$HUSA – Capitalizing On The Oil Rush
An oil and gas exploration and production company, Houston American Energy Corp (NYSE: HUSA) is mainly focused on properties in the US Permian Basin in Texas and Louisiana as well as Colombia. With the company increasing its interest in a Colombian project, HUSA stock surged by as much as 134%. As oil prices are continuing to climb, many investors are bullish HUSA stock could be one to buy amid rising oil prices.
HUSA Stock News
As oil prices continue climbing back to where they were in the early days of the conflict in Ukraine, oil plays like HUSA stock are starting to surge again. With this in mind, OPEC members believe oil prices could continue running because China has not fully reopened its economy from Covid-19 restrictions. China is a huge consumer of oil and is gradually loosening its restrictions leading the UAE Energy Minister to say that ”With the pace of consumption we have, we are nowhere near the peak because China is not back yet. China will come with more consumption”. This combined with a potential EU ban on Russian oil coming in by sea on top of other energy sanctions could create rising demand for oil.
Although OPEC+ pledged to increase its oil production, the increase is believed to cover only .4% of the global demand for July and August. In light of this, Goldman Sachs projects oil prices to average $140 between July and September. Given that HUSA stock previously broke $16 back in March, the stock has shown its ability to run on rising oil prices. If Goldman Sachs’ projections prove true, many investors are bullish HUSA stock could reach new highs.
With this in mind, HUSA appears to be in a prime position to take advantage of the rising prices thanks to its assets. HUSA’s main properties are located in Texas where it holds an 18.1% average working interest in 320 gross acres in Reeves County. Moreover, the company operates in Yoakum County where it drilled a well. However, the fracking of the well has been delayed and the company has not shared any updates since. At the same time, HUSA operates a property in San Andres. While the capital required to start drilling has been raised, drilling plans have been on hold and the company has not updated investors about this property.
As for its Louisiana properties, HUSA owns a 23.4% mineral interest in 2,485 gross acres in East Baton Rouge Parish. Despite this, HUSA highlighted that this property has no present wells and it does not plan to start drilling in Louisiana right now.
While these properties have the potential to help the company capitalize on rising oil prices, HUSA’s most profitable investment could be its interest in Hupecol Meta project located in Colombia. Back in 2019, HUSA acquired a 2% ownership interest in Hupecol Meta. Through this interest, HUSA holds interests in the CPO-11, Loc Picachos, Macaya and Serrania concessions. In this way, HUSA’s interests in these projects cover over 1 million gross acres.
The most significant of these projects is the CPO-11 project which covers almost 1000 square miles with multiple identified leads and prospects expected to support a multi-well drilling program. In addition, this project contains 69 thousand gross acres related to the Venus exploration area which is fully held by Hupecol Meta. Now that drilling operations have started for the first well in this area, HUSA could realize higher production once the well is complete.
Given the potential of this project, HUSA acquired an additional interest in Hupecol Meta. Based on this, HUSA now holds an 11% interest in the Venus exploration area and a 5.5% interest in the larger CPO-11 block. In light of this, many investors are bullish HUSA stock has long-term value.
Looking at HUSA’s production in 2021, the company reported a 141% increase in total oil and gas revenues. This increase was largely the result of oil’s rising price compared to 2020’s oil glut since HUSA sold its oil at an average price of $35.63 in 2020 and $63.60 in 2021. In both years it had only 4 gross producing wells, however in 2021 it produced a net of 14,367 barrels and 60,069 MCF of gas. Its operations resulted in $1,330,198 in oil and gas revenues.
HUSA Stock Financials
According to its Q1 report, HUSA has kept its assets almost the same, reporting $10.7 million this quarter. Meanwhile, the company’s liabilities increased to $223 thousand compared to $141.9 thousand in Q4. In terms of revenues, HUSA realized $423.8 thousand compared to $328.4 thousand in Q4 mainly due to rising oil prices. At the same time, the company reduced its operating costs from $607.3 thousand to $589.6 thousand – yielding an improved net loss of $165.5 thousand. Considering that oil prices are continuing to climb, HUSA could be set to generate more revenue this year compared to last.
