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April 6, 2022, 4:28 a.m. EDT

5 Permian Plays With Big Potential (AGYP, REI, CDEV, APA, OXY)

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Apr 06, 2022 (AB Digital via COMTEX) -- Oil prices remain firmly above $100 per barrel as the Ukraine conflict continues to affect supply globally. In the United States, this has led to increased production at the nation’s most active oil field, the Permian Basin, located in southeast New Mexico and West Texas.

Tightened supply has coincided with increased demand as COVID-19 subsides, creating a cocktail of opportunity for all involved in the extraction of ‘Texas tea.’

The rising prices of oil have created increased fundamental valuation for securities in the sector. Permian-based stocks could be the biggest beneficiaries of this boost in value.

—Allied Energy Corp. (otcmkts:AGYP), for instance, is an oil-producing Permian play, the company holds several leases in the region but has production interest at 3 primary locations:1. Green Lease2. Gilmer Lease3. Prometheus Lease

Both the Green Lease and Gilmer Lease had assessments completed last summer, the recent market conditions have made a major change in the value of AGYP’s reserves:

GREEN LEASE:
July 2021 Assessment ($46.26 per barrel): $20,563,100
Post Ukraine Conflict Value ($110 per barrel): $48,896,260

GILMER LEASE:
July 2021 Assessment ($46.26 per barrel): $12,194,800
Post Ukraine Conflict Value ($110 per barrel): $28,997,578

The current market conditions have increased the value of these two leases by 140%. Around the time of the report, AGYP’s share price was at 47 cents. Currently, the stock trades at roughly half that price.

Considering the company’s reserves are much more valuable now, and AGYP is currently producing, this represents value potential for investors. Before, the assessment represented ‘potential’, now the company is selling its oil, with oil prices near highs, this could mean a major bump in the company’s bottom line.As more investors seek Permian plays with profit potential, AGYP will certainly draw interest.

–Ring Energy, Inc. /zigman2/quotes/203476774/composite REI -2.02% , is another Permian penny stock worth pursuing. The company released its 2021 FY financials and 2022 guidance last month. Highlights from the report include:

-Reported net income of $24.1 million, or $0.20 per diluted share, in the fourth quarter of 2021, up 70% compared with net income of $14.2 million, or $0.12 per share in the third quarter of 2021;

-Net income for full year 2021 was $3.3 million, or $0.03 per diluted share, compared with a loss of $253.4 million or $3.48 per share, in full year 2020;

–Posted Adjusted Net Income1 of $9.9 million, or $0.10 per share, for the fourth quarter of 2021, up 46% compared with $6.8 million, or $0.07 per share, in the third quarter of 2021;

–Adjusted Net Income for the full year 2021 was $30.6 million, or $0.31 per share, up 48% from $20.7 million, or $0.28 per share, in full year 2020;

REI projects it will sell between 7,200 and 7,400 barrels of oil daily in Q1. Considering it has been a record quarter for oil prices, investors may be anxious to see if these numbers come to fruition.

–Centennial Resource Development, Inc. /zigman2/quotes/207935988/composite CDEV -1.72% is another Permian play reporting 2021 FY and 2022 guidance. Its announcement came in February, highlights from the report include:-Announced $350 million stock repurchase program

-For the full year 2021, CDEV generated net cash from operating activities of $525.6 million and free cash flow of $206.7 million.

-CDEV reported full-year net income of $138.2 million, or $0.46 per diluted share, compared to a net loss of $682.8 million, or $(2.46) loss per diluted share, in 2020. -Repaid $180 million in borrowings during the fourth quarter

-Entered into a new $750 million, five-year revolving credit facility

CDEV plans to double its free cash flow in 2022 to $400 million.

Other Permian plays with profit potential include APA Corporation /zigman2/quotes/200648444/composite APA +0.66% and Occidental Petroleum /zigman2/quotes/207018272/composite OXY +2.55% although they are not pure Permian plays like CDEV, REI and AGYP.

Disclaimers: The Private Securities Litigation Reform Act of 1995 provides investors a safe harbor in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be forward looking statements. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as projects, foresee, expects, will, anticipates, estimates, believes, understands, or that by statements indicating certain actions & quote; may, could, or might occur. Understand there is no guarantee past performance will be indicative of future results. Investing in micro-cap and growth securities is highly speculative and carries an extremely high degree of risk. It is possible that an investors investment may be lost or impaired due to the speculative nature of the companies profiled. Capital Gains Report ‘CGR’ is responsible for the production and distribution of this content. CGR is not operated by a licensed broker, a dealer, or a registered investment adviser. It should be expressly understood that under no circumstances does any information published herein represent a recommendation to buy or sell a security. CGR authors, contributors, or its agents, may be compensated for preparing research, video graphics, and editorial content. CGR has been compensated five thousand dollars via wire transfer by Crossroads, Inc. to produce and syndicate content related to Allied Energy Corporation. As part of that content, readers, subscribers, and website viewers, are expected to read the full disclaimers and financial disclosures statement that can be found on our website.

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/zigman2/quotes/203476774/composite
US : U.S.: NYSE American
$ 2.91
-0.06 -2.02%
Volume: 11.82M
June 24, 2022 4:00p
P/E Ratio
13.87
Dividend Yield
N/A
Market Cap
$310.50 million
Rev. per Employee
$3.70M
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/zigman2/quotes/207935988/composite
US : U.S.: Nasdaq
$ 6.30
-0.11 -1.72%
Volume: 14.88M
June 24, 2022 4:00p
P/E Ratio
10.66
Dividend Yield
N/A
Market Cap
$1.80 billion
Rev. per Employee
$7.01M
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/zigman2/quotes/200648444/composite
US : U.S.: Nasdaq
$ 36.45
+0.24 +0.66%
Volume: 9.97M
June 24, 2022 4:00p
P/E Ratio
5.19
Dividend Yield
1.37%
Market Cap
$12.33 billion
Rev. per Employee
$3.54M
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/zigman2/quotes/207018272/composite
US : U.S.: NYSE
$ 57.52
+1.43 +2.55%
Volume: 45.34M
June 24, 2022 4:00p
P/E Ratio
8.76
Dividend Yield
0.90%
Market Cap
$53.91 billion
Rev. per Employee
$2.22M
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