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TFN Special Report: Three tiny energy companies set for major gains

Posted July 2, 2008

TINY ENERGY COMPANY #1: THE DRILLER

As the big energy providers desperately seek more untapped sources of oil and natural gas, there has been an epic jump in demand for drilling services providers. This Houston-based driller that operates 28 land rigs in ten countries and 18 barge rigs in the inland waters of Mexico, the U.S. Gulf of Mexico, and the Caspian Sea.

Parker Drilling Company (PKD:NYSE) was founded by Gifford C. Parker in 1934. His grandson serves as Chairman and CEO today.

Besides the building and operation of land and offshore barge drilling rigs, this firm provides front-end engineering and design and project management services to both oil and gas operators worldwide.

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A main subsidiary, Quail Tools, provides rental equipment for oil and gas exploration and production companies.

Last May, Parker announced the issuance of a letter of intent from a subsidiary of BP PLC (BP:NYSE) to a subsidiary of this company for the building of two new land rigs in Alaska worth $250 million. The five-year drilling contract includes a five-year option and should be executed any day now. Know-how is not a problem for Parker Drilling as they’ve been drilling in the Artic since the 1960’s. They seem confident that this contract will happen, as they are already advertising to fill the various staff requirements of the new rigs.

Room to grow

Parker Drilling Company
1401 Enclave Parkway
Suite 600
Houston, TX 77077
Phone: 1-281-406-2000
Fax: 1-281-406-2010
Website: http://www.parkerdrilling.com/

Company revenues were affected earlier this year by international difficulties in Kazakhstan and Saudi Arabia. These problems have been resolved. But it resulted in a slight decrease of net income with first quarter 2008 coming in at $23.9 million –- $6.1 million less than the same quarter in 2007. This naturally affected the company’s stock price.

The pending contract is a perfect short-term price catalyst.

The valuation of the stock is still good, with a P/E ratio of just 10.53. No doubt some of the bigger players have taken note and may move to take over the company –- which wouldn’t be a bad thing for investors either.

***We recommend you buy shares of Parker Drilling Company (PKD:NYSE) at or under $10. We anticipate 20% gains within the next six months.

TINY ENERGY COMPANY #2: THE EXPLORER

The stock price for Pyramid Oil Company (PDO:AMEX) hit 52-week highs in recent weeks, then retreated slightly. But we don’t see it staying down. Founded in 1909, Pyramid Oil is involved with the exploration, development and production of crude oil and natural gas. They are headquartered in California and hold interests in New York, Wyoming, and Texas.

Pyramid Oil Company
2008 - 21st Street
Bakersfield, CA 93301
Phone: 1-661-325-1000
Fax: 1-661-325-0100
Website: http://www.pyramidoil.com/

In May the company announced first quarter results and they were stellar! The actual revenue amount for the first quarter was $1,589,896 — that’s a 92% increase over last year’s first quarter.

With U.S. consumer energy needs not diminishing anytime soon, I can’t see this as a bad bet. I suggest you buy shares of Pyramid Oil Company (PDO:AMEX) below $32 and hold on for the ride.

TINY ENERGY COMPANY #3: THE GAS MAN

Since the beginning of this year, the price for this fuel source has increased by almost 50% — though compared to crude oil, it’s positively cost-efficient and currently accounts for around 40% of the electricity generated in the U.S.

In December of 2005, natural gas reached its peak price of $15 per million BTUs (British Thermal Units). This was due to many factors including unusually high temperatures over that summer and the devastating hurricanes that marked that year.

New record highs for natural gas prices?

Prices are currently around $12 per million BTUs. But this year, a cold winter has already had an impact – reducing inventories by 16% compared to last year.

Adding to this, less LNG (liquid natural gas) imports are anticipated and NOAA, the National Oceanic and Atmospheric Administration, is predicting two to five major hurricanes with Categories of 3 or above this season.

This could mean major profits for investors and there are plenty of potential winning natural gas stocks out there. Our favorite is a small San-Diego-based supplier that is having a banner year…

Our natural gas stock choice is Royale Energy Inc.

Royale Energy Inc. is experiencing 52-week highs daily but it still has a long way to go.

Operating as an independent oil and natural gas producer in the U.S., the company owns, operates and leases oil and gas interests in California, Texas, Utah, Oklahoma and Louisiana. It also engages in the developmental and exploratory drilling.

Don’t wait too long to make your move…

In March, the company announced that its oil and gas reserves were up 28% and rumor has it that they are expecting to confirm a significant reserve discovery in the next few weeks.

Happily, Royale Energy is no fly-by-night operation — it’s been around since 1986.

With a market cap of about $59 million this company has the potential — and the room — to grow.

Royale Energy Inc.
7676 Hazard Center Drive
Suite 1500
San Diego, CA 92108
Phone: 1-619-881-2800
Fax: 1-619-297-8557
Web Site: http://www.royl.com

In 2006, Fortune magazine named it one of America’s 100 top fastest growing small public companies – looks like they were right on target.

The stock price saw a 69% increase in May alone, so you don’t want to wait to jump onboard for maximum gains.

If your looking for a winning natural gas stock, we recommend you buy shares of Royale Energy Inc. (ROYL:NASDAQ) at or under $11. We’re looking for (at least) a 20% increase in price by January 2009.


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Posted by J. Christoph Amberger · Filed Under Oil and Energy 

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