Company Interview / The small cap energy plays investors may be ignoring

Key bullet points:

XRF Scientific (ASX:XRF) highlighted for undervalued growth and sector-leading EPSKaroon Energy (ASX:KAR) considered highly leveraged to oil price increasesRed Hill Minerals (ASX:RHI) viewed as an attractive royalties investment with strong cash flowContinued small cap opportunities seen despite market volatility

Ben Richards from Seneca Financial Solutions highlights fresh opportunities in the small cap mining and energy sectors. Richards points to the market volatility following reporting season, fuelled by factors such as tech sector weakness and macroeconomic uncertainties. XRF Scientific (ASX:XRF) stands out as a quality core position in the Seneca small caps portfolio, which Richards believes is undervalued despite 26% annualised EPS growth over five years. Richards identifies strong demand for XRF’s mineral sample testing equipment and consumable chemicals from major clients, including ALS, BHP and Rio Tinto, and notes its effective pricing power in passing on input costs related to lithium and platinum.

Karoon Energy (ASX:KAR) is another preferred pick, which Richards sees as well-positioned to benefit from higher oil prices, particularly as global supply concerns grow amid geopolitical tensions. Karoon’s assets in Brazil and the Gulf of Mexico offer low production costs, and its leverage to oil price increases reportedly surpasses peers such as Beach Energy (ASX:BPT), Santos (ASX:STO) and Woodside (ASX:WDS).

Red Hill Minerals (ASX:RHI) is considered a compelling royalties play, with Richards citing the attractive cash flow from royalties over Mineral Resources’ Onslow Iron Ore project, as well as future upside from gold sector royalties. An 11.6 cent per share dividend has recently been announced, reinforcing the value proposition.