Penny Stock Brokers 4u

“Oil” and “Penny Stocks” would seem to some to be a contradiction in terms considering that when most of us think of oil we think of Big Oil such as ExxonMobil, Chevron Texaco and BP. With even ExxonMobil’s stock being considerably less than its $95 high in 2008 – currently in the $60-$70 range, one would have to wonder if investing in ANY oil stock would be a good idea for the investor looking for a quick profit. However, oddly enough, oil penny stocks are showing some interesting returns. Let’s take a look at a few currently being traded.

* Dune Energy Inc (AMEX:DNE) – Their current price is hovering between $.28 and $.31 per share with their 52 week range between $.06 and $.45 giving it just enough of a price variation to squeak out a few pennies per share in the short term. Although it is well off its $3 to $4 per share prices of 2006 and 2007, they just reported $20.3 million of revenue for the first quarter of 2010 up from the $14.3 million for the same period the previous year which enabled them to report a lower net loss for the quarter than in 2009. Their holdings are along the Louisiana/Texas Gulf Coast.
* Kodiak Oil & Gas Corp (AMEX:KOG) – Current stock price is just under $4 per share with a 52 week range of $.70 to $4.34; thus it is as the high end at the moment. During the 2006 to mid 2007 period they experienced their highest prices between $5 and $6. After experiencing a plummet from $4 to below $1 between late 2008 and the first quarter of 2009, they have been steadily rising ever since.
* GeoGlobal Resources Inc. (GGR) – Does a fair amount of bouncing around but with very low volume (3m avg vol of 55,826). Currently priced around $1.50 per share, its 52 week range is $.75 to $3.04. It is a new company, just founded in 2003 and headquartered in Calgary, Canada. A small staff of 12 full time employees involved in the exploration, development and production of oil and natural gas reserves in India.
* Cheniere Energy, Inc. (AMEX:LNG) – With a 3m average trade volume of just 810,582 this would also be considered a lower volume penny stock. Its current trade price is about in the middle of their 52 week range of $1.77 to $5.40. The 1y target for this stock is $5.88 thus it has about a $2 profit expected – although this obviously cannot be guaranteed.
* Canadian Superior Energy Inc (AMEX:SNG) – Has been staying pretty steady between $.46 and $1.15 with current price around $.60 with 3m average volume of 326,095. Their exploration territories include western Canada, offshore Nova Scotia, offshore Trinidad and Tobago, the United States and North Africa. It was founded in 1983 as Prize Energy Inc but changed their name in August 2000. Some forecasters do not believe it will ever see $1 again while others think they are poised for a comeback.
* American Oil & Gas, Inc. (AMEX:AEZ) – Currently being traded over $7 per share this technically is not currently a penny stock, but since its 52 week range has been between $.79 and $7.74 and it has a steady increase along with a 3m trading volume near one million shares, it looks interesting. It also has a 1y target estimate of $8.17 giving it some potential.
* Sampson Oil & Gas (AMEX:SSN) – Currently in the middle of its 52 week range of $.18 to $1.09 with a 3m average volume of 1.3 million shares this stock bears some watching. With a number of $.10 and $.20 bounces in the past few weeks, it could provide a little profit if timed correctly. This company was founded in 1980 and is headquartered in Perth, Australia. They own interests in various United States projects including ones in Wyoming, North Dakota, New Mexico and Texas.

It can be interesting to follow companies to see where they go. As this writer was reviewing other articles about oil penny stocks, it became apparent that many found in listings are no longer viable. For example, one list included a company called JED Oil (AMEX:JDO) for example that has not produced a financial report since the 1st quarter of 2008. Further investigation showed that throughout 2009 they filed default status reports and a news release of a closing of asset sale. Another company to go bust around the same time was Transmeridian Exploration Inc which filed for bankruptcy in March of 2009 after being delisted in January. Such is the way with oil penny stocks sometimes. Just like any penny stock, they can and do fail.

Obviously, oil penny stocks have the potential for an explosion in their value. When a company strikes oil, it is great news! But the exploration costs involved in locating oil are enormous, as are the costs once you actually find it. Too many times, however, the money invested into a site does not yield enough oil to cover the costs. When a company has more unprofitable sites than it can afford to absorb, then it fails and there is rarely any money left for the poor shareholder.

Oil prices also have a lot to do with a company’s success or failure. When prices are up, the company can go out and drill in places that are too costly when the price of oil is down. However, once begun a project might not go further if oil prices suddenly drop. Additionally, with the world’s increased dependence on oil as more countries become more industrialized, the demand tempts more companies into the industry, and some are terribly undercapitalized only hoping for a quick strike to fill their pockets. They do not last for the long haul and the shareholders never see a return on their investment.

When you put together the inherent volatility of penny stocks and the roller coaster environment of oil exploration, you have an investment that is completely unreliable. Big profits or big losses can result and only the bravest of investors or those with expendable capital should enter into such an investment. Regardless, use due diligence when choosing oil penny stocks.