When will the pain end for AIM oil and gas investors? The falls have been staggering over the last few weeks. The charts are all looking like an Alpine down hill race over the last 6 months, which presumably means the same for many holders bank accounts! Chariot Oil and gas is the one exception to the rule, despite a real lack of drilling news, rising 16% in the last month. Falkland Oil and Gas is the only other real outperformer with only a marginal decline during the month of June following the announcement of the farm in partner as Italian company Edison.
The whole sector has had to contend with and absence of significant corporate updates, a diving oil price and of course the ongoing eurozone crisis. Institutions have dumped shares with their “risk off” approach to buy more bonds.
Despite positive news from Gulf Keystone on the Shaikan 5 well and Xcite Energy with their reserve based lending deal, the two perennial private investor favourites continue to plummet. Frustration has reached all time highs.
Gulf Keystone was down 7% alone today to 141p (down 32% in the last month) – £1.2 billion market cap
Xcite Energy was down another 6% today to 71p (down a tub thmping 24% in the last month) – £184 million market cap
Gulfsands Petroleum down 1.5% today to 84p (down 15% in the last month) – £103 million market cap
Bowleven down 1.5% today to 53.5p (down 17% in the last month) – £153 million market cap
Chariot Oil and Gas up 2.5% today to 98.5p (up 16.5% in the last month) – £197 million market cap
Falkland Oil and Gas 87p down 0.8% today (down 4.6% in the last month) – £280 million market cap
Rockhopper Exploration 244p down 1.8% today (18% down in the last month) – £695 million market cap
Borders and Southern 58p down 10% today and giving up almost all the pre drill gains (down 16% in last month) – £280 million market cap
At these prices, for those punters with free liquidity and margin capability, long bets on pretty much any time horizon, and importantly on a diversified basis seem an almost dead cert for price appreciation. The collective discount to risked NAV’s is reaching historic extremities. Barring a fall of anothet 50% in the oil price we fail to see any more real downside. Time to buckle up for the ride!