Geopolitics around the Strait of Hormuz are back in focus, with talk of new transit fees, shifting governance and the risk of sanctions all feeding into what oil extraction and production stocks might face next. Higher shipping costs, tighter insurance terms and renewed supply concerns can change how investors think about risk and potential reward in this corner of the market. This article breaks down how that backdrop ties into three stocks from our Oil and Gas Exploration and Production Companies screener, each presented as a potential beneficiary of these developments.

Riley Exploration Permian (REPX)

Overview: Riley Exploration Permian is an independent oil and gas producer focused on acquiring, drilling and operating fields across contiguous acreage in Yoakum County, Texas, and the Yeso trend of the Permian Basin in Eddy County, New Mexico, extracting oil, natural gas and natural gas liquids.

Operations: The company generates its US$403.4 million in revenue from oil and gas exploration and production activities in the United States.

Market Cap: US$701.2 million

Riley Exploration Permian provides direct exposure to oil prices at a time when potential new transit fees and sanctions risk around the Strait of Hormuz could affect global supply and pricing for producers. The company is investing in New Mexico infrastructure and ERCOT power projects that could create new cash flow streams, and buybacks and dividends indicate management is returning capital even after a recent quarterly loss and margin compression from 23.9% to 15.3%. Debt levels, one off items and insider selling mean investors still need to think carefully about risk, but the combination of index inclusion, production growth and analyst expectations for stronger earnings leaves more to consider for anyone watching REPX closely.

Riley Exploration Permian’s mix of new projects, capital returns and recent margin pressure suggests the real story might be in how the trade off between growth and risk is priced in the 3 key rewards and 4 important warning signs

Gulf Keystone Petroleum (LSE:GKP)

Overview: Gulf Keystone Petroleum is an oil and gas producer focused on the Shaikan Field in the Kurdistan Region of Iraq, where it explores, develops and operates one of the region’s key onshore resources while also providing technical and support services across geology, geophysics and engineering.

Operations: Gulf Keystone Petroleum generates US$193.1 million in revenue primarily from exploration and production of oil and gas, with most revenue linked to activity in the Kurdistan Region of Iraq.

Market Cap: £378.4 million

Gulf Keystone Petroleum sits at the intersection of high quality reserves and high geopolitical risk. This positioning can draw attention when tensions around key oil routes such as the Strait of Hormuz are in focus. The company is working to lift constrained production through new water handling facilities, while discussions over export routes and pricing could influence how much of that output reaches higher priced international markets. At the same time, recent earnings growth, a 4.95% dividend yield that currently leans on improving profitability, and cost reduction efforts are set against issues like security disruptions, payment uncertainty and reliance on a single field. For investors, the central consideration is how these factors balance out as Gulf Keystone Petroleum executes on its plans.

Gulf Keystone Petroleum’s mix of constrained output, cost cuts and a 4.95% dividend yield hints at a story investors may be only half seeing; the real tension is inside the 4 key rewards and 2 important warning signs

Infinity Natural Resources (INR)

Overview: Infinity Natural Resources is an Appalachian Basin producer that acquires, develops and operates crude oil, natural gas and natural gas liquids acreage across Ohio’s Utica Shale and Pennsylvania’s Marcellus and Utica dry gas plays, using long lateral wells to scale production from its concentrated footprint.

Operations: The company generates its US$426.1 million in revenue from acquiring, exploring, developing and producing crude oil and natural gas in the United States.

Market Cap: US$782.7 million

Infinity Natural Resources gives investors direct exposure to both crude and gas at a time when potential transit fees and sanctions risk around the Strait of Hormuz are feeding into oil pricing. Management is already talking about locking in higher oil-linked hedges and even accelerating oil projects in response. The company’s mix of Ohio oil and Pennsylvania gas, supported by its own midstream build out and long laterals, sits alongside fast growing revenue, an improving loss profile and analyst expectations for strong earnings growth. At the same time, the stock trades on a low P/E, with removal from Russell value indices potentially creating technical selling. High leverage, large CEO pay and high non cash earnings keep the risk side of the ledger significant, which is where Infinity Natural Resources may become more interesting for investors who are willing to look a layer deeper.

Infinity Natural Resources appears to combine accelerating oil exposure, long lateral wells and a low P/E that many investors might be pricing as routine energy risk, but the real twist could be hiding in the 4 key rewards and 1 important major warning sign

The three stocks here only scratch the surface of what is happening in oil and gas extraction and production, because the full screener has uncovered 42 more companies with equally compelling narratives inside the Oil & Gas Exploration and Production Companies screener.

Use Simply Wall St to identify and analyze the specific catalysts, geopolitical angles and financial traits that matter most to you. This can help you filter this wider group down to the highest conviction opportunities for your portfolio.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.