4 Oil and Gas Penny Stocks Trading at a Cash-Flow Discount

The oil and gas penny stocks on our list today have industry-low price/cash flow multiples

SmallCapPower | January 23, 2018: Oil prices have continued to rise for the past six months. Brent Crude has reached US$69, up 51% from its low of US$45 in July. On Monday, Russian and Saudi Arabian Energy minsters met in Oman and pledged to maintain their cooperation. In late 2016, OPEC and Russia made a pact to cut oil production levels. The oil and gas penny stocks on our list today have low price/cash-flow multiples that could represent discounted value opportunities. The average 2018 P/CF multiple of our picks is 1.7x compared to their peers, which trade at 7.9x.

Read: Top 15 Penny Stock Picks of 2017, Categorized by Relative Value, Intrinsic Value, and Growth

Cequence Energy Ltd. (TSX:CQE) – $0.09
Oil & Gas Exploration and Production

Cequence Energy is a Canada-based oil and gas company operating in Alberta. The Company’s primary asset, the Simonnete Dunvegan field, holds both oil and natural gas assets, with total reserves of 136 Mboe. The Company produces ~8,300 boe/d.

  • Market Cap: $22.2 Million
  • Price to Cash Flow Per Share FY2017: 1.0x
  • Forward Price to Cash Flow Per Share FY2018: 1.1x

Eagle Energy Inc. (TSX:EGL) – $0.39
Oil & Gas Exploration and Production

Eagle Energy is a Canada-based oil company operating in Alberta and Texas. The Company operates 350 active wells, with total reserves of 20.9 Mboe. EGL plans to expand production by taking advantage of the ~300 potential drilling opportunities on its existing assets.

  • Market Cap: $17.0 Million
  • Price to Cash Flow Per Share FY2017: 1.0x
  • Forward Price to Cash Flow Per Share FY2018: 1.2x

Bellatrix Exploration Ltd. (TSX:BXE) – $1.90
Oil & Gas Exploration and Production

Bellatrix Exploration is a Canada-based oil and natural gas company operating in Alberta. The Company controls significant infrastructure, including compression facilities and pipelines, surrounding its flagship asset, the Spirit River wells. The Company expects to produce ~36,000 boe/d in 2018.

  • Market Cap: $94.4 Million
  • Price to Cash Flow Per Share FY2017: 1.8x
  • Forward Price to Cash Flow Per Share FY2018: 1.9x

Petrus Resources Ltd. (TSX:PRQ) – $1.52
Oil & Gas Exploration and Production

Petrus Resources is an oil and gas company operating in Alberta. The Company operates ~400 drilling locations west of Edmonton. The Company produces on average 11,000 boe/d and expects to grow production by 2% in 2018.

  • Market Cap: $75.6 Million
  • Price to Cash Flow Per Share FY2017: 2.1x
  • Forward Price to Cash Flow Per Share FY2018: 2.1x

Disclosure: Neither the author nor his/her family own shares in any of the companies mentioned above.

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