We recently published a list of 12 Best Oil and Gas Penny Stocks to Invest in Now. In this article, we are going to take a look at where VAALCO Energy, Inc. (NYSE:EGY) stands against other best oil and gas penny stocks to invest in now.

The oil and gas sector faces a pivotal moment in 2025 as it deals with complex dynamics from global tensions, evolving policy directions, and rising innovation. The stable pricing in 2024, after many decades, now faces hurdles due to geopolitical stresses, energy transition demands, and economic shifts. Companies are keeping tight capital control while boosting tech productivity, as analysts predict oil will stay between $70 and $80 per barrel. However, geopolitical instability and unpredictability could push prices higher.

Despite these obstacles, operations have advanced as the sector’s capital spending has increased 50% from 2020. Meanwhile, returns are on the upswing as businesses focus on high-performing assets and refine their portfolios. Many companies are betting on digital and green tech—carbon capture, hydrogen, and data-driven exploration—as part of a wider clean energy push. Global oil trade issues have shifted focus to natural gas as a second key revenue source, thus, gas prices have jumped lately. According to Yahoo Finance data, LNG futures are up nearly 40% in six months and 91.65% year-over-year at Henry Hub, thanks to low stockpiles, winter demand, and rising LNG exports.

Although market instability persists, as recent OPEC+ supply boost and US-China trade tensions have pushed down crude prices. As of April 2025, West Texas Intermediate (WTI) crude sits near a three-year low of $61.5 per barrel. The US Energy Information Administration (EIA) sees an average of $63.88/bbl this year, further dropping to $57.48 in 2026. This decline, plus tariff hurdles and export problems, might squeeze US oil output since profit thresholds sit between $61-$70/bbl. This shows how even major forecasters are scaling back amid trade fights and project holdups.

Now, the trend has shifted to natural gas as the growth driver for the oil and gas industry. Europe remains central to global LNG trade, taking 55% of US LNG exports in 2024, per LSEG data. As seen last December, 69% of US LNG shipments (5.84 MT) went to Europe, up from November’s 5.09 MT, driven by winter needs and limited Russian supply. As trade tensions add complications, China’s 15% tariff on US LNG threatens new deals despite existing contracts.

The outlook is mixed but hopeful as oil demand rebounds post-pandemic and a global boost in energy diversification. Although solar energy helps reduce fossil fuel dependence, it won’t replace it entirely, which shows the significance of a harmonized energy mix. In the same way, the main alternatives—solar, wind, and nuclear—each have scaling or consistency limits. Oil and gas, especially natural gas, remain vital to global growth and energy security, creating openings for agile, cost-effective penny stocks.

While major companies grab headlines with billion-dollar projects, penny stocks—small-cap oil and gas companies trading under $5—attract interest for their high-growth potential.

Our Methodology

We first sifted through ETFs, online rankings, and internet lists to compile a list of the best oil and gas stocks under $5. We then selected the 12 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. For tied stocks, we ranked them by the value of their hedge fund stakes. The hedge fund data was sourced from Insider Monkey’s database, which tracks the moves of over 1000 elite money managers.

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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

VAALCO Energy, Inc. (NYSE:EGY)

Number of Hedge Fund Holders: 16

Share Price as of April 16: $3.39

VAALCO Energy, Inc. (NYSE:EGY) operates as an independent upstream energy company with assets across Africa and Canada. It manages production and exploration in Gabon, Egypt, Equatorial Guinea, Côte d’Ivoire, and Canada. The company’s portfolio features high-interest assets like Gabon’s Etame Marin block and fully operated positions in Egypt’s desert regions. VAALCO is actively growing its presence in key African oil basins through smart development and strategic acquisitions.

In Q4 ending December 31, 2024, VAALCO Energy, Inc. (NYSE:EGY) showed impressive financial results, hitting a record adjusted EBITDA of $303 million for the year, up 8% from last year. Whereas Q4 production averaged 25,300 BOE daily, matching the company’s guidance. VAALCO’s proven reserves jumped 57% to 45 million BOE, while its 2P reserves reached 96.1 million BOE. The company’s acquisition in Côte d’Ivoire has already paid for itself 1.8 times since April 2024. Moreover, VAALCO gave $33 million back to shareholders and finished Q4 with $82.6 million in cash.

Additionally, VAALCO Energy, Inc. (NYSE:EGY) secured a $190 million credit line (expandable to $300 million) to fund its growth plans. The company formalized a 70% interest in CI-705 offshore Côte d’Ivoire and got a 10-year extension on its CI-40 license through 2038. It has also lined up a rig for its 2025-2026 Gabon drilling and completed its FPSO off hire on January 31, 2025, with service expected to resume in May 2026.

Looking ahead to 2025, VAALCO Energy, Inc. (NYSE:EGY) expects production between 19,250 BOE and 22,210 BOE daily. It has set aside $270-$330 million for capital expenses, with $70-$90 million planned for Q1. The company aims to drill two wells in Gabon and up to 13 in Egypt. It also plans to complete studies for the Venus development in Equatorial Guinea and might reach FID this year, making it one of the best penny stocks in the oil and gas sector.

Overall, EGY ranks 9th on our list of best oil and gas penny stocks to invest in now. While we acknowledge the potential of EGY as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than EGY but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.