Jul 28, 2021 (WallStreetPR via Comtex) -- It should be no secret at this point that global policymakers are back on high alert for Covid reasons, with the emergence of the dominant Delta strain now fully in gear. CDC estimates now suggest that over 80% of all new Covid cases in the US are Delta cases.
The variant acts differently - it is more contagious and capable of being contracted and passed through vaccinated populations. While most new cases are among the unvaccinated, as are nearly all hospitalizations and deaths, the fact that case numbers are growing fast again has governments and central banks worried.
But here's the thing: the people responsible for the majority of consumer spending, including travel and driving, aren't changing their behavior. Most have been vaccinated, and the specter of catching something that registers roughly on par with the common cold doesn't appear to be nearly the same kind of psychological hurdle we saw a year ago.
The combination of these ideas could end up being a boon for commodity players, especially in oil and gas. Think about this way: monetary and fiscal policy may remain accommodative for longer, even as consumers continue to drive deficits in energy markets.
The most attractive space in such a context would seem to be the small-cap players in the energy sector, including names like PDC Energy Inc /zigman2/quotes/202777853/composite PDCE +2.73% , Southwestern Energy Company /zigman2/quotes/208301463/composite SWN +6.24% , Viking Energy Group Inc /zigman2/quotes/204256105/composite VKIN -1.55% , PBF Energy Inc /zigman2/quotes/202545933/composite PBF -0.27% , Callon Petroleum Company /zigman2/quotes/201917664/composite CPE +3.90% , and SM Energy Co /zigman2/quotes/209677692/composite SM +6.37% .
These stocks have seen underinvestment even as they ramp up production in a durable bull market. Eventually, that paradox will likely resolve itself. As such, we take a look at some of the most interesting recent catalysts in the group below.
Southwestern Energy Company /zigman2/quotes/208301463/composite SWN +6.24% bills itself as a holding company that engages in the exploration, development, and production of natural gas, oil, and natural gas liquids (NGLs).
The company operates through the Exploration and Production (E&P), and Marketing segments. The E&P segment includes operations in northeast Pennsylvania, West Virginia, and southwest Pennsylvania, The Marketing segment deals in the marketing and transportation of natural gas, oil and NGLs primarily produced in E&P.
Southwestern Energy Company /zigman2/quotes/208301463/composite SWN +6.24% recently announced that Carl Giesler Jr. will join the company as Executive Vice President and Chief Financial Officer on July 19, 2021. Michael Hancock, who has served as CFO on an interim basis, will continue as Vice President - Finance & Treasurer.
"I am pleased to welcome Carl to the team at an impactful time for Southwestern Energy," said Bill Way, President and Chief Executive Officer. "Carl's distinctive strategic perspective and disciplined approach to driving shareholder value complement the Company's existing strategy and leadership team and will help build on SWN's strong momentum. I want to thank Michael for the steady hand he provided these past many months and look forward to more of his exceptional work as a valued leader of the Company."
The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 5% in that timeframe. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -8%.
Southwestern Energy Company /zigman2/quotes/208301463/composite SWN +6.24% managed to rope in revenues totaling $1.1B in overall sales during the company's most recently reported quarterly financial data — a figure that represents a rate of top line growth of 81.1%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($4M against $1.4B, respectively).
Viking Energy Group Inc /zigman2/quotes/204256105/composite VKIN -1.55% is an OTC small-cap energy play with real production and very real prospects for growth in its production footprint, potentially creating greater growth possibilities for investors looking for a more speculative option. The company is in the process of a pending merger with its majority-owner, Camber Energy Inc (nyseamerican:CEI).
The strategic combination will grant investors strong exposure to historically rich oil and gas properties spread across Oklahoma, Texas, Louisiana, Mississippi, and Kansas, with significant exposure to the Gulf Coast.
Viking Energy Group Inc /zigman2/quotes/204256105/composite VKIN -1.55% also stands to benefit from recent news on a major funding deal for CEI for $15 million in fresh unencumbered capital in the form of a premium-to-market convertible deal that can't be dealt by the lender without a major increase in price in shares of CEI.
Since VKIN is the principal operating subsidiary of CEI, one would anticipate that capital to be plowed into expansion for VKIN. Given the fact that Viking has shown strong recent results, expanding production could drive major operating growth, especially as the value of that production continues to rise with the bull market in oil and gas.