Carrizo Oil & Gas, Inc. (NASDAQ:CRZO), Goodrich Petroleum Corporation (NYSE:GDP) and Magnum Hunter Resources Corp (NYSE:MHR) are three undervalued and unnoticed oil players that might benefit from the unrest in Iraq, while most of the major players are taking a hit.
Kent Moors, editor at Money Map Press, was on CNBC recently and he discussed the effects of the Iraq situation and how it can benefit few companies such as Carrizo Oil & Gas, Inc. (NASDAQ:CRZO), Goodrich Petroleum Corporation (NYSE:GDP) and Magnum Hunter Resources Corp (NYSE:MHR). He spoke how the situation impacts the oil market and how few of the companies can actually benefit more from it.
“Well it all depends on how you look at it, Bill. From a regional standpoint, the longer the unrest takes place in Iraq in general and Bagdad in particular, we had a couple of events today that were really disconcerting. That uncertainty will ripple through the market,” Moors said.
However, according to him, the benefits that situations like these create are for the companies that have built in security premium, companies that produce in North America, which don’t get impacted by such situations. These are mostly medium and smaller size companies. Smaller companies like Carrizo Oil & Gas, Inc. (NASDAQ:CRZO), Goodrich Petroleum Corporation (NYSE:GDP) and Magnum Hunter Resources Corp (NYSE:MHR).
“They tend to be producing higher profit results than the bigger boys and this is likely to continue the longer the uncertainty remains,” Moors stated about the smaller companies making more profits currently.
Moreover, he said this advantage might be short-lived as the situation in Iraq might get deleveraged quickly based on what has happened so far there. He also gave his reasons for backing the medium and small cap companies such as Carrizo Oil & Gas, Inc. (NASDAQ:CRZO), Goodrich Petroleum Corporation (NYSE:GDP) and Magnum Hunter Resources Corp (NYSE:MHR).
“These companies tend to be well-managed, they tend to be leaner. They tend to emphasize basins they know well and they’ve been doing this for years. They tend to come in ‘under the radar’ and they tend to produce at a profit in a market that is secure.” Moors mentioned.
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