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 Transocean Ltd. (NYSE:RIG) 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).
An aerial view of an oil rig with drillers in hard hats working on the platform.
Transocean Ltd. (NYSE:RIG)
Number of Hedge Fund Holders: 38
Share Price as of April 16: $2.16
Transocean Ltd. (NYSE:RIG) operates as a top offshore drilling contractor with one of the world’s biggest mobile drilling unit fleets. The company owns or has stakes in 34 rigs—26 ultra-deepwater floaters and 8 harsh environment ones—serving energy companies from government-backed giants to small independents. Its rigs tackle deepwater and ultra-deepwater projects while offering drilling services with cutting-edge safety and automation tech. Transocean is among the few penny stocks tied to offshore oil exploration, a sector gaining traction amid steady energy needs.
In Q4 ending December 31, 2024, Transocean Ltd. (NYSE:RIG) posted $952 million in adjusted drilling revenue and $323 million in adjusted EBITDA—a 34% margin. The full 2024 year brought in $3.5 billion in revenue and $1.15 billion in adjusted EBITDA. The company generated $206 million in operating cash in Q4 and finished the year with $1.5 billion in liquidity, keeping a solid balance sheet despite market ups and downs.
In addition, Transocean Ltd. (NYSE:RIG) keeps landing valuable contracts, including day rates above $500,000 for seventh-gen rigs and over $600,000 for eighth-gen 20k-capable rigs. The company’s fleet use stays robust—above 96% for 2025 and 93% heading into 2026—backed by extended contracts and new deals in India and Australia. Tracocean hit its best safety record ever and installed the industry’s first two 20k subsea completions, showing its tech leadership.
Despite expected short-term offshore market weakness in 2025 because of a temporary rig surplus in Africa and currency headwinds in Brazil, the company stands in a good spot. Moreover, Transocean Ltd. (NYSE:RIG) is working to unlock its $3.1 billion backlog while cutting costs and reducing debt. Many deepwater projects are set to launch in 2026 and beyond, hinting at a broader industry comeback.
With global deepwater spending projected to double by 2027 and traditional oil production becoming a priority again for major players, Transocean’s focus on deepwater trends sets it up for long-term growth in the offshore market.
Overall, RIG ranks 1st on our list of best oil and gas penny stocks to invest in now. While we acknowledge the potential of RIG 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 RIG 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.
