While there are many reasons why the price of oil has remained high ranging from speculators to "The Syria Premium," three smaller firms in the sector are coming off a strong quarter that featured "Big Oil" companies such as Exxon Mobil (NYSE:XOM) falling over the period.
Interestingly enough, two of these "Small Oil" firms, InterOil (IOC) and Americas Petrogas (BOE.V), are involved in operations with Exxon Mobil, the world's largest oil and natural gas firm.
InterOil, based in Australia, is primarily focused on developing 10 trillion feet of natural gas in Papua, New Guinea. InterOil is negotiating a deal where it will sell its gas to Exxon Mobil. The market likes what it sees as InterOil jumped more than 6% last quarter. By contrast, Exxon Mobil is down more than 4% for the last three months of market action.
Also dealing with Exxon Mobil is Americas Petrogas (OTCPK:APEOF), a small cap oil and natural gas firm based in Canada. For its most recent quarter, Americas Petrogas reported a 70% increase in net revenue with a large jump in sales volume. There have also been very favorable reports about its holdings in Argentina. This is a very attractive area as Chevron (NYSE:CVX) and BP (NYSE:BP) also have operations. To enhance shareholder value, Americas Petrogas recently retained Jefferies LLC.
Based in Switzerland but with its assets in Canada, the stock price for Octagon 88 (OTCQB:OCTX) soared over the last quarter due to promising reports about its holdings and the granting of a license. Octagon 88 is also benefiting from the increasing appeal of oil and natural gas resources in North America. As detailed in a previous article, Repsol (REPPY.PK), the Spanish oil giant, is looking to spend up to $10 billon on North American energy assets as it wants a more secure resource base. Octagon 88 can only benefit from buyers willing to pay a premium for Canadian oil and natural gas holdings.
Smaller oil and natural gas firms, by their very nature, can benefit more from concentrated developments than firms such as Exxon Mobil, Chevron, Repsol and BP. As the US Energy Administration is predicting a huge jump (56%) in global energy consumption in the decades ahead, Small Oil such as Americas Petrogas, Octagon 88, and InterOil are better situated to profit from localized developments. In addition, these companies will benefit from the overall rise in the price for oil and natural gas based on higher demand.
Additional disclosure: I am very interested in small cap oil companies like Octagon 88 and Americas Petrogas that sell at low prices. Based on recent developments, the assets are tremendously undervalued. While I fully intend to buy in the future, I do not expect this to happen in the next 72 hours, however.