May 13

Rockhopper Finds Oil According to a recent article on Rockhopper Exploration PLC from Interactive Investor, the AIM-listed small oil and gas exploration company licenced to survey and drill in the North Falkland Basin has reported on not only its first oil discovery, but also potentially good quality of the reservoir, and is now waiting for lab results to further confirm that the oil is indeed moveable without any free water. So far, investors have responded to the two reports quite positively, pushing shares up almost three folds, from around 70p before the news to 195p at the close of 11 May. It looks like that the field is to be commercial, said Evolution Securities in a note, as long as the flow rate is in line with the rock properties.

By any means, investors’ jubilant reactions are justified, not to mention that their patience is finally being paid off. Investing in AIM-listed shares of small, start-up companies requires a lot of entrepreneurial spirit and taking on a new business adventure about the old oil commodity calls for a keen judgment in the mid of all the renewable-energy talks that are flowing around. Sometimes, narrower investor participation in smaller-scale business undertakings that are nonetheless well-planned and focused, like the one being conducted by Rockhopper, set up in 2004 to explore for oil and gas in the Falkland Islands, could potentially yield much greater investment rewards than the mass lingering at big oil establishments.

However, trading AIM-listed shares often entails greater precautions, as shares, if thinly traded, may be subject to price manipulation. Unless you’re an active trader, most likely trading through CFDs (Contract For Difference) using leverage, it’s a good idea to buy and hold your AIM-listed shares and keep an eye on the shares’ underlying business and do your research. Drilling by Rockhopper soon following the tests could potentially gush out oil in the thousands or even millions of barrels in a region allegedly holding up to 60 billion barrels. Its shares would then be worth much more than what it is now, which reflects only the good testing news so far.

No risk consideration is too much of a contemplation, especially for the oil industry. Oil production around the globe has been known for its political risk association because of many unstable corners of the world that happen to be rich in oil reserves. For Rockhopper, if Argentine government’s political stance on the Islands translates into any adverse business effects in the future, the company’s newly found fortune is surely to be affected and so are those of investors.

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May 05

Oil and gas exploration company VOG (VOG) warned that further share dilution could be on the cards as it continues to pursue its drilling campaigns in Russia and Africa.

In a letter to shareholders on Wednesday morning, chairman Kevin Foo addressed investors’ fears at the level of dilution taking place.

In the last year, the group has raised $53 million through the issue of 926 million shares and Foo recognised shareholders’ fears as a “valid and important point” which undoubtedly contributed to a disappointing share price performance.

However, shares in the group tumbled a further 3.4% as it admitted that it would issue new shares for cash in the future as “such capital is the lifeblood of all growing companies.”

“We have some very attractive projects and until cash flow from Logbaba can cover our development costs we will pursue all financing options to avoid dilution. I want to assure shareholders that new share issues will only be approved by the Board if necessary to maintain schedule and when all other options have been eliminated,” Foo said.

In an effort to appease shareholders, the AIM-listed group said the last six months had been the most important in the company’s history as it battled to bring its flagship Logbaba project to fruition and assured investors that the steep drilling costs of the wells were now firmly behind it.

“We have faced and overcome some incredible challenges involving technical, operational and financing issues that at times have threatened the very existence of our Company. It is worth bearing in mind that one year ago, Logbaba was just a site in a region where no onshore drilling has taken place since the early 50’s, with no available infrastructure. Then, our budget to drill and complete the two wells was approximately $24 million and we anticipated that this would be done by the end of 2009. In fact, the total cost of the two wells and support in Cameroon has been about $49 million and only recently have we completed the second well.” Foo said.

For an alternative look at Victoria Oil, check out the iBall TV episode on the company

Drilling progress was also considerably slowed by the need for heavier mud weights, it added.

Tests have revealed La-105 to hold the capacity to serve demand from the group’s industrial customers after initial flow rates showed the equivalent of approximately 10,000 barrels of oil. Meanwhile, La-106 encountered in excess of 300 feet of gross pay in multiple gas bearing sands.

VOG anticipates first gas delivery to customers in the final quarter of this year.

“This has been a very successful campaign and we are expecting a substantial increase in Reserves and Resources from previously published figures of about 100 billion standard cubic feet of Proven plus Probable gas and condensate equivalent,” Foo said.

The group is now focusing on building gas production facilities and a pipeline at Logbaba.

Meanwhile, exploration activity has continued at the company’s West Medvezhye gas and condensate field in Russia. It is still aiming to collect as much information on unexplored areas as possible to ensure future wells will successfully supplement the existing discovery at well 103. Surveys commissioned on the area should be completed by the end of this month and its licence requirement calls for it to drill two new wells by the end of 2012.

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Jan 25

Oil and Africa, Worth a Pun–in the Shape of Afren? Natural resources and Africa continue to be the two themes for investors of the new decade for me. Oil, the black gold and Africa, the dark continent are an interesting pun to some.  But for a company called Afren, an African independent oil and gas company, founded in 2004 with £1m from family and friends and currently listed on the Main Board of the LSE, it’s all about its big ambition to be the world premier African oil producer and explorer. Afren is not just living for the present; it’s looking years ahead.

Afren lost $37 million after tax in the first half of 2008, but rich in cash, it repaid $26 million of debt and bought into a few very intriguing oil fields. The company has 16 oil assets in Nigeria, Cabon, Congo, Cote d’Ivoire, and Ghana. They suck out 27,000 barrels of oil a day. Afren’s share price has gone up 6 times since March last year. With shares trading at 103.75p as of 22/1/2010 and 889.07m shares in circulation, the company has a market cap of £922.40m. Its current EPS is -9.68 and P/E ratio -10.71. But analysts predict revenue to be £441m for the coming year.

Afren’s biggest share value is probably in the Gulf of Guinea, the top oil hot spot. But such an investment is not without risks. Also, as Afren has already gone up, is it a bit late to the game for investors? Still, oil will be in big demand, when the recession is a history. And the young Afren could eventually realize its mission as Africa’s top oil company, because of all the untapped bonanza of black gold. Remember, Oil’s Well That Ends Well.

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Oct 16

John Mulligans Podcast click here to find it

John Mulligan speaks about the health of the world’s stock markets and investor’s appetite for equities across these markets since the on set of the economic downturn. Since the credit crisis, the markets have been starved by unscrupulous companies who have required vast amounts of capital to save them from bankruptcy.

He also speaks about how the onset of the economic crisis has starved the IPO markets. What he is debating is whether the health of these markets is improving. I agree with him in his assessment that the markets have slightly recovered. This improvement of the stock markets across the globe is obvious through the fact that activity has significantly picked up through 28 new listings raising over $400 billion in investment capital throughout the second quarter of 2009.

On a global level, the pace of initial public offerings have picked up substantially over the two quarters. Forty-nine successful IPOs have raised some $34 billion compared from just four IPOs raising barely $1 billion a year ago.

In the world market, there is a substantial increase in activity. It is absolutely vital that equity finance begin to flow again in order to fund the companies that power economic growth. We see signs that the markets are recovering.

So Got pick some nice Penny Shares that will ride the next wave!

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