Allied Energy Corp. (OTC: AGYP) is an oil and natural gas exploration company that finds abandoned wells in the U.S. and utilizes its technologies to make them commercial again. AGYP stock is currently trading at $.3336 however, investors are anticipating a bounce due to tightening supply across the oil and gas market.

Catalysts

Due to this tightening global oil supply, experts at the Bank of America have predicted a 43% increase in oil prices – putting the value per barrel of oil at $84 to $120 by this summer. Meanwhile, US crude oil production is still struggling to recover from the pandemic’s effects as OPEC producers continue their gradual increase in oil production. In light of this, the BOA forecast includes expectations that the price per barrel of oil will reach $100 over the next few months.

AGYP could play a crucial role as a domestic oil producer after achieving production at its Green Lease and Gilmer sites. According to a report conducted this summer, the Green Lease site holds $2,944,900 of proved oil and $18,536,600 of probable and possible oil. On the other hand, the Annie Gilmer site holds $6,704,900 in proved oil and gas reserves with $5,489,900 in probable and possible reserves. These calculations were made by an experienced petroleum engineer using the conservative price point of $46.26 per barrel and is a bullish sign of what AGYP may be able to achieve in terms of long-term production.

The company is also making rapid progress at its newly acquired Prometheus site which has yet to be fully utilized. For the moment, AGYP is focusing its efforts on the 28 Unit Well 1H which as recently as 2016, was producing 200 BPD of oil and 300 thousand cubic feet of natural gas per day. AGYP is hoping to utilizing its modern technology and experience to surpass that production record.

Besides the Green Lease and Annie Gilmer sites, AGYP is looking for other sites with a high probability of production. This is a key part of its business model which targets under utilized wells which can be revived at minimal cost. The company has already acquired promising lease sites such as the Byer Heirs at the Cameron Deu Pree Field in Wood County but has plans to seek out more locations over time.

Throughout the year, AGYP has been consistent in its updates to shareholders releasing videos of its progress at the Green Lease Site where the team installed pumpjacks and a saltwater disposal well. More recently the company has shared videos from its Prometheus lease site as its work crews begin the process of installing equipment.

Technical Analysis

AGYP stock chart

Currently trading at $.3336, 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 but came close to a second crossover. The RSI currently lies at 56 while accumulation took a recent dip after steady consolidation.

Should You Buy

Considering how volatile the oil and gas market currently is in the U.S., AGYP might be a good investment going into the new year. Overall, oil prices are on the rise which is a bullish sign for AGYP and the newly passed infrastructure bill will undoubtedly increase demand for energy. Given international energy tensions, a long-term investment in AGYP stock could prove worthwhile as the domestic oil producer picks up the pace at its different lease sites. But bullish investors must consider the oil sector’s volatility as well when making their investment decisions.

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