On Thursday, oil price slipped from its multi-year highs, with Brent Crude futures down 0.5%, at $87.99 per barrel, while the United States West Texas Intermediate (WTI) crude futures for February delivery, slipping 0.5%, at $86.50 per barrel. However, supply shortfalls from the OPEC+ amid a strong demand is supporting the oil prices to hover near 2014 highs.
On top of it, the recent outlooks from the International Energy Agency and the U.S. Energy Information Administration suggest that the world might need more oil this year than it did a month ago. The demand figures seemingly look robust as the omicron variant’s impact on consumption was smaller than many had initially feared.
Moreover, Goldman Sachs Group Inc. (GS) predicts oil prices to hit $100 per barrel later this year and further price rises in 2023. Oil stocks Vista Oil & Gas, S.A.B. de C.V. (VIST), SilverBow Resources, Inc. (SBOW), and VAALCO Energy, Inc. (EGY) could witness major upsides in the near term if oil prices continue to rally.
Vista Oil & Gas, S.A.B. de C.V. (VIST)
VIST, based in Mexico, engages in the exploration and production of oil and gas in Latin America. The company owns producing assets in Argentina and Mexico, and its principal assets are located in Vaca Muerta, Argentina.
VIST’s revenues from contracts with customers increased 150.5% year-over-year to $175 million for the fiscal third quarter ended September 30. Net profit for the period and profit per share came in at $4.73 million and $0.05, respectively, up substantially from their negative year-ago values.
The street EPS estimate for the fourth fiscal quarter of $0.16 indicates a 150% year-over-year increase. Likewise, Street revenue estimate of $159.50 million for the same period reflects an improvement of 100.5% from the prior-year period.
The stock has gained 117.6% over the past year and 82.8% over the past six months to close yesterday’s trading session at $6.18. Its average price target of $11.58 indicates an 87.4% potential upside.
VIST’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
VIST has a Momentum grade of A and a Growth, Value, and Sentiment of B. In the 48-stock Foreign Oil & Gas industry, it is ranked #15. The industry is rated A. Click here to see the additional POWR Ratings for VIST (Stability and Quality).
SilverBow Resources, Inc. (SBOW)
SBOW is an oil and natural gas exploration and production company primarily focused on the Eagle Ford Shale developments in South Texas.
On November 22, SBOW declared the closing of its acquisition of oil and gas assets in the Eagle Ford shale, from anonymous sellers, at an aggregate purchase price of $75 million, payable in cash and common stock. The acquisition is expected to enhance the company’s productive capability.
On November 15, the company announced its entry into an amendment to its revolving credit facility, increasing its borrowing base from $300 million to $460 million and an amendment to its Second Lien Notes Purchase Agreement, extending its maturity date to December 2026. The company expects these amendments to increase its liquidity and enable it to enter into strategic mergers and acquisitions.
For the fiscal third quarter ended September 30, SBOW’s oil and gas sales revenues increased 117.2% year-over-year to $99.25 million. Operating income improved 359.6% from the prior-year quarter to $59.64 million. Adjusted EBITDA went up 60.1% from the same period prior year to $57.63 million.
The consensus EPS estimate for the fiscal fourth quarter of $3.24 reflects an increase of 145.5% year-over-year. Likewise, the consensus revenue estimate of $115 million for the current quarter indicates a rise of 115.1% from the same period last year.
SBOW’s stock has gained 271.2% over the past year to close yesterday’s trading session at $22.42. It has gained 19.1% over the past six months. The 12-month median price target of $39.00 indicates a 74% potential upside.
SBOW’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which translates to Strong Buy in our POWR Rating system.
SBOW has an A grade for Growth and Momentum and a B grade for Value, Sentiment, and Quality. It is ranked #2 of 77 stocks in the Energy – Oil & Gas industry. The industry is rated B. To see the additional SBOW POWR Rating for Stability, click here.
VAALCO Energy, Inc. (EGY)
EGY operates as an independent energy company and a crude oil and natural gas explorer, developer, and producer. The company holds the Etame production sharing contract in the Etame Marin block in the Republic of Gabon and has interests in the undeveloped offshore block in Equatorial Guinea.
On December 29, EGY announced the filing of a $150 million shelf registration statement on Form S-3 with the U.S. Securities and Exchange Commission (SEC). About this statement, George Maxwell, EGY’s Chief Executive Officer, said, “We believe this shelf registration statement, which is a common practice with other U.S publicly-traded E&P companies, is a prudent proactive move to support our future growth objectives as the filing will provide us increased financial flexibility and more efficient access to the capital markets.”
On December 13, EGY declared the commencement of its 2021/2022 drilling campaign with the Etame 8H-ST well in offshore Gabon under a previously announced contract. It is expected that the execution of a successful drilling campaign would expand the company’s size and scale and accelerate growth initiatives.
EGY’s crude oil and natural gas sales increased 206.2% year-over-year to $55.90 million in the fiscal third quarter ended September 30. Adjusted net income and adjusted net income per share stood at $9.96 million and $0.17, respectively, up 324.6% and 325% from the prior-year quarter. Adjusted EBITDAX rose 232.6% from the same period last year to $23.26 million.
Street expects EPS to increase 152.9% year-over-year to $0.43 for the quarter ending March 2022. Likewise, Street expects EGY’s revenue to improve 62.7% from the prior-year quarter to $64.70 million in the upcoming quarter.
Over the past year, the stock has gained 73.3% to close yesterday’s trading session at $4.16. It has gained 76.3% over the past six months. The 12-month median price target of $4.98 indicates a 19.7% potential upside.
EGY has an overall A rating, which equates to Strong Buy in our proprietary rating system. The stock has a Momentum and Sentiment grade of A and a Growth, Value, and Quality grade of B. It is ranked #1 in the Energy – Oil & Gas industry.
In addition to the POWR Rating grades we’ve stated above, one can see the EGY rating for Stability here.
VIST shares were unchanged in after-hours trading Thursday. Year-to-date, VIST has gained 10.13%, versus a -5.94% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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