Domestic oil is seeing a resurgence given uncertainty in the Middle East caused by the US withdrawal from Afghanistan. Allied Energy Corp. (OTC: AGYP) is at the forefront of domestic oil exploration thanks to its focus on developed wells with untapped oil reserves in prolific petroleum regions of Texas. Whereas, 88 Energy Ltd. (OTC: EEENF) is an Alaska-focused oil and gas production company seeking out oil drilling opportunities on Alaska’s north slope. Both companies have confirmed oil reserves at their sites and have made gains today despite global oil volatility. Considering the increasing interest in domestically produced oil, AGYP and EEENF stock have the potential for sustained growth as investors look for oil plays. 

EEENF Stock Catalysts

Capitalising on oil wells in Alaska, the company is currently involved in four projects: Umiat Oil Field, Project Icewine, Yukon Leases, and Project Peregrine. Most recently, the reports on the Merlin site of  project Peregrine have garnered the interest of bullish investors as the company’s latest update after its evaluation of the Merlin site indicated the presence of light oil, with a prospective 1.5 billion barrels of oil (BBOE) for this site alone.

The company’s other projects also contain significant prospective oil reserves. The Umait site is expected to contain 94 BBOE,  Project Icewine is predicted to hold 1.77 BBOE, and the Yuko leases are valued at 90 MMBO. All in all, 88 Energy has a combined, prospective portfolio of 3.4 BBOE and total proven and probable reserves of 94 million barrels of oil. After Merlin-1’s success, the company is eager for the appraisal of its Merlin-2 site which will be chosen from 3 potential sites. This appraisal of Merlin-2 is scheduled for the first quarter of 2022. 

In a recent development, a federal court ruling denied ConocoPhillips (NYSE: COP) a permit for its $6 billion Willow Project. But because 88 Energy is drilling on state land while ConocoPhillips is drilling on federal land, 88 Energy remains unaffected by this ruling.  Speculative investors are now wondering if ConocoPhillips will decide to employ or merge with EEENF. Considering ConocoPhillip’s revenue of $36.670 billion in 2019, a merger – if true – would drive EEENF stock to new heights. 

AGYP Stock Catalysts

However, President Biden’s January freeze on new oil drilling on federal lands was loosened by a federal judge in June. Without this restriction and given the global oil climate, AGYP is positioned, like EEENF, to take advantage of the predicted increasing value of domestic oil and gas. 

AGYP is in the early stages of its oil exploration, but has the potential to become cash flow positive now that it has identified oil reserves at two of its sites.  The first of which – the Green Lease site – is believed to have 229,400 “probable” barrels of oil and 448,000 “possible” barrels. AGYP’s second site – the Annie Gilmer – is expected to have 80,400 “probable” barrels of oil and 135,500 “possible” barrels of oil. These findings prove the success of AGYP’s business model which centers on seeking out wells with the potential to produce at 10-50 barrels per day. 

Clearly, AGYP must choose its sights wisely considering that its model aims to exploit overlooked reserves in the US’s estimated 420,000 marginal, shut-in wells. While this reduces  exploration and drilling costs by accessing untapped petroleum from 25-30 years ago – as with any oil investment, there is high risk before long-term gain. The timeline before oil production is long and full of obstacles as EENF’s journey exemplifies. The company spudded the Merlin-1 well in March and is only seeing tangible results now. Similarly, AGYP has only recently shared on August 10th that it is “ready to spud”. While both companies are different, the long timeline until fruition for oil companies is not. 

With this in mind, AGYP’s experienced leadership chose its Green Lease site based on nearby, analogous fields which have shown production over six times greater to date than the current total production from the Green Lease. Composed of a mixed lithology and fracture-prone reservoirs, Green Lease shares similarities with the Meremac and Hunton in the Anadarko Basin and the Austin Chalk in South and East Texas. Overall, trends among this type of reservoir shows a “tremendous upside” in development.

Media Sentiment

Self-proclaimed OTC Ninja – @Ninja1Stock – encouraged their followers not to “get bored out of your shares” knowing that oil stocks like EEENF stock are a long-term play.  Meanwhile, our Canadian neighbor – @ZapBuysDower – shared his bullish feelings for AGYP stock given rising oil prices.

Technical Analysis

EEENF Stock

EEENF oil stock chart

With a current resistance at 0.23, EEENF stock tested its resistance recently and fell back. EEENF stock has a longer term resistance is near 0.25 with an underlying support line near 0.22. The RSI is at 40.41 showing some selling as the MACD trends upward with no sign of an imminent crossover. Accumulation has held somewhat steady throughout.  

On top of its projects and ventures, EEENF has also maintained an excellent financial standing, becoming debt free as of July as well as having net assets equivalent to $94.5M, of which $14.8M is cash. Typically, oil stock prices increase before a drilling event, therefore keeping an eye on EEENF’s and AGYP’s upcoming projects and reports could yield opportunities for short-term investment.  

AGYP Stock

AGYP oil stock chart

At the moment, AGYP stock is trading at $.31 having recovered from a dip which put its support at .2825. Its resistance level is at .3526 with a second resistance forming at .3712. RSI is currently at 46.83 and trending down after increased buying before market close. The MACD converged before market close and trended upwards after market but accumulation has stayed relatively low after a flurry of activity at the beginning of the month. 

Over the last quarter, AGYP has made some structural changes reducing its total operating expenses by a total of 24.2% compared to 2020 Q2. At the same time, AGYP has streamlined its budget and is converting employees’ accrued salaries into unsecured, non-interest bearing convertible notes. This has allowed AGYP to hold significantly more cash on hand which is being re-invested into its oil and gas sites.

Should you Buy?

Trading at $.024, EEENF is at a lower price point than when it first announced its activities at the Merlin-1 site. Considering its plans to analyze 3 testing sites for its Merlin-2 well and begin drilling in Q1 2022, there are a variety of catalysts long term investors can benefit from. As companies, EEENF and AGYP have proven their solvency of their structural models and are continuing to show results. In light of the global oil situation, the outlook for both of these domestic oil penny stocks is promising. Similarly, speculations of a merger related to EEENF and a joint venture in the works for AGYP show promising activity in the short-term as well. While AGYP is trading at $.31, today’s gains might signal a turn around for the stock which could drive it up to its $.37 resistance. Comparatively, EEENF is still buoyant after its good news and is showing signs of climbing before market open.

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