The global drive for cleaner technology accelerated in the runup to the COP26 summit this year, but efforts may fall short. The oil and gas industry is here for a while yet because renewables are still expensive. The United States Energy Information Administration reported that Brent crude prices averaged $81 per barrel for November, indicating a $38 per barrel increase from November 2020. Furthermore, the organization also estimated that 99.7 million b/d of petroleum and liquid fuels was consumed globally in the last month, a 4.9 million b/d increase from the same month last year.
On Tuesday, December 20, oil prices rebounded after a decline in the previous session. Brent crude rose 3.4%, to $73.98 per barrel, while the West Texas Intermediate (WTI) gained 3.7%, to settle at $71.12 per barrel. In addition, analysts at investment bank Goldman Sachs Group (GS), expect oil prices to hit $100 per barrel in 2023 as growth in demand outperforms supply.
We think the upbeat market sentiment could also benefit comparatively lesser-known oil and gas stocks of San Juan Basin Royalty Trust (SJT), VOC Energy Trust (VOC), PHX Minerals Inc. (PHX), and Barnwell Industries, Inc. (BRN), given their growth potential. These stocks are currently trading at less than $10.
San Juan Basin Royalty Trust (SJT)
SJT is an express trust that is based in Houston, Tex. Its interests consist of working interests, royalty interests, overriding interests, and other contractual rights in producing acres in San Juan, Rio Arriba, and Sandoval counties of New Mexico.
On December 20, PNC Bank, National Association, as the successor trustee of SJT, declared a quarterly distribution of $ 0.112441 per unit to the unit-holders of beneficial interests, payable on January 14, 2022. The payment reflects the company’s cash generation ability.
For its fiscal third quarter, ended September 30, SJT’s total income came in at $6.06 million, up substantially from its year-ago value. Its distributable income and distributable income per unit came in at $5.67 million and $0.12, respectively. And for the nine months ended September 30, the company’s total income increased 261.3% year-over-year to $21.84 million.
The stock has gained 111.2% in price over the past year and 118.4% year-to-date to close yesterday’s trading session at $5.83.
SJT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
SJT has a Growth, Momentum, and Quality grade of B. In the 103-stock Energy – Oil & Gas industry, SJT is ranked #21. The industry is rated B. Click here to see the additional POWR Ratings for SJT (Value, Stability, and Sentiment).
VOC Energy Trust (VOC)
VOC in Houston, Tex., engages in the acquisition and holding of term net profits from the net proceeds from the production and sale of interests in oil and natural gas properties in Kansas and Texas.
On October 20, VOC announced the Trust’s distribution of net profits for its fiscal third-quarter period, ended September 30. The distribution of $0.20 per unit was to be paid to unitholders on November 12. The payment indicates the trust’s ability to pay back its unitholders.
VOC’s income from net profits interest increased 63.3% year-over-year to $5.73 million for the nine months ended September 30. The company’s distributable income and distributions per trust unit stood at $5.27 million and $0.31, respectively, both up 121.4% from the same period last year.
VOC’s shares have gained 77.4% in price over the past year to close yesterday’s trading session at $4.63. It has gained 108.6% year-to-date.
It is no surprise that VOC has an overall B rating, which translates to Buy in our POWR Rating system. The stock has a B grade for Growth, Momentum, and Quality. It is ranked #28 in the Energy – Oil & Gas industry. To see the additional POWR Ratings for Value, Stability, and Sentiment for VOC, click here.
PHX Minerals Inc. (PHX)
PHX, formerly known as Panhandle Oil & Gas Inc., is a natural gas and oil mineral company that is based in Oklahoma City, Okla., with principal properties located in Oklahoma, Texas, Louisiana, North Dakota, and Arkansas. The company produces and sells natural gas, crude oil, and natural gas liquids primarily to pipeline and marketing companies.
On December 9, PHX announced that it had agreed to an amendment to its revolving credit facility, increasing the credit facility’s borrowing base to $32 million with its scheduled semi-annual redetermination. In addition, the company entered an agreement to acquire 426 total net royalty acres in Caddo Parish, La. The acquisition is expected to provide immediate cash flow to the company, and its expansion of its borrowing base is expected to strengthen its asset base.
On December 1, PHX revealed its sale of assets totaling 193 non-operated legacy working interest wellbores located primarily in the Arkoma Shale and Western Anadarko Shale plays in Oklahoma. The company also announced that it had acquired approximately 172 net royalty acres located primarily in Carter and Stephens County in Oklahoma. These developments should upgrade PHX’s asset base by reinvesting proceeds in areas of higher-margin minerals.
For its fourth fiscal quarter, ended September 30, PHX’s revenues increased 11.5% year-over-year to $4.07 million. This can be attributed to a 139.6% rise from the prior-year quarter in natural gas, oil, and NGL sales to $12.08 million. Its adjusted EBITDA improved 52.1% from the same period last year to $4.14 million.
A $0.07 consensus EPS estimate for the current quarter (ending December 2021) indicates a 600% year-over-year increase. And the $10.10 million consensus revenue estimate for the current reflects a 68.3% rise from the prior-year quarter.
The stock has declined marginally in price intra-day to close yesterday’s trading session at $2.14.
PHX’s promising prospects are reflected in its POWR ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. PHX has a Momentum grade of A and a Growth and Sentiment grade of B. It is ranked #24 in the Energy – Oil & Gas industry. Click here to see the POWR Ratings for Value, Stability, and Quality for PHX.
Barnwell Industries, Inc. (BRN)
BRN acquires , develops, produces, and markets oil and natural gas in Canada. The Honolulu, Hawaii company invests in land interests located in Hawaii and owns and operates water well drilling rigs and other ancillary drilling and pump equipment.
On December 20, BRN reported that it had entered a non-operated joint venture with two private drilling operators. The joint venture consists of seven horizontal wells in the Anadarko Basin. The first well came online in May, and the other six began producing in October. The wells targeting the Woodford and Meramec formations might prove profitable for the company.
BRN’s net earnings attributable to shareholders increased 146.3% year-over-year to $1.55 million in its fiscal fourth quarter ended September 30. Its EPS improved 100% from the same period last year to $0.16. And its revenues came in at $4.61 million.
Over the past year, BRN’s stock has gained 108.3% in price to close yesterday’s trading session at $2.50. It has gained 96.9% year-to-date.
BRN has an overall B rating, which translates to Buy in our POWR Rating system. The stock has an A grade for Quality and a B grade for Sentiment. It is ranked #20 in the Energy – Oil & Gas industry.
In addition to the POWR Rating grades we have stated above, one can see BRN ratings for Growth, Value, Momentum, and Stability here.
SJT shares were trading at $5.89 per share on Wednesday afternoon, up $0.06 (+1.03%). Year-to-date, SJT has gained 150.53%, versus a 26.33% 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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