Oil prices have recovered from three year lows, with Brent crude oil prices hovering near $77 per barrel, but prices remains well below the $115 per barrel high last seen in 2011. The falling price has pushed some oil stocks below $1 per share, making them penny stocks.

However, prices have been helped in recent months by commitments from the Organization of Petroleum Exporting Countries (OPEC) to extend production cuts through 2019 and a dwindling of the world oil oversupply. Recently, the International Energy Agency (IEA) said that the oversupply should end. But continued geopolitical unrest could negatively impact prices. Meanwhile, the U.S. has not committed to the same production cuts as other nations, which could limit the impact of OPEC's cuts. As of August 2018, the EIA predicts Brent crude oil prices will average around $72 per barrel this year and between $70 and $71 in 2019, while West Texas Intermediate (WTI) oil prices will average around $66 per barrel this year and $64 per barrel in 2019.

The fact that these low-priced energy stocks have survived the oil slump may speak to their resilience. They were chosen based on their longevity and potential to profit from higher oil prices going forward, as well as the EIA's prediction for higher natural gas prices over the next two years. However, investors should be cautious in dealing with so-called "penny stocks." All figures are current as of August 31, 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 $1.38 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: 17,144
  • Market Cap: $24.25 million
  • P/E Ratio (TTM): N/A
  • EPS (TTM): -$1.24

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: $54.38 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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