The news release shows that Independent Oil & Gas has completed its objective to drill two mapped reservoir structures below the Skipper oil field in the Lower Dornoch and Maureen formations. The well didn’t encounter any hydrocarbons and will be plugged and abandoned. This is the key reason for today’s share price fall, although Independent Oil & Gas was still able to complete its primary objective of retrieving good quality reservoir condition oil samples in order to optimise the Skipper field development plan.

Furthermore, initial observations strongly suggest that Independent Oil & Gas has a better oil viscosity than the Competent Person Report’s (CPR) estimates. This bodes well for its future performance and the company is becoming increasingly confident of the commerciality of the Skipper field now that it has the required date to progress to the field development planning.

Under pressure

Clearly, the oil industry is still in an extremely uncertain situation. Although the price of oil has risen from its January lows of sub-$30 per barrel to today’s $51 per barrel, they’re still significantly lower than their previous high of $115-plus per barrel. This means that pressure on exploration and production companies remains high, since profitability is far lower than it was just a few years ago. In turn, this has caused investor sentiment to remain weak for a prolonged period.

Looking ahead, investor sentiment towards oil stocks such as Independent Oil & Gas could come under pressure. That’s because the demand/supply imbalance that has caused the oil price to fall is showing little sign of reversing. Most commentators expect the oil price to trade under $60 per barrel over the medium term, which indicates that the price rises seen thus far in 2016 are unlikely to be repeated. As such, investor sentiment towards the wider oil & gas sector could be somewhat weak, which would be bad news for Independent Oil & Gas’s share price.

Bright future?

However, the firm is well-financed having secured the backing of London Oil & Gas Limited. The £13.55m financing package will cover its licence fees and general and administrative expenses until mid-2018 at the earliest, which provides a degree of certainty in a very unstable market. Furthermore, Independent Oil & Gas’s cost control and the quality of its asset base indicate that it has a bright long-term future.

Undoubtedly, there are larger, more financially stable oil stocks that offer greater diversity than Independent Oil & Gas. And they’re on offer at ultra-low valuations. However, for investors seeking a smaller company with greater potential rewards (and higher risk), then it could be a sound buy if the oil price doesn’t fall to new lows.

The post Is Independent Oil & Gas plc a buy after falling 20% today? appeared first on The Twelfth Magpie.

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Peter Stephens 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.

Clearly, this is good news for the company and investors have reacted positively to the update. Today’s share price rise takes Independent Oil & Gas’ capital gains since the turn of the year to 27%, with at least some of those gains being due to a higher oil price.

Looking ahead, there is further potential for gains if the oil price rises, although the supply/demand imbalance which has been present in recent years looks set to persist in the short term at least. Therefore, buying smaller exploration plays remains relatively high risk, although Independent Oil & Gas may be of interest to long term, less risk averse investors.

Also rising today are shares in Belvoir Lettings (LSE: BLV), with the property specialist announcing the acquisition of Northwood GB Limited for a total consideration of up to £22m. With Northwood being the largest remaining independent UK lettings franchise which operates 86 outlets nationwide, Belvoir will be the largest property franchise group in the UK upon completion of the deal.

To fund the acquisition, Belvoir is conducting a placing to raise gross proceeds of up to £2.5m. The deal appears to be a logical one for Belvoir and fits in with its multi-brand strategy to grow both organically and through acquisitions.

With Belvoir forecast to increase its bottom line by 12% this year and 9% next year, it appears to be performing well even without the acquisition of Northwood. And with greater diversity and increased resilience during what could prove to be a relatively challenging period for the UK property sector, buying Belvoir now seems to be a sound move for long term, less risk averse investors.

Meanwhile, investment specialist Tern (LSE: TERN) has also been engaging in M&A activity of late, with it announcing the purchase of Flexiant Limited last month. It is a provider of cloud management software for cloud orchestration for on-demand, fully automated provisioning of cloud services. The deal has been paid for through the issue of 8m new ordinary shares in Tern and with its shares rising by 13% in the last month, investor sentiment in the business seems to be improving.

Clearly, the cloud and internet of things spaces have considerable long term appeal and could allow Tern to deliver rising profitability over the coming years. However, with it being a loss-making entity last year and there being other options within that space, it may be prudent to await further news flow and improved financial performance before piling in.

The post 3 unmissable small-caps? Independent Oil & Gas plc, Tern plc and Belvoir Lettings plc appeared first on The Twelfth Magpie.

More reading

• Why Barclays shares could have a huge second half of 2026
• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?

Peter Stephens 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.