2 Small-Cap Oil & Gas Stocks To Add To Your Watch List

NYSE: QEP | QEP Resources, Inc.  News, Ratings, and Charts

The COVID-19 outbreak triggered an unprecedented demand shock for crude oil, resulting in a 40% decline in price in the first quarter of 2020. This collapse was further intensified by a short-lived, yet aggressive, Saudi Arabia-Russia price war. However, prices started picking up strongly mid-year as optimism grew around a COVID-19 vaccine. Moreover, on the supply side, the OPEC+ alliance came to a settlement and implemented production cuts and several other actions to curb oil price volatility.

While the global clean energy drive is a potential threat to this industry, the demand for crude oil and energy is expected to hold steady in the near future because governments around the world are completely focused on economic revival, placing clean energy initiatives on the back burner for now.

As a result, we think small-cap oil and gas companies like QEP Resources, Inc. (QEP - Get Rating) and Genie Energy Ltd. (GNE - Get Rating), which are currently working on reducing their carbon footprints, could deliver substantial gains in the near term.

QEP Resources, Inc. (QEP - Get Rating)

Focused primarily on Texas and North Dakota, QEP is an independent crude oil and natural gas exploration and production company. The company has a $722.54 million market cap and sells oil, condensate, gas, and natural gas liquids to wholesale marketers, industrial users, local distribution companies, refiners, and utilities.

On December 21 QEP announced that it had entered o an agreement under which Diamondback will acquire QEP in an all-stock transaction valued at approximately $2.2 billion. The strategic merger with Diamondback is expected to lead to operational synergies and deliver capital efficiencies beyond what each company could achieve independently.

QEP’s total revenues have increased 47.4% sequentially to $177.8 million in the third quarter ended September 30, 2020. Its adjusted EBITDA has risen 2% from the prior quarter to $160.4 million, while its adjusted net profit improved 183.6% year-over-year to $31.2 million over the same period, yielding an adjusted EPS of $0.13.

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