But after the price of a barrel has fallen back from $70 to around $63, the shares have retrenched. Is that a buying opportunity?

Last week, Tullow reported its first operating profit in three years. It was only a modest one at $22m, and hefty finance costs helped push that down to a bottom-line loss. But, crucially, we learned of free cash flow of $543m, and that will hopefully leave Tullow’s lenders feeling a little less twitchy over the oil firm’s big debts.

After refinancing in November, that debt level still stood at $3.47bn (£2.5bn) at year-end, which is a bit above the company’s current market capitalisation of £2.45bn.

Debt falling

But gearing was “significantly reduced” and is actually not far above the company’s targeted level. And there’s still headroom (including cash) of $1.1bn. I see the chances of a collapse very much receding now, and I don’t think the short sellers are going to win this one.

The prospects for Tullow’s drilling programme are looking good for boosting production over the next few years — Kenya is expected to produce first oil in the early 2020s. Although oil is down a bit, I can see it regaining $70 or higher before too long — and I reckon Tullow Oil shares should do well in 2018, on a forward P/E of 12.

A big crash

Looking at its share price, you could be forgiven for thinking Amur Minerals Corporation (LSE: AMC) is on the ropes. At one stage on Tuesday the price dipped by more than 15%, though as I write it’s come back a little and is 10.4% down at 5.8p.

The price has actually fallen by 55% over the past 12 months, but what lies behind the latest drop?

The company, which delves for nickel-copper sulphide in Russia’s eastern regions, revealed it has taken on a new convertible loan facility to the tune of up to $10m, with an initial $4m to be drawn straight away. Two other drawdowns will be taken, one at 121 days and one at 240 days.

Amur sounds happy with the deal, but the terms of the repayment will surely be behind the market’s weak sentiment in response. Each cash advance is to be repaid in 12 monthly instalments, but if Amur elects not to pay any individual instalment, the lenders can convert that amount into new ordinary shares at any time.

Dilution?

With Amur currently lossmaking, how many of those repayments it will elect to make is an open question. And though the deal is flexible for it, we now have the uncertainty of how much dilution of shareholders’ interests we’ll see. Amur’s market capitalisation is currently around £40m, and the total $10m loan could represent up to around 20% of that.

The share price momentum is not in Amur’s its right now, but what should you do? Buy for a potential recovery or sell and use the cash to buy some Tullow shares?

Well, I wouldn’t buy a tiny ‘jam tomorrow’ stock like Amur anyway, and I already own some Premier Oil shares as my risky hydrocarbon pick — so it’s a choice I can happily ignore.

But Amur Minerals could go either way, and I reckon 2018 could be a crucial year.

The post After today’s 15% drop, is this momentum stock worth selling to buy Tullow Oil plc? appeared first on The Twelfth Magpie.

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Alan Oscroft owns shares in Premier Oil. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Still, if you do your research and spend time carefully choosing the most attractive small-caps, the returns available can be life changing.

Redt Energy (LSE: RED) is just one small-cap that may have the potential to revolutionise your portfolio’s returns. Formally known as Camco Clean Energy, Redt develops energy storage technologies, and while the company is still in its early stages, there’s been plenty of positive news flow over the past 12 months.

Redt is planning to ramp up the production of its liquid vanadium energy storage units over the next two years and as the company develops its manufacturing capacity, the cost of production per unit is expected to decrease considerably.

According to management, there’s already plenty of interest in the units from industrial groups, and City analysts expect big things over next two years. Sales of just £3.4m are expected this year but for 2017 analysts have pencilled-in sales of £18.5m, a staggering growth rate of over 400%. The City expects Redt’s pre-tax loss to narrow significantly over the next two years falling to £1.2m for 2017 with a profit expected in the years after.

With such an impressive growth rate on the cards, Redt could be one company to watch going forward.

Debt deal

The market seems pleased with a debt restructuring deal announced by Iofina (LSE: IOF) this morning with shares in the company rising by 10% in early trade. The restructuring deal will see the maturity date of Iofina’s existing convertible debts of $20m extended to 2 June 2019, and interest rates will be lowered from 6% to 5%. What’s more, to help with cash flows under the terms of the new agreement accrued interest will be rolled up into the loan principal so it can be paid at maturity.

Along with this new debt deal, one of Iofina’s existing creditors Stena Investment has agreed to extend an additional $10m credit line to the company to finance expansion plans. The details of this new credit deal are expected to be finalised within the next 30 days.

When it comes to small-cap investing, it’s often best to avoid the companies with high levels debt as if things don’t go to plan, shareholders will have to foot the bill for the company’s excessive spending. For example, right now if Iofina’s existing loans were converted, the debt would equate to around 45% of the group’s existing share capital.

A long way to go

Early-stage miner Amur Minerals (LSE: AMC) is another high-risk play. The company is still in the early stages of developing its nickel/copper Kun-Manie prospect in Far East Russia. Even though recent drilling results showed a higher grade of ore than was initially expected, Amur has a long road ahead of it before it can bring the mine into production. Indeed, last year the company informed the market that it would cost an estimated $312m to develop a permanent access road to the nearest suitable rail line for Kun-Maine.

With a market cap. of only £25m, Amur is facing the prospect of taking on a near-crippling amount of debt just to fund the construction of the access road.

The post 3 potential ten-baggers? Redt Energy plc, Iofina plc and Amur Minerals corporation appeared first on The Twelfth Magpie.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Avanti’s management also announced today that demand for its High Throughput Ka band satellite capacity in Europe, the Middle East, and Africa has been strong, particularly in the large telecommunications and government sectors. With demand for its services robust, Avanti is confident that it will be able to hit its revenue growth target of 50% year-on-year for the year to the end of June, some much-needed good news for the company’s shareholders.

Rocky period 

Over the past 12 months, Avanti’s investors have been taken on a wild ride as the company’s share price has collapsed by around 60% since mid-May last year. And year-to-date, shares in Avanti have lost around 50% of their value as investors have become concerned about the company’s financial position and its ability to hit growth targets. Indeed, City analysts expect the company to report substantial losses for the next two years, and it remains to be seen if Avanti can survive long enough to book a profit eventually. 

Analysts expect the company to report a pre-tax loss of £51m for the year ending 30 June and a pre-tax loss of £33m for the following year.

Speculative pick 

Shares in Amur Minerals (LSE: AMC) had a rough start to the year but have begun to make back some of their losses in recent trading days. Year-to-date the company’s shares have lost around 36% of their value and since the beginning of June last year, the shares have lost a staggering 90% of their value. However, in the last week, the company’s shares have started to recover some lost ground and are up around 16% since Monday.

Amur is still in the early stages of exploring its flagship Kun Manie nickel copper sulphide project located in the far east of Russia and it will be several years before this asset starts production and generates a return for shareholders. 

With this being the case, Amur is a high-risk opportunity. The company still has a whole mine to build and finance. If you’re going to buy into Amur’s nickel copper sulphide project, it’s best to do so as part of a well-diversified portfolio so if the company fails, you don’t lose your shirt.

The post Is the reward worth the risk with Avanti Communications Group plc and Amur Minerals Corporation? appeared first on The Twelfth Magpie.

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• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.