Quite a week and a particularly savage one for those holding the poorer companies. The most positive event was 88 Energy (88E) confirming rig mobilisation for the upcoming Charlie-1 appraisal well. Spud now is imminent and drilling & logging are estimated to take around 30 days. I highlighted this as a favourite several times around 0.7p and it's now over 1p, having been nearly as high as 1.5p. It's a big drill targeting 1.6 billion barrels of oil and 480 million barrels net to 88E. There are seven stacked targets and multiple oil and gas show announcements are highly likely. It's also a credible drill with Premier Oil (PMO) having farmed in.
On to the news from a few less credible ones (better ones will be along shortly), Sound Energy (SOU) announced the immediate appointment of Graham Lyon as Executive Chairman. Mr. Lyon is a former Chairman of Infrastrata (INFA). It will be interesting to see if he presides over a final collapse of the share price to the sub-penny fractional level. I suspect he will. In which case, fellow director, Brian Mitchener, who sold 2 million shares last week at just over 1.5p will be able to look back with satisfaction at the excellent price he achieved. I saw SOU featured in someone's bucket list last week, down over 80%. It's also in my list, down over 95%. Thing is I said it was rubbish; the other guy said it was one of the best. That's the problem with supposedly independent commentators getting too close to the companies and failing to remain detached.
Moving on with the bad ones (it’s a sort of reverse bucket list where instead of saying buy them, I said the opposite), Zenith Energy (ZEN) announced it intends to drill in the Congo in April. But that is dependent on so many things and in reality it's not going to happen. I’ve been warning about ZEN for some time and it’s down from 4.2p to 0.9p (79%) in the last few months alone. That’s nothing compared to its Congo co-venturer, Anglo African Oil & Gas (AAOG) which is down from 11.7p to 0.21p (98%) over the last year. In fact, I’ve been saying it’s a con since around 20p. It never stops with them, though. AAOG’s own news last week revealed that RiverFort et al effectively received a present from the other AAOG shareholders of £336,926 in the form of the ISA.
I sometimes wonder why some people criticise me so heavily for warning about these scam companies. What's most fascinating is how those who are being scammed speak up and defend those who are scamming them. A social media version of Stockholm syndrome perhaps. The ones who attack me hardest, though, generally are those stuck with stock in placings that they're trying to flip and are furious with me speaking out the facts about their companies. I find it particularly amusing when they refer to their co-conspirators as “other respected posters.”
The two companies which present the most trouble to comment upon are Reabold Resources (RBD) and United Oil & Gas (UOG). But the reality with these two is in their share price performances. RBD is down from 1.7p to 0.57p (66%) in the last six months and UOG is down from 6.25p to 2.65p (58%) over the past two years. Their business models simply aren’t the best and there’s no getting away from that. In the last week, RBD announced an update on California operations. The number that's missing from their RNS is current oil production. There's a heavy decline rate on these California wells, that they prefer to avoid to mention. Meanwhile, UOG announced the completion of its acquisition and re-admission to AIM. 114.5 million shares are being issued to Rockhopper Exploration (RKH), 150.6 million shares are being issued to placees, plus 8.4 million to subscribers, all at 3p. With that lot, it’s difficult to see the UOG share price doing anything positive for some time. RKH meanwhile has the extra funds to get on with its much more exciting North Falkland Basin development.
Predator Resources (PRD) is down from 12.65p to 3.45p (73%) over the last year. PRD announced a drilling team update last week; they also announced the exercise of the rig option the previous week. What they didn't announce was the publication of their CPR. I don't think that any company grounded in reality can seriously expect potential investors to be checking their website daily, so the question is why. There's still a lot of 4p placing stock out there to be flipped and shifty looking behaviour by the company is never a good sign.
Tlou Energy (TLOU) is down from 10.35p to 2.6p (75%) in the last year. TLOU last week reported that dewatering is taking longer than originally anticipated. I thought it might. Sustained higher gas rates will take more time and/or require more wells. They're now talking about including solar, but are the management here really the most competent people to undertake all this?
On to the ugly as opposed to the bad, Eco (Atlantic) Oil & Gas (ECO) announced unaudited results and a corporate update. It appears there will be no drilling on the Guyana block this year, indeed perhaps never. ECO is down from 194.5p to 24.5p (87%) in the last six months, since it wasn’t entirely truthful about the nature of the oil it had encountered. If the majority partners do somehow agree to drill, though, there could be significant upside. ECO was a blog favourite that gained more than 100% last year, but then collapsed when it turned out that their oil was heavy. Fortunately, I warned that the upward share price movement had run out of steam before that collapse happened. It just shows how these type of companies are more for trading than investing.
The shine is now starting to come off PetroTal (PTAL) which is down from 32.5p a month or so ago to 18.25p (44%), having been as low as 16p (down over 50%) last Friday. There were some fairly unpleasant exchanges over that one last weekend, but yet again it’s turning out that I was right. PTAL announced the publication of a presentation on Thursday and the 20,000 barrels of oil per day year end target, far from being a virtual certainty, now is something to which there only is “a clear line of sight.” Hitting such a target, of course, is another matter entirely.
On the brighter side, Aminex (AEX) pushes forward in Tanzania, so that when approvals are given, they can quickly move into the operational phase. This also is positive for Solo Oil (SOLO), whose shares currently are suspended although the company hopes to be able to shortly provide an update on its proposed reverse takeover transaction. Whilst the form in which SOLO will emerge from suspension is as yet unknown, there’s significant potential with AEX if it can pull it off.
The preceding commentary relates only to companies which issued news during the week. Surveying the carnage, there are many other interesting possibilities. Most of these companies of course are worthless and last week simply accelerated their inevitable declines, but such times present great opportunities and I'll be reviewing the good ones in the private blog. It's at times like these that the big money is made.
Fundamental analysis isn’t primary here (indeed, I see huge losses being made by those who try to apply it to AIM oil and gas companies); critical with these small caps which constantly require funding is to understand how the finance and promotion side works. That’s why I know what’s going on at these companies and where they’re likely to go. I’ve 40 years experience in the markets from both sides of the fence.
My personal trading philosophy is based upon conviction, elimination of possible loss making trades and only going for those which are certainties. It takes discipline, but it maximises profits, which is what this is all about. I write two blogs. The main blog (and associated podcast) focusses on the news. The private blog focusses on the trades. Writing it all down and publishing it is an excellent discipline, requiring focus and accuracy, since I'm open to criticism if I don't get it right. Writing the main blog ensures staying on top of and correctly assessing all the oil and gas public company news each week. Writing the private blog and sharing my thoughts ensures careful and accurate analysis of the trading ideas. The main blog is free. The private blog costs £95 a month. Some question the cost, but what I can say is that of those who try the £23.75 first month's trial subscription, the vast majority see the value of it and continue at the full monthly rate. The link is https://www.oilnewslondon.com/subscribe
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The author holds 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.