Now that Congress has passed the long-awaited $1 trillion infrastructure package, oil bulls are rejoicing. The bill was supported by major business and oil industry groups despite the climate-conscious policies included in the legislation. Likely because it will boost infrastructure funding by $550 billion over the next five years, including $110 billion in new funding for roads and bridges as well as $66 billion for freight and passenger rail. Clearly, oil will play a major role in these infrastructure efforts leading senior oil markets analyst – Louise Dickson – to declare, “This U.S. infrastructure bill screams bullish for oil”. With this in mind, the oil and natural gas exploration company Allied Energy Corp. (OTC: AGYP) stock could have its moment in the sun soon enough.

Oil has become a bullish bet as OPEC chose not to increase planned production despite growing global demand. In fact, Saudi Aramco went the opposite direction and will boost crude prices on exports – only contributing to overall supply tightness. Meanwhile, Congress’ final infrastructure bill did not include the planned increase to the federal gas and diesel tax, signaling Congress’ reticence to increase pressure on consumers.

Catalysts

AGYP has differentiated itself from the competition by implementing new technologies like horizontal legs, downhole drilling, and fracking to revitalize abandoned wells across the US. This keeps operation costs low and frees AGYP’s funds up to take advantage of the 420,000 marginal wells across the country.

This strategy is finally paying off for AGYP after it achieved production at its Green Lease and Gilmer sites over the last few months. This has led the company to seek out a regional natural gas purchasing company to finalize a Gas Purchase Agreement with. Considering the energy predicament the US is facing, AGYP’s domestic strategy could be a major payoff for the company and its shareholders.

With production coming along at two of its sites, AGYP has begun focusing its efforts on its newly acquired Prometheus lease site in Texas. The company has already ordered an Electrical Submersible high capacity pump specifically for a historically high producing well at the Prometheus site. The 28 Unit Well 1H is of particular interest to AGYP because it was producing around 200 oil bpd and 300 thousand cubic feet of natural gas per day, causing AGYP’s CEO to set the goal of not only matching but potentially surpassing those numbers

In the meantime, AGYP has other active projects which are potential assets for the company and its shareholders. Of its projects, the Byers Heirs #1 and #2 located in Wood County Texas, hold significant promise. Abandoned in 1997, the former was capable of producing 60 bbls of oil per day while the latter was initially producing 122 bbls of oil per day. The Byers Heirs #1 could be a major asset as “there is a large demand” for the type of crude oil produced at the site and could “receive a significant bonus over the posted price of WTI”. AGYP has successfully re-entered the well and has plans to bring it back to commercial capacity.

However, the nearby Cameron #1 was producing 91 bbls of oil per day before falling into disuse. The well could have been drilled deeper to maximize production, which is why AGYP is considering deepening the well “for evaluation and possible completion”. This is a key part of AGYP’s strategy as it uses modern technology – unavailable in the 1990’s – to fortify domestic production.

Media sentiment

Oil investors like @MaxTrader2011 have been keenly watching oil price targets, and Bank of America’s $120 estimate could definitely cause an uptick for AGYP stock.

Technical Analysis

AGYP stock chart

Currently trading at $.3349, AGYP stock has a primary support at .311 and a secondary support at .2932, while its immediate resistance lies at .3403. The MACD had a bullish crossover to the upside while the RSI remains at 50.96. Accumulation continues to trend upwards.

Should You Buy

In light of the rising energy tensions across the US, AGYP could be a strong investment going into the winter season. Reaching production at two of its sites is a very bullish sign and the company has numerous lease sites to achieve production at in the near and long-term. This is a positive indication of the company’s long term growth potential. Keeping in mind AGYP’s significant growth since the beginning of the year – increasing from $.03 to its current value of $.33 – AGYP may be a good long hold going into 2022.

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