The last time you pulled up the pump for gas, you may have noticed a pinching feeling. For every agenda, there’s a price to be paid.
In this case, as has recently been highlighted by Shell, Chevron, and ExxonMobil, the price for the mission to slow human-caused global warming is a lack of increased production, even as oil and gas prices power higher.
However, at the same time, the economic recovery is on increasingly strong footing and monetary and fiscal policymakers are working hard to create as much demand and inflation, as they can, to help force interest rates off the zero lower bound and finally get us off the drip-feed of “alternative policy measures” like QE and Curve Control.
The end result is a strong bull market in oil, and a likely premium valuation over time to be conferred to small-cap energy names with production strategies that don’t involve highly public board decisions involving climate change protests.
That points to an advantage for companies like SM Energy Co (NYSE: SM), Viking Energy Group Inc (OTC US: VKIN), Camber Energy Inc (NYSE American: CEI), PDC Energy Inc (NASDAQ: PDCE), Callon Petroleum Company (NYSE: CPE), Southwestern Energy Company (NYSE: SWN), and PBF Energy Inc (NYSE: PBF).
We take a closer look at a few of these names below.
Callon Petroleum Company (NYSE: CPE) was teetering on the verge of extinction following the pandemic lockdown crash a year ago. However, the stock has come roaring back, up 600% in the past six months but now nicely consolidating on the charts under the key $40 level.
The company bills itself as an independent oil and natural gas company focused on the acquisition, exploration, and development of high-quality assets in the leading oil plays of South and West Texas.
Callon Petroleum Company (NYSE: CPE) recently reported results of operations for the three months and full-year ended December 31, 2020, including full-year 2020 production of 101.6 MBoe/d (63% oil), an increase of 146% over 2019 volumes, year-end proved reserves of 475.9 MMBoe (61% oil), and net cash provided by operating activities of $559.8 million and adjusted free cash flow of $10.7 million, including net cash provided by operating activities of $368.1 million and $122.6 million of adjusted free cash flow generation over the last three quarters.
Joe Gatto, President, and Chief Executive Officer commented, “In a year marked by extraordinary volatility in commodity prices and workplace challenges created by the COVID-19 pandemic, our newly integrated team executed flawlessly on a revamped set of operational and financial initiatives that ultimately delivered over $120 million of adjusted free cash flow since the beginning of the second quarter, dramatically improving our liquidity and absolute debt position. Importantly, these accomplishments were complemented by significant achievements related to employee safety and environmental emissions.”
Even in light of this news, CPE hasn’t really done much of anything over the past week, with shares logging no net movement over that period.
Callon Petroleum Company (NYSE: CPE) generated sales of $359.9M, 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 21.6% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($24.4M against $672M, respectively).
Camber Energy Inc (NYSEAMERICAN: CEI) is in the game of optimizing suboptimal previously operated wells, which is a particularly interesting pursuit during a period of political push-back against expanding production from the larger players.
The company has expertise and resources tailored to the process of leasing out underexploited production opportunities where most of the fixed costs associated with the development and bring oil to market have already been absorbed by another entity, increasing the value of its expertise and helping to expand access to oil for consumers.
The company is particularly interesting given its pending merger with its majority-owned subsidiary, Viking Energy Group Inc (OTCMKTS: VKIN). The strategic combination will give CEI investors strong exposure to historically rich oil and gas properties spread across Oklahoma, Texas, Louisiana, Mississippi, and Kansas, with significant exposure to the Gulf Coast.
Camber Energy Inc (NYSEAMERICAN: CEI) most recently announced that it has regained compliance with all of the NYSE American LLC continued listing standards, fully resolving its previous continued listing deficiency. Hence, the company is now in full compliance with all NYSE American continued listing requirements.
Louis G. Schott, Interim Chief Executive Officer of Camber stated, “We are delighted to be back in compliance with all of the NYSE American listing standards. Our re-compliance could not have been possible without the 1-for-25 reverse split which we affected in December 2018. We are looking forward to completing our previously announced combination transaction with Lineal Star Holdings and continuing to build shareholder value.”
