In this article, we will shed light on the 7 Best Oil and Gas Penny Stocks to Buy According to Analysts.

Despite the ongoing government shutdown, the U.S. stock market has shown resilience, with the S&P 500 and Nasdaq reaching new record highs, highlighting investor appetite for equities beyond large-cap names. According to Reuters, on September 30, oil prices dropped, with Brent crude closing at $67.02 a barrel, along with West Texas Intermediate at $62.37, as investors prepared for a potential hike in OPEC+ output in November and the expected restart of crude exports from Iraq’s Kurdistan region. Further supply concerns put pressure on margins for U.S. shale producers, additionally challenged by record output levels and weaker demand outlooks.

CNBC also recently noted that big U.S. energy companies will be laying off a large number of employees in 2025. ConocoPhillips has proposed layoffs of up to 25%, Exxon Mobil plans to cut 2,000 jobs, and Chevron anticipates reducing up to 20% of its staff through 2026. Roughly 4,000 oil and gas jobs were lost as of August, according to the Bureau of Labor Statistics, indicating a growing strain in the industry. CNBC also revealed on October 1 that KKR, a private equity behemoth, broadened its alliance with Abu Dhabi National Oil Company (ADNOC) by acquiring a minority interest in ADNOC Gas Pipeline Assets, adding an international dimension.

With this backdrop, let’s move on to our list of the 7 best oil and gas penny stocks to buy according to analysts.

Our Methodology

To curate our list of the 7 best oil and gas penny stocks to buy according to analysts, we used the Finviz stock screener to identify oil & gas stocks trading below $5 per share. From that pool, we shortlisted stocks with a potential upside of at least 10% that are also well-liked by elite hedge funds, according to Insider Monkey’s hedge fund database as of Q2 2025. Finally, we selected the top seven stocks with the highest upside and arranged the stocks in ascending order of their respective upside.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).

Note: All pricing data is as of market close on October 13, 2025.

7. Ultrapar Participações S.A. (NYSE:UGP)

Upside Potential: 14.2%

Number of Hedge Fund Holders: 9

Share Price: $3.95

Ultrapar Participações S.A. (NYSE:UGP) is one of the 7 best oil and gas penny stocks to buy according to analysts, supported by hedge fund interest and strong upside potential.

Higher operating cash generation and the execution of critical projects helped Ultrapar Participações S.A. (NYSE:UGP) report a 134% year-over-year increase in second-quarter net income to $215 million in September 2025. Recurring EBITDA increased 15% to $306 million, while revenue hit $34.1 billion. With $2.35 billion in net debt and a net debt-to-EBITDA ratio of 1.9x, the balance sheet was strong.

Furthermore, by completing the purchase of Hydrovias and moving on with the construction of the Ultrapar Participações S.A. (NYSE:UGP) railway branch, the company strengthened its logistics operations and advanced its expansion strategy.

Even though these actions improve development prospects, Ultrapar Participações S.A. (NYSE:UGP) still faces operational difficulties, including decreased volumes at Ipiranga and Ultragaz, the possibility of increased competition as Petrobras considers entering the LPG market, and regulatory uncertainty.

Ultrapar Participações S.A. (NYSE:UGP), which is one of the best oil and gas penny stocks, is involved in lubrication services, convenience retail, LPG, and fuel distribution in Brazil.

6. Transocean Ltd. (NYSE:RIG)

Upside Potential: 18.0%

Number of Hedge Fund Holders: 32

Share Price: $3.20

Transocean Ltd. (NYSE:RIG) is one of the 7 best oil and gas penny stocks to buy according to analysts, supported by hedge fund interest and strong upside potential.

On October 1, 2025, to strengthen its backlog in important offshore markets, Transocean Ltd. (NYSE:RIG) announced contract extensions for two of its ultra-deepwater drill ships totaling around $243 million. BP will contribute an estimated $232 million towards these contracts, having exercised a 365-day option for the Deepwater Atlas in the United States Gulf of Mexico. Additionally, Petrobras added $11 million by exercising its 30-day option for the Deepwater Mykonos in Brazil.

Moreover, the extensions demonstrate Transocean Ltd. (NYSE:RIG)’s capacity to obtain multi-region commitments and the ongoing need for high-specification deep water rigs in both the Americas. Furthermore, to further strengthen liquidity and operational stability, the company also issued a $500 million private offering of Senior Priority Guaranteed Notes due 2032 at 7.875% interest, with a closing date of mid-October.

Transocean Ltd. (NYSE:RIG) is one of the top local suppliers of offshore contract drilling services for gas and oil wells. It is one of the best oil and gas penny stocks.