Equities Benefitting From Crude’s Sharp Rise (RDS.A, AGYP, TTE, BP, PSCE, EEENF)

Crude oil prices in the U.S. rose 1.9% Tuesday, finishing at over $85 per barrel, the commodity hasn’t reached these prices since October 2014.  Many analysts predict this rally is just getting started.

Bullish momentum in the commodity is the product of several geopolitical concerns:

-Russia invading Ukraine

-Houthi drone attack on the UAE

-Colombia’s presidential front-runner Gustavo Petro’s pledge to replace oil and gas output with a knowledge-based, tourism-driven economy

While consumers will eventually pay more at the pump, savvy investors can offset these inflated prices by investing in oil companies that stand to benefit from the market’s current trajectory.  Upstream, midstream, and downstream plays could all see rising revenue in 2022 based on crude oil’s price appreciation.

At the end of the day, oil explorers and producers hold assets that are increasing in value.  Which companies are most likely to benefit from this?

Many blue-chip oil companies are focusing on alternatives based on their recent announcements. Shell (NYSE:RDS.A) just acquired the world’s first large-scale floating wind farms with Scottish Power Renewables.  TotalEnergies (NYSE:TTE) sold its interest in Angola’s mature Block 14 because the company is focusing on low costs and low emissions.  BP (NYSE:BP) is setting up a net-zero task force in Oman that would evaluate wind and solar data from 8,000 km2 of land and potentially kickstart new renewable projects.

With old standby’s like this going green what is an old-fashioned oil investor to do? 

One option is the Invesco S&P SmallCap Energy ETF (PSCE). PSCE has dramatically outperformed the broader market with a total return of 48.9% over the past 12 months.

A large driver of performance in this ETF is the volatility in small to micro-cap stocks.  Taking that a step further, if you are looking to ‘cut out the middle man’ so to speak, there are a few speculative oil penny stocks worth researching.

Allied Energy Corp. (OTCMKTS:AGYP) has started pumping oil from 5 wells and is getting close to a sixth well 1-H on its Prometheus leased site in Texas. 

They have several projects which you can find ranked here:

The Annie Gilmer and Green leases are the two sites that have been most productive.  All five of the aforementioned wells are located at the two leases.  In July, AGYP commissioned Mark McBryde to study each lease.  The report stated the Green lease was found to have Proven, Possible and Probable reserves of $20,563,100, and $12,194,800 at the Annie Gilmer lease.

According to the company’s Twitter feed, AGYP has started operations at the Prometheus site which has historically produced 335 barrels per day along with 298,000 cubic feet of natural gas daily.

With oil on the rise, AGYP stock should be on your radar. 

Like AGYP, 88 Energy Ltd. (OTCMKTS:EEENF), has a history of large price moves running to $0.095 in April of 2020 after announcing results on their Charlie-1 well. The well was drilled on time and within budget and penetrated sandstones in seven stacked targets and shale in one target. Analysis of logs and sidewall cores subsequently confirmed condensate discoveries in the Torok Formation and oil in the Seabee Formations.  

Stocks like AGYP and EEENF move swiftly when momentum hits and could be the biggest beneficiaries of crude oil’s climb.

Allied Energy in particular has several potential updates in the pipeline any one of which could be a catalyst.