Oil futures rise: Are these 2 midcap stocks a good buy?

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Oil futures rise: Are these 2 midcap stocks a good buy?

 Oil futures rise: Are these 2 midcap stocks a good buy?
Image source: Shutterstock.com

Highlights 

  • Crude oil futures prices gained on Friday’s trading session amid media reports that China will release some of its national strategic reserves around 15 February.
  • China had reportedly agreed with the US to release such stockpiles in late 2021.

 

Crude oil futures gained on Friday’s trading session amid reports that China had agreed with the US to release crude oil from its national strategic reserves in the end of 2021.

China is likely to release these stockpiles around 15 February 2022, at the time of its Lunar New Year holiday, according to some media reports.

The US-led plan regarding the release of crude oil from stockpiles is part of an effort to reduce global crude prices.

Following the development, WTI crude oil February 22 futures were trading at US$82.25, higher by 0.16% on 14 January 2022 at 07:27 AM GMT+1. Meanwhile, Brent oil March 22 futures were at US$84.65, higher by 0.21 per cent at around 07:13 AM GMT+1.

Given this background, let us look at 2 FTSE 250 index-listed oil stocks and explore their investment prospects:

  1. Diversified Energy Company PLC (LON: DEC)

Diversified Energy Company is an oil and gas production firm, which has operations in the US’s Appalachian Basin. It was previously known as Diversified Gas and Oil plc.

The group recently closed its Texas-based undeveloped acreage Haynesville sale. The group’s asset management company, Oaktree Capital Management, got a total cash consideration of around US$ 67.4 million by divesting their working interest from the acreage. DEC’s net consideration from the deal was about US$34.6 million.

The Haynesville undeveloped acreage represented only about 2 per cent (or about 1,700 net Mcf per day of production) of DEC’s production.

The group’s shares were trading at GBX 109.40, down by 0.18 per cent, on 14 January, at 10:02 AM BST. Its shares had ended at GBX 110 on 13 January 2022. The group’s market cap was at £851.35 million as of 13 January 2022.

  1. Capricorn Energy PLC (LON: CNE)

Capricorn Energy PLC is a UK-based oil and gas company. The group recently reported that it is at the last stage regarding its deal with the Indian government and has withdrawn its lawsuits and related proceedings. Capricorn is expected to receive a tax refund of about INR 79 billion, following a prolonged 7-year dispute with the Indian government. The company has said it has completed all obligations as per the India Taxation (Amendment Act) 2021.

CNE share price and volume

Image source: Refinitiv

The group’s shares had closed at GBX 195.80 on 13 January 2022. Its shares were trading at GBX 194.10, down by 0.87 per cent on 14 January at 10:04 AM BST.

The company’s market cap stood at £904.91 million as of date. And it has given shareholders a return of 2.52 per cent on a one-year basis.

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