In addition, its subsidiary, VKIN, recently posted breakout performance metrics that continue to show tremendous promise. According to its recent filing, Viking just posted record topline performance, posting 2020 revenues above $40 million, which is up over 400% from 2018.
James Doris, President and Chief Executive Officer of both Camber and Viking, commented, “We are pleased with Viking’s results given the challenges faced in 2020. In many respects, the year was about survival for E&P companies given the unprecedented price environment and market conditions, and not only did we endure thanks to the commitment and perseverance of our entire team we also managed to improve in key areas, including increasing overall revenues and reducing debt at the Viking level. We remain focused on executing on our strategy and forging a path toward profitability.”
PBF Energy Inc (NYSE: PBF) bills itself as one of the largest independent refiners in North America, operating, through its subsidiaries, oil refineries, and related facilities in California, Delaware, Louisiana, New Jersey, and Ohio.
PBF Energy Inc. also currently indirectly owns the general partner and approximately 48% of the limited partnership interest of PBF Logistics LP (NYSE: PBFX).
PBF Energy Inc (NYSE: PBF) recently reported first-quarter 2021 income from operations of $57.7 million as compared to a loss from operations of $1,366.8 million for the first quarter of 2020. Excluding special items, the first-quarter 2021 loss from operations was $317.8 million as compared to a loss from operations of $134.0 million for the first quarter of 2020. PBF Energy’s financial results reflect the consolidation of PBF Logistics LP (NYSE: PBFX), a master limited partnership of which PBF Energy indirectly owns the general partner and approximately 48% of the limited partner interests as of quarter-end.
Tom Nimbley, PBF Energy’s Chairman and CEO, said, “PBF’s first-quarter results reflect the continuing challenges of lower demand brought on by the pandemic. Our refineries operated well and at rates which mirrored demand.” Mr. Nimbley continued, “We did see sequential improvement during the quarter. We ran higher in March than we did in January which reflects more favorable market conditions as the progressive vaccine rollout lead to improving demand. However, even with rising demand, the independent refining sector is facing unsustainable headwinds as a result of escalating compliance costs under the RFS program. If the program is not fixed, it will likely result in a reshaping of the U.S. refining industry and a greater reliance on foreign energy.”
While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action PBF shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -10% on above-average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities.
PBF Energy Inc (NYSE: PBF) generated sales of $4.9B, 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 34.7% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($1.5B against $3.4B, respectively).
Viking Energy Group Inc (OTCMKTS: VKIN) bills itself as an independent exploration and production company focused on acquiring, enhancing, and developing oil and natural gas properties in the Gulf Coast and Mid-Continent regions.
It has assets in Texas, Louisiana, Mississippi, and Kansas. It is also currently the majority-owned subsidiary of Camber Energy Inc (NYSEAMERICAN: CEI) (see above), and a merger agreement is in the works that could increase the value of both companies through geographic and operational synergies.
Viking Energy Group Inc (OTCMKTS: VKIN) recently posted sturdy results for Q1, including revenues of nearly $10.5 million and an adjusted EBITDA of $4.63 million.
James Doris, President and Chief Executive Officer of both Camber and Viking, commented, “We are pleased with Viking’s Q1 results, especially following the unprecedented conditions experienced in 2020. We are extremely encouraged with the foundation we have established, and are intensely focused on pursuing growth opportunities.”
Importantly, the company was able to drive nearly 20% sequential quarterly topline growth ahead of any clear sense of full economic “reopening”, when analysts expect energy demand to grow significantly.
Viking Energy Group Inc (OTCMKTS: VKIN) shares are testing key support in recent action, with the $0.50 level thus far broadly holding. This could be important given that this area was tested a half-decade ago in the stock and held up well, leading to dramatic gains for VKIN shareholders over subsequent months and quarters.
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