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.
5. Clean Energy Fuels Corp. (NASDAQ:CLNE)
Upside Potential: 44.4%
Number of Hedge Fund Holders: 25
Share Price: $2.77
Clean Energy Fuels Corp. (NASDAQ:CLNE) is one of the 7 best oil and gas penny stocks to buy according to analysts, supported by hedge fund interest and significant upside potential.
In keeping with its commitment to zero-emission transportation infrastructure, Clean Energy Fuels Corp. (NASDAQ:CLNE), one of the best oil and gas penny stocks, announced on September 25, 2025, that it will construct a second hydrogen fueling station for Foothill transportation. The $11.3 million facility, which will be partially financed by federal grants, will be built at Foothill’s Arcadia bus yard to support 19 new hydrogen fuel cell buses.
Moreover, following the first hydrogen station at Pomona, which has been in service since June 2023 and serves 33 buses, these two organizations have been collaborators for more than 20 years. In Collaboration with Mass Energy Works, Clean Energy Fuels Corp. (NASDAQ:CLNE) also began construction on three RNG production plants on September 16. The $80 million projects, which span dairy farms in South Dakota, Georgia, Florida, and New Mexico, are anticipated to produce three million gallons of RNG a year beginning in 2026, feeding its more than 600 fueling stations around the country.
With fueling stations located throughout the United States and Canada, Clean Energy Fuels Corp. (NASDAQ:CLNE) is the biggest supplier of renewable natural gas for transportation in North America.
4. Cosan S.A. (NYSE:CSAN)
Upside Potential: 58.1%
Number of Hedge Fund Holders: 12
Share Price: $4.28
With significant upside potential, Cosan S.A. (NYSE:CSAN) secures a spot on our list of the 7 best oil and gas penny stocks to buy according to analysts.
According to a September 24 report by Bloomberg, Rubens Ometto, the controlling shareholder of Cosan S.A. (NYSE:CSAN), was negotiating a $141 million loan from Banco Bradesco to support his family office’s continued ownership of the company’s proposed capital increase.
The action follows persistent difficulties at Raízen and Moove, as well as Cosan S.A. (NYSE:CSAN)’s second-quarter 2025 results, which showed an EBITDA of almost $1.1 billion but a net loss of almost $190 million.
Furthermore, Cosan S.A. (NYSE:CSAN), which prioritizes debt reduction, revealed plans to raise as much as $1.9 billion in equity, supported by $140 million from Ometto himself, $380 million from Perfin Infra Fund, and $850 million from BTG Pactual.
Moreover, as Cosan S.A. (NYSE:CSAN) looks to repair its balance sheet and reassure investors after shares fell more than 20% on the restructuring news, the Bradesco loan would support Ometto’s involvement in the financing.
Cosan S.A. (NYSE:CSAN), one of the best oil and gas penny stocks, is a fuel distribution company operating both domestically in Brazil and abroad.
3. New Fortress Energy Inc. (NASDAQ:NFE)
Upside Potential: 84.2%
Number of Hedge Fund Holders: 24
Share Price: $1.90
With significant upside potential, New Fortress Energy Inc. (NASDAQ:NFE) secures a spot on our list of the 7 best oil and gas penny stocks to buy according to analysts.
On September 17, 2025, according to Bloomberg, New Fortress Energy Inc. (NASDAQ:NFE) was negotiating to get more liquefied natural gas cargoes for its import facilities around the Americas. The discussions, which took place at the Gastech 2025 conference in Milan, focused on the company’s efforts to fortify supply chains for its regional infrastructure but did not reveal cargo numbers or contract durations.
The talks come after New Fortress Energy Inc. (NASDAQ:NFE) said on September 16 that it had inked a seven-year LNG supply agreement with Puerto Rico authorities, subject to the Financial Oversight and Management Board’s approval.
New Fortress Energy Inc. (NASDAQ:NFE)’s current 25-year supply deal with Energiza, which is building a new 550 MW power plant in Puerto Rico, is enhanced by this agreement. Furthermore, the company’s 1.4 MTPA Fast LNG project in offshore Altamira, Mexico, which started production in late 2024 and is currently running over nameplate capacity, will provide the LNG.
New Fortress Energy Inc. (NASDAQ:NFE) provides complete energy solutions worldwide through its LNG and natural gas infrastructure operations, as well as an integrated fleet of ships and logistics assets.
2. Kosmos Energy Ltd. (NYSE:KOS)
Upside Potential: 136.4%
Number of Hedge Fund Holders: 23
Share Price: $1.65
Kosmos Energy Ltd. (NYSE:KOS) is one of the 7 best oil and gas penny stocks to buy according to analysts, supported by hedge fund interest and significant upside potential.
On October 1, 2025, Kosmos Energy Ltd. (NYSE:KOS) reported that it had finished its semi-annual assessment of reserve-based lending facilities. It verified that all financial covenants, including liquidity tests related to its 2027 notes, have been met and that the borrowing base exceeds the $1.35 billion facility size.
Additionally, Kosmos Energy Ltd. (NYSE:KOS) and Shell Trading Company recently completed a $250 million senior secured term loan facility. Of this amount, $150 million is available for withdrawal to redeem Kosmos 2026 unsecured notes partially, and the remaining $100 million is available until April 2026.
Moreover, on October 6, 2025, the $150 million will be redeemed. Simultaneously, Kosmos Energy Ltd. (NYSE:KOS) increased its oil hedging positions for 2026 and increased the total amount of hedged volumes to 8.5 million barrels at an average floor price of $66 per barrel.
Furthermore, Kosmos Energy Ltd. (NYSE:KOS) used recent increase in oil prices to improve its balance sheet and bolster downside protection in the face of commodity market volatility.
With offshore assets spread throughout West Africa, Kosmos Energy Ltd. (NYSE:KOS) is an oil and gas exploration and production company that specializes in deepwater fields. It is one of the best oil and gas penny stocks.
1. Prairie Operating Co. (NASDAQ:PROP)
Upside Potential: 195.7%
Number of Hedge Fund Holders: 3
Share Price: $1.86
With significant upside potential, Prairie Operating Co. (NASDAQ:PROP) secures a spot on our list of the 7 best oil and gas penny stocks to buy according to analysts.
Prairie Operating Co. (NASDAQ:PROP) reported on September 2 that nine wells from its Opal/Coalbank pad have been completed, resulting in a first 30-day average production rate of 525 barrels of oil equivalent per day (boepd).
Prairie Operating Co. (NASDAQ:PROP)’s place in the Denver-Julesburg Basin, where it is still advancing several projects, is strengthened by wells that were purchased in the Bayswater deal.
Furthermore, while the Nobel pad’s four 2-mile U-turn wells and three 1-mile laterals are under drill-out, with initial output anticipated by Q4 2025, 11 wells across the Niobrara and Codell zones are being turned to sales at the Rusch pad. Moreover, with six 2-mile wells scheduled for completion later this year, the Simpson pad is making headway. Prairie Operating Co. (NASDAQ:PROP) completed two bolt-on acquisitions last month to support these initiatives, increasing its oil-weighted inventory and adding 16,000 net acres.
As one of the best oil and gas penny stocks, Prairie Operating Co. (NASDAQ:PROP) develops natural gas, oil, and NGL resources in the U.S.
While we acknowledge the potential of PROP to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than PROP and that has 100x upside potential, check out our report about this cheapest AI stock.
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