Ships Inc. (TOPS Stock Report) slid for most of the Monday session. After reaching highs of $0.305 during premarket hours, the oil and gas transportation stock fell to lows of $0.23. However, by the late afternoon session, TOPS stock began climbing. One of the big hurdles right now is where to store all of this extra oil. Obviously tankers are one place to do that though not a permanent fix.
Something else of note when it comes to Top Ships is what the company announced on Monday morning. It was revealed that the company concluded its previously announced sale of the vessel, M/T Palm Springs. The cash release amount came to $9.7 million. Heavier short interest in this stock may be to thank for the late afternoon run. Many have bet against the stock after the company announced another financing deal this month.
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No matter the case, it’s important to understand how TOPS stock trades. Many times it has broken out in the past but then came crashing back down. If TOPS stock is on your list of penny stocks right now, keep in mind that this stock can be very volatile especially in this kind of market.
Best Penny Stocks To Watch: Nordic American Tanker Shipping
Another one of the shipping penny stocks to watch is Nordic American Tanker Shipping (NAT Stock Report). Unlike TOPS stock, shares of NAT stock have been climbing for the last few weeks. In fact since March 20th, NAT stock is up nearly 80% as of Monday’s high of $4.91.
In similar reasoning to Top Ships, the idea that shipping stocks could benefit from “dip buyers” in the physical market, could hold true with NAT as well. The world continues run on fossil fuels whether you like it or not. In times where prices are potentially “discounted,” it makes sense that there would be high demand for companies to transport such cargo. On top of this, it also helps that there’s a major necessity to store oil someplace and tankers can be ideal.
On Monday, shares of Nordic American Tanker Shipping stock climbed to highs of $4.97 during power hour. Share volume for the day was some of the highest in recent history. The biggest question now is how long with this rally last? If oil prices continue to crater will shippers remain a key focus for investors?
Best Penny Stocks To Watch: Southwestern Energy
Southwestern Energy (SWN Stock Report) pushed to new highs for the year on Monday. Shares of the U.S. energy company reached highs of over $3 for the first time since July of 2019. The operating segments of the company are the Exploration and Production and Marketing segment.
Monday saw a slew of analyst remarks for the oil and gas stock. B of A Securities raised its price target to $1.70. This came just a few days after Goldman analysts lifted their target to $1.80 from $1.10. In addition to that, Stifel Nicolaus reiterated a hold rating on the stock and boosted its price target to $1.60 from $1.50. While its set to release its next round of earnings at the start of May, it may be prudent to see how the company performed in its previous quarter.
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For its fourth quarter, Southwestern Energy recorded net income attributable to common stock of $110 million. Adjusted net income, which excludes the impact of unsettled derivatives and one-time items, was $99 million. Meanwhile, during the year, the Company reduced senior notes by $114 million. It repurchased $62 million of senior notes at an average discount of 13%. It also retired $52 million of notes that were due in 2020. We’ll see how Southwestern handles the turbulent first quarter. Its earnings conference call is scheduled for May 1 just before the open.
Best Penny Stocks To Watch: Antero Resources Corp
Finally, Antero Resources Corp. (AR Stock Report) was one of the popular energy penny stock to watch on Monday. The trading volume was well above-average. On top of that, the penny stock reached new April highs. AR stock has climbed as much as 163% since the start of the month. This began after it appointed a new member to its Board, Jacqueline Mutschler. Among a number of endeavors, Mutschler previously served as Senior Vice President and Head of Exploration and Production Technology at BP, PLC.
Similar to Southwestern, analysts have been increasingly bullish on Antero. Goldman recently lifted its price target on the stock. The firm previously had it set to $1.15. As of this month, the new target was boosted to $1.30 with a neutral rating. The company also has upcoming earnings this month. Antero will release results after the market on April 29 with a conference call to follow on the 30th.
In its last report, Paul Rady, Chairman and Chief Executive Officer of Antero Resources commented, “Our 2020 capital budget highlights the direct benefit from our well cost savings initiatives that we launched in 2019. In simple terms, we have reduced our total well cost per foot from $970 in the initial 2019 budget to a target of $795 to $825 per for 2020. The result is a 10% reduction in drilling and completion capital and a 28% reduction in lease operating expense as compared to 2019, while delivering production growth of 9%.”
He also explained that “this level of production in turn should trigger $75 million in previously announced gathering, processing and transportation expense savings in 2020 and paves the way for up to $350 million in total savings between 2020 and 2023. “
