Oil prices have rallied to four-year highs in October, with Brent crude oil hovering near $85 a barrel, as investors braced for the imminent U.S. sanctions against oil-producing Iran and ignored an industry report showing a big build in weekly U.S. stockpiles.

While prices remain below the $115 per barrel high last seen in 2011, they nonetheless have recovered over the last six months, pushing a variety of energy stocks higher in tandem. When oil prices were slipping over the last few years, many energy stocks slid too, with some even falling below $1 per share, making them penny stocks. Those stocks have started to recover and look primed for continued gains if the higher trend in oil prices should continue.

Prices have slowly inched higher over the last six months in response to commitments from the Organization of Petroleum Exporting Countries (OPEC) to extend production cuts through 2019 — and a dwindling of the world oil oversupply. But prices have taken a bigger jump in recent days as the market looks to November 4, the date when U.S. sanctions against Iran take full effect. The focus on Iran has overwhelmed other news that might have otherwise sent oil prices lower — including a report from the International Energy Agency (IEA) that U.S. crude inventories rose by 8 million barrels in the last week of September. That was a jump more than four times what analysts were expecting and the largest build since the first quarter of 2017.

The low-priced energy stocks we have featured below survived the oil slump, despite faltering, and look to rebound now that the price of oil is recovering. However, investors should be cautious in dealing with these so-called "penny stocks." All figures are current as of October 4, 2018.

1. Petro River Oil Corp. (PTRC)

The stock price for Petro River Oil saw a dramatic drop starting in 2013, and now stands at $1.05 per share. The company develops oil internationally, with a presence in Oklahoma, California, Ireland, England and Denmark. Petro River Oil uses 3D seismic analysis to find oil resources. The company has shown increased cash reserves in the past several quarters, so it could be in a position to acquire assets to take advantage of higher oil prices. (For more, see: 5 Biggest Risks Faced by Oil and Gas Companies.)

  • Average Volume: 14,954
  • Market Cap: $18.448 million
  • P/E Ratio (TTM): N/A
  • EPS (TTM): -$1.18

2. Bellatrix Exploration (BXE)

The Canadian oil and gas company is focussed on the Western Canada Sedimentary Basin. As oil prices have slid, Bellatrix stock has slid 63% over the last year, falling from $2.59 per share in August 2017 to its current price of $0.96 per share. The company is expected to post a per-share loss in the near term. However, the stock – and the company – could be primed for a comeback. Bellatrix is expected to grow profits by nearly 70 percent over the next few years, with higher cash flows expected and higher valuations for the stock price. The average 12-month price target for the stock is $1.85 per share, which represents a 93 percent gain from current levels. Nonetheless, analysts are a bit tepid on the stock, currently rating it a "hold." This is one for investors to keep an eye on.

3. Granite Oil Corp. (GXOCF)

Granite focuses on the Western Canada Sedimentary Basin. The company declared a dividend of $0.023 per share in July 2018 and again in August 2018. Management has reduced costs significantly to make up for declining oil prices, and debt is relatively low. The fact that the company has not eliminated its dividend bodes well, and it currently offers a dividend yield of 13.29%. Granite's stock price has fallen nearly 49% over the last year to around $1.53 per share. This is one to watch to see if it turns around.

  • Average Volume: 20,310
  • Market Cap: $46.994 million
  • P/E Ratio (TTM): N/A
  • EPS (TTM): -$0.25

The Bottom Line

There is a saying among investors that "a rising tide lifts all boats." But the rising tide of oil prices won't lift a leaky boat. Penny oil stocks on this list have seen better days. They are not startups; they are has-beens. In other words, these plays are for those who see significant odds that the companies can turn around. To be sure, the drop in oil prices was not the fault of any of these companies, but that doesn't change the fact that they will have to make some quick moves to reverse their financial fortunes. (For additional reading, check out: A Guide to Investing in Oil Markets.)

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