Technical Analysis
Currently trading at $6.26, HUSA has supports near 5.66, 4.68, and 4.20. Since the company acquired an additional interest in Hupecol Meta, HUSA saw a 134% run. With oil prices reaching the same levels as the early days of Russia’s invasion of Ukraine, HUSA is one to watch since it typically surges with oil prices.
Right now, HUSA is trading just below the 50MA and could be looking to break out above it after the broader market dipped on June 13th. There is also a partial gap remaining from HUSA’s gap up on May 31st. Eventually the gap between 3.74 and 3.98 might be filled which could be something to watch for as well. It will be important to see whether HUSA is able to maintain its momentum after its dip from around $7 yesterday.
Overall, accumulation is dropping and the MACD is bearish after some profit taking following HUSA’s run to $8. At the same time, the RSI has cooled off from 74 to 45. Since the indicators are regulating, this could give HUSA room to run more as macro level events could bring more volume.
However trading volume has dropped since HUSA’s leg up on June 7th with 67 million trading volume. As is, HUSA has an OS of 9.9 million and a low float of 8.8 million.
HUSA Stock Forecast
Thanks to the company’s various properties in the US Permian Basin, HUSA produced 3,040 bbl of oil in Q1 for a total of $279,478 in oil sales. At the time, HUSA sold its oil at an average price of $91.67 per barrel. Considering the rising energy concerns globally, oil prices could continue to increase leading to another profitable quarter for HUSA. In the future, HUSA will be able to realize higher production after beginning operations in Colombia. However, this is a far out catalyst since the company has only recently begun drilling operations at its Venus exploration area.
In the short term, HUSA moves quickly on energy sentiment due to its low float. Therefore, HUSA could continue its run as other oil plays like Imperial Petroleum Inc. (NASDAQ: IMPP) regain their momentum. Right now, global markets are not making up for the lost Russian production and if the U.S. Federal Reserve surprises markets with a higher-than-expected interest rate hike when it meets on June 14th -15th then additional pressures could impact oil prices. With these catalysts on the horizon, HUSA stock is one to watch.
HUSA Stock News
As oil prices continue climbing back to where they were in the early days of the conflict in Ukraine, oil plays like HUSA stock are starting to surge again. With this in mind, OPEC members believe oil prices could continue running because China has not fully reopened its economy from Covid-19 restrictions. China is a huge consumer of oil and is gradually loosening its restrictions leading the UAE Energy Minister to say that ”With the pace of consumption we have, we are nowhere near the peak because China is not back yet. China will come with more consumption”. This combined with a potential EU ban on Russian oil coming in by sea on top of other energy sanctions could create rising demand for oil.
Although OPEC+ pledged to increase its oil production, the increase is believed to cover only .4% of the global demand for July and August. In light of this, Goldman Sachs projects oil prices to average $140 between July and September. Given that HUSA stock previously broke $16 back in March, the stock has shown its ability to run on rising oil prices. If Goldman Sachs’ projections prove true, many investors are bullish HUSA stock could reach new highs.
With this in mind, HUSA appears to be in a prime position to take advantage of the rising prices thanks to its assets. HUSA’s main properties are located in Texas where it holds an 18.1% average working interest in 320 gross acres in Reeves County. Moreover, the company operates in Yoakum County where it drilled a well. However, the fracking of the well has been delayed and the company has not shared any updates since. At the same time, HUSA operates a property in San Andres. While the capital required to start drilling has been raised, drilling plans have been on hold and the company has not updated investors about this property.
As for its Louisiana properties, HUSA owns a 23.4% mineral interest in 2,485 gross acres in East Baton Rouge Parish. Despite this, HUSA highlighted that this property has no present wells and it does not plan to start drilling in Louisiana right now.
