There was some talk last week about "cleaning up AIM” and I suggested perhaps borrowing a few ideas from the United States, who have been dealing with the challenges of regulating micro-cap fraud on a much larger scale, for a much longer period of time. Adopting certain provisions of their Securities Act would help, in particular minimum holding periods for shares issued in placings and disclosure of compensation by paid commentators. Another practical way, and this approach proved very effective, is when a company announces a new business endeavour and heavy promotion starts off the back of a short news announcement, suspend the shares pending publication by the company of what in the UK would be a new admission document disclosing all information necessary for investors to make an informed investment decision. I’m not aware of any companies to whom this happened in the US ever coming back. Just a few thoughts if anyone was serious about wanting to clean up the market.
Strange goings on at PetroTal (PTAL). It closed at 7p in London on Thursday the previous week, then was walked up to the equivalent of 9.6p in the North American markets on the Friday when London was closed. PTAL had some heavy social media promotion last weekend, the angle being buy at the “bargain" price in London first thing Monday morning. It did some good volume, although the price of course didn’t go anywhere, but the interesting question is who was behind it? Entirely coincidentally I’m sure, Miton sold half its stake in the company on Monday. Fact is PetroTal is now down from 32.5p to 6.9p and has recently disclosed a hitherto unknown contingent derivative liability of $42 million. Reality is it’s an old style Canadian stock promotion out of a letterbox in Zug and this tends to be what happens with these companies.
The question is and it goes back to the points I made at the start, do we always have to rely on others to protect us? With common sense and a bit of knowledge, we can do that ourselves. Problem is the lack of knowledge plus most people’s laziness and unwillingness to learn. Many investors, particularly new, rely on certain paid commentators for guidance, not realising that person is getting paid to persuade them to buy their offers. And if you’re one of those investors, understand that while you’re buying, the people who are paying these commentators are selling. Think about that. Then when the placing comes along and the share price dives, your trusted guides start chuntering on about how wise the company was to take advantage of increased market interest to raise and they’ve spoken to the CEO and it’s all great, etc. etc. Hold your shares they say and it will all be fine. Unfortunately, it never is. Some of these people cover many shares, using them as clickbait to draw in investors desperate to hear any comments about the shares they’re stuck in and desperate for another tip to make back their losses. Next time, see if you can spot the one(s) they’re being paid for.
Many of these companies can’t raise money in the normal manner, only via the market, selling to the most ignorant and ill-informed. Personally, I would say it’s market abuse, particularly since some commentators vehemently deny receiving payment, even though everyone familiar with the business knows they do. It also falls foul of advertising regulations. On their clients’ side, it has to be insider dealing selling shares when you know that a placing is forthcoming. So plenty of ways to stop it if anyone wanted to.
I explain all this in much further detail in the Special Trading Course along with many other things to enable you to protect yourself. Also, I explain my methods for making money in the markets, which perhaps are a little different to most. I actually just finished writing the final part of the Special Trading Course last weekend. In it I’ve written down all my observations about these markets and companies, the issues with the bad ones and how to make money with those that look certain to perform. I think most, even those with experience, will find it useful. In fact, I’m certain that it will be really helpful, so for a limited time, you can receive the first part of the trading course for FREE. Read it, see what you think and if it's not for you, you can cancel with the click of a button and pay nothing. Special link for blog readers and podcast listeners is https://www.oilnewslondon.com/free
Moving on, 88 Energy (88E) released it's Bidder's Statement, setting out the details for its takeover of XCD Energy. As I've said before, expect them to start planning soon for the next big drill, which could be quite interesting once fully financed. It’s a share, where if you time it right, delivers returns virtually as good as guaranteed (it did an easy 100% last time from the 0.7p placing in the run up to the spud and I highlighted it as a favourite several times in the blog before that run). It's one I've also profited from many times before. Obviously, you never hold for the drill result.
Mosman Oil & Gas (MSMN) announced the agreement of terms of a fairly uninspiring farm-out agreement whereby it receives an immediate sum of just under £8,000, plus a further similar amount after completion of the required seismic re-processing work. If all proceeds satisfactorily, it will end up with a 15% interest carried through the first well. A huge ramp took place, with many getting spiked on a 350% share price rise. I did warn about it on the day, explaining that a review of the accounts indicated a placing must be imminent. As expected, it’s now given up the vast bulk of its gains and those who bought it earlier in the week are sitting on some very substantial losses.
I said on 12 April that it could be “lights off” at Canadian Overseas Petroleum (COPL) and that was very much confirmed by their announcement on Wednesday, which stated that “the Company does not currently have sufficient working capital, cash inflows and/or adequate financing to continue its operations.” They’re now even paying the staff in shares. The future rests on a share price destroying £2 million equity placing agreement with Yorkville Advisors Global and Riverfort Global Opportunities, but closing of this facility is contingent on the clearing of a prospectus. It’s hard to see the attraction here.
President Energy (PPC) has been getting a lot of promotion on social media, some from the paid commentators too. The story is that the government in Argentina is going to institute a minimum oil price of $45 per barrel. It sounds great, but $45 oil would only be a boon for producers if there were buyers. There aren’t. “If there’s nobody to buy the oil,” said one union leader, “how will higher prices help?” Watch out, because these things often presage a placing.
Petro Matad (MATD) announced cost reductions that they say will see them through to next year with their current cash resources. Meanwhile, the Block XX Exploitation Licence application is progressing with the Mongolian authorities. I suspect there won't be too much happening here for some time, although MATD is always one for an opportunistic placing if the opportunity arises.
Union Jack Oil (UJO) announced final results, but most importantly reconfirmed that it is fully funded for all current drilling and well testing commitments. UJO had a cash balance in excess of £5.5 million as at 1 May and the company remains debt free. Works now are underway at West Newton, with further developments awaited.
UK Oil & Gas (UKOG) announced a further loan balance reduction, converting into shares at just over 0.2p this time. They also paid off £75,000 in cash out of the recent £1.275 million placing at 0.2p, leaving £2.005 million outstanding on the loan. I suspect we may be reaching the bottom here and it’s now time to start watching UKOG more closely.
Predator Oil & Gas (PRD) now is paying off its convertible loan, partly via a new placing at 2p. It’s still well down from the 4p price at which most of the funds were raised and COVID plus the oil price remain serious concerns. Nevertheless, the millstone around its neck now is gone and at least the share price will have room to breathe.
If you’re not yet familiar with me, I’ve been involved in the markets for a long time. I bought my first shares in the 1970s and I’ve worked in the financial sector since the early 1980s. My particular knowledge is of the stock markets and I’ve been actively involved in these, both in the UK and the US for over 40 years from both sides of the fence. I’ve also had significant involvement in the oil and gas industry along the way, from drilling wells to negotiating farm-outs to majors, which enables me to see very quickly whether or not these companies are telling the truth.
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. You can try out the first month on a trial basis for just £23.75. The link is https://www.oilnewslondon.com/oilman-jim
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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.