Oil prices have been rising and are expected to see sharp spikes and sudden dips as the world deals with potential supply shortages. The Russian invasion of Ukraine and the subsequent sanctions on Russia, against a backdrop of low oil inventories, pushed oil prices higher. According to the U.S. Energy Information (EIA), Brent’s price will average $116/b in the second quarter of 2022 and $102/b in the second half. Oil prices are expected to remain elevated as the world deals with supply shortages.
The Greece-based Imperial Petroleum Inc. (IMPP) has been gaining investors’ attention lately amid the rising oil and gas prices, seemingly caught up in a meme stock frenzy. However, the momentum did not sustain, and the stock is down 19.6% year-to-date. In addition, for the company’s last reported quarter ended September 30, 2021, IMPP’s revenue stood at $4.13 million, marking a decrease of 28.4% year-over-year. The company also reported a net loss of $0.93 million, while its loss from operations stood at 0.92 million.
Given this backdrop, we think APA Corporation (APA), Crescent Point Energy Corp. (CPG), Gran Tierra Energy Inc. (GTE) are better positioned to capitalize on the industry tailwinds and could be better investments than IMPP.
APA Corporation (APA)
APA explores for and produces oil and gas, operating through its subsidiaries Apache Corporation and APA Corporation Suriname. Its production segments include the United States; Egypt’s the Western Desert; and the United Kingdom’s North Sea and Suriname.
Note that APA is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
On March 14, 2022, APA announced the closure of two transactions, generating net proceeds of approximately $1 billion. The company raised $805 million from the previously announced Delaware Basin minerals divestiture and $224 million from selling 4 million shares of Kinetik common stock. “Completion of these transactions reflects the ongoing streamlining of our portfolio. We remain committed to returning Free Cash Flow to shareholders and continuing to strengthen the balance sheet. As such, we plan to direct a portion of these sales proceeds toward debt reduction,” said John J. Christmann IV, CEO and president of APA Corporation.
Earlier in March, APA announced the expansion of its collaboration with LongPath Technologies, Inc. for continuous monitoring of methane emissions in the Permian Basin of southeast New Mexico and west Texas. The company expects this collaboration to help reduce emissions while providing real-time monitoring and more innovative and sustainable ways.
APA’s total revenue increased 88.6% from the prior-year quarter to $2.30 billion in the fiscal fourth quarter ended December 31, 2021. Net income attributable to common stock came in at $382 million, reflecting an increase of 3,720% year-over-year for the same quarter, while the net income per common share stood at $1.05, up 2,725% year-over-year.
The consensus EPS estimate of $1.79 for the fiscal first quarter ending March 2022 represents a 96.9% improvement year-over-year. The consensus revenue estimate of $2.11 billion for the same quarter represents a marginal increase from the same period last year. It has an impressive earnings surprise history, as it topped Street EPS estimates in three of the trailing four quarters.
APA has gained 126.4% over the past year and 89.6% over the last six months to close the last trading session at $41.53.
APA’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to Buy in our POWR Ratings system. The POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
APA has an A grade in Momentum and Quality. It is ranked #17 of 89 stocks in the B-rated Energy - Oil & Gas industry.
Beyond what is stated above, we’ve also rated APA for Value, Stability, Sentiment, and Growth. Get all the APA ratings here.
Crescent Point Energy Corp. (CPG)
CPG is a Canada-based company exploring, developing, and producing light and medium crude oil, natural gas liquids, and natural gas reserves in Western Canada and the United States.
In December 2021, CPG declared a first-quarter 2022 dividend of $0.045 per share payable on April 1, 2022, to shareholders of record on March 15, 2022, which represents a 50% increase from its fourth-quarter 2021 dividend, equating to a dividend payment of $0.18 per share on an annualized basis. The company also announced its plans to allocate up to $100 million to share repurchases over the following six months. Thus, improving shareholders’ returns considerably.
For the fiscal fourth quarter ended December 31, 2021, CPG’s oil and gas sales increased 101.1% year-over-year to $900.40 million. Its net income grew 337.5% from the year-ago value to $121.60 million in the same period. Also, its adjusted net earnings from operations stood at $160 million, reflecting an 86.9% increase year-over-year. The company’s net income per share came in at $0.21, up 310% from the prior-year quarter.
CPG’s revenue for the current quarter is expected to come in at $847.35 million, indicating a 63.1% year-over-year growth. The company’s EPS is expected to increase 919.7% year-over-year to $0.34 for the ongoing quarter ending March 2022.
The stock has gained 97.5% over the past year to close the last trading session at $7.86. CPG shares have gained 85.8% over the past six months.
It is no surprise that CPG has an overall rating of B, equating to Buy in our POWR Ratings system.
CPG has an A grade in Momentum and a B in Growth, Value, Quality, and Sentiment. Out of the 43 stocks in the A-rated Foreign Oil & Gas industry, CPG is ranked #15.
In addition to the POWR Rating grades I’ve just highlighted, you can see the CPG’s ratings for Stability here.
Gran Tierra Energy Inc. (GTE)
GTE is a Canada-based energy company focused on exploring and producing oil and natural gas in Colombia and Ecuador.
GTE’s sales increased 21.9% year-over-year to $23.78 million in the fiscal fourth quarter ended December 31, 2021. Its non-GAAP net income grew 230.6% from the year-ago value to $62.52 million, while its non-GAAP adjusted EBITDA improved 266.7% year-over-year to $81.53 million.
Street expects GTE’s EPS for the fiscal year ending December 2022 to improve 202.8% year-over-year to $0.36. The consensus revenue estimate of $938.65 million for the same period represents a 98.1% increase year-over-year.
GTE’s shares have gained 142.9% over the past year to close the last trading session at $1.70. The stock has gained 152% in the past six months.
GTE’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to Strong Buy in our POWR Ratings system.
The company also has an A grade in Momentum and Sentiment and a B in Growth, Quality, and Value. The stock is ranked #8 in the Foreign Oil & Gas industry. To get GTE’s ratings for Stability, click here.
APA shares were unchanged in after-hours trading Monday. Year-to-date, APA has gained 48.77%, versus a -3.71% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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