While these properties have the potential to help the company capitalize on rising oil prices, HUSA’s most profitable investment could be its interest in Hupecol Meta project located in Colombia. Back in 2019, HUSA acquired a 2% ownership interest in Hupecol Meta. Through this interest, HUSA holds interests in the CPO-11, Loc Picachos, Macaya and Serrania concessions. In this way, HUSA’s interests in these projects cover over 1 million gross acres.
The most significant of these projects is the CPO-11 project which covers almost 1000 square miles with multiple identified leads and prospects expected to support a multi-well drilling program. In addition, this project contains 69 thousand gross acres related to the Venus exploration area which is fully held by Hupecol Meta. Now that drilling operations have started for the first well in this area, HUSA could realize higher production once the well is complete.
Given the potential of this project, HUSA acquired an additional interest in Hupecol Meta. Based on this, HUSA now holds an 11% interest in the Venus exploration area and a 5.5% interest in the larger CPO-11 block. In light of this, many investors are bullish HUSA stock has long-term value.
Looking at HUSA’s production in 2021, the company reported a 141% increase in total oil and gas revenues. This increase was largely the result of oil’s rising price compared to 2020’s oil glut since HUSA sold its oil at an average price of $35.63 in 2020 and $63.60 in 2021. In both years it had only 4 gross producing wells, however in 2021 it produced a net of 14,367 barrels and 60,069 MCF of gas. Its operations resulted in $1,330,198 in oil and gas revenues.
HUSA Stock Financials
According to its Q1 report, HUSA has kept its assets almost the same, reporting $10.7 million this quarter. Meanwhile, the company’s liabilities increased to $223 thousand compared to $141.9 thousand in Q4. In terms of revenues, HUSA realized $423.8 thousand compared to $328.4 thousand in Q4 mainly due to rising oil prices. At the same time, the company reduced its operating costs from $607.3 thousand to $589.6 thousand – yielding an improved net loss of $165.5 thousand. Considering that oil prices are continuing to climb, HUSA could be set to generate more revenue this year compared to last.
Technical Analysis
Currently trading at $6.26, HUSA has supports near 5.66, 4.68, and 4.20. Since the company acquired an additional interest in Hupecol Meta, HUSA saw a 134% run. With oil prices reaching the same levels as the early days of Russia’s invasion of Ukraine, HUSA is one to watch since it typically surges with oil prices.
Right now, HUSA is trading just below the 50MA and could be looking to break out above it after the broader market dipped on June 13th. There is also a partial gap remaining from HUSA’s gap up on May 31st. Eventually the gap between 3.74 and 3.98 might be filled which could be something to watch for as well. It will be important to see whether HUSA is able to maintain its momentum after its dip from around $7 yesterday.
Overall, accumulation is dropping and the MACD is bearish after some profit taking following HUSA’s run to $8. At the same time, the RSI has cooled off from 74 to 45. Since the indicators are regulating, this could give HUSA room to run more as macro level events could bring more volume.
However trading volume has dropped since HUSA’s leg up on June 7th with 67 million trading volume. As is, HUSA has an OS of 9.9 million and a low float of 8.8 million.
HUSA Stock Forecast
Thanks to the company’s various properties in the US Permian Basin, HUSA produced 3,040 bbl of oil in Q1 for a total of $279,478 in oil sales. At the time, HUSA sold its oil at an average price of $91.67 per barrel. Considering the rising energy concerns globally, oil prices could continue to increase leading to another profitable quarter for HUSA. In the future, HUSA will be able to realize higher production after beginning operations in Colombia. However, this is a far out catalyst since the company has only recently begun drilling operations at its Venus exploration area.
In the short term, HUSA moves quickly on energy sentiment due to its low float. Therefore, HUSA could continue its run as other oil plays like Imperial Petroleum Inc. (NASDAQ: IMPP) regain their momentum. Right now, global markets are not making up for the lost Russian production and if the U.S. Federal Reserve surprises markets with a higher-than-expected interest rate hike when it meets on June 14th -15th then additional pressures could impact oil prices. With these catalysts on the horizon, HUSA stock is one to watch.