The week started well with a recommended cash offer for RockRose Energy (RRE) of 1,850p per share, which takes virtually all investors out at a substantial profit. I first bought a couple of tranches of RRE around 130p and received a 150p per share “return of capital” a few months later. RockRose is a rare company that actually generates cash.
Perhaps to follow in its footsteps is Longboat Energy (LBE), which announced founders incentive plan awards under which “participants are eligible to receive 15% of the growth in returns of the company from the date of admission should a hurdle of doubling of the total shareholder return be met.” LBE was highlighted in the private blog three months ago in the 50s and it’s already double that.
PetroTal (PTAL) announced first quarter 2020 financial and operating results. The Bretana field is currently shut-in and they’re hoping to reopen it this month. Planned capital expenditure for this year has been deferred and it will be interesting to see what the field can produce without continuous development expenditure. It’s one I’ve been warning about all the way down from 30p and it’s now trading just over 10p. Remember with this one, the bullish commentary actually is only coming from those paid to put it out.
I3 Energy (I3E) updated on the Gain Energy production acquisition. ”Completion of the transaction [still] remains subject to…financing to raise the cash consideration and working capital,” which of course is the hard part. Even if they can get it financed (and I think it’s a big if), it’s doubtful the financiers would be willing to give anything away to the existing shareholders, whose shares have already been written down to an effective zero by management. I warned about this one all the way down from 20p and its shares are now suspended.
Further down the trough, Mosman Oil & Gas (MSMN), Nostra Terra Oil & Gas (NTOG), Nu-Oil & Gas (NUOG), TomCo (TOM) and Zenith Energy (ZEN) all issued news. It’s grim stuff. MSMN obtained a suspension of work programme conditions, NTOG announced that its principal shareholder has dumped half their stake, NUOG announced their proposed RTO transaction has fallen through, TOM gave its punters a further nasty spiking and ZEN announced yet another possible/potential/conditional acquisition, plus of course another financing. The more tangible Solo Oil (SOLO) announced the sale of its Canadian gas assets, but unfortunately it didn’t get any cash for them.
Hurricane Energy (HUR) announced an operational and corporate update. The water cut is now at 21%. I was cautioning about HUR towards the end of last year when it was in the low 30s. It’s now down to 6p. The most money that’s lost in the market is by those who think they’re buying bargains and most exposed to this are those who think they understand how to analyse these companies, but don’t, often simply because they’re not aware of the myriad technical issues and potential complications involved in their operations. There’s always a reason why what appears to some to be a “bargain” may not in fact be mis-priced.
UK Oil & Gas (UKOG) announced a two year planning permission extension to its Broadford Bridge oil discovery. It didn’t help the share price, which after the last ramp has now broken down under 0.2p. Absent a new promotion, the inevitable next financing will be at a price even lower than this. It’s not good when the best you can say about a company is that its share price might get ramped temporarily.
88 Energy (88E) announced a XCD Energy takeover update. It “has now reached a level of ownership in shares and options of XCD Energy that guarantees it will reach the minimum threshold required for compulsory acquisition.” 88E has been a multiple winner for me from the various share price runs up to its drill spuds and we’re now just waiting for the next well.
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The author may hold one or more investments in one or more of the companies mentioned so this post cannot be viewed as independent research. This post does not constitute investment advice or a recommendation to buy or sell and may be incorrect or outdated.