Russia- and Ukraine-focused small cap JKX Oil & Gas (LSE: JKX) fell 20%, while Tullow Oil (LSE: TLW) also slipped lower. US firm Nighthawk Energy (LSE: HAWK) bucked the trend, climbing by 11%, but are any of these companies a buy in today’s market?

JKX: wrong place, wrong time

Shares in JKX fell by 20% to 15p when markets opened this morning, after the firm reported a 40% fall in revenue and a $7.3m operating loss for the first half of 2015.

Production fell by 15% to 8,611 barrels of oil equivalent per day (boepd) during the period, mainly as a result of gas sale restrictions and a punitive tax hike in Ukraine, which have forced the company to suspend development drilling.

JKX is fighting these restrictions, but it is not yet clear whether the Ukrainian government will honour a recent interim ruling ordering it to lower the tax rate on JKX’s gas sales to its previous level of 28%.

The group does have a cash balance of $22.4m and has slashed capital expenditure. JKX can afford to continue operating in the short term, but may struggle to return to profit unless the situation in Ukraine normalises fairly soon.

Tullow Oil

Tullow shares fell by 3% following today’s results, leaving them 31% lower than one month ago.

Today’s results were slightly better than expected, thanks mainly to an effective hedging programme that provided a $298m boost to first-half earnings. This limited Tullow’s pre-tax losses to £10m.

However, a technical problem with the firm’s flagship Jubilee field means that production guidance for the full year has been cut from 105,000 bopd to 100,000 bopd. The cut comes at a bad time for Tullow, which is currently investing heavily in the completion of its TEN project in Ghana, where first oil is due in 2016.

Although TEN is on budget, it’s worth noting that Tullow’s capital expenditure this year is expected to be $1.9bn. That’s more than total forecast revenue of $1.8bn. The shortfall will be funded by debt, which has already risen from $3.1bn at the end of 2014 to $3.6bn.

I remain concerned that when TEN production starts, the cash generated may not be enough to repay the firm’s debts and reward shareholders.

Can Nighthawk drill?

Like many US shale operators, Nighthawk has stopped drilling new wells and is relying on maximising output from existing wells to maintain production.

That seems to be working quite well at the moment. Net production in June was 1,491 bopd, compared to 1,638 bopd in April.

The question is whether Nighthawk can afford to drill. The firm said today that it has 55-65 potential drilling locations which have been qualified with seismic surveys. The problem is that in June’s AGM presentation, Nighthawk said that only 70% of its 2013-14 wells would be economic at $60 per barrel.

Given that WTI crude is currently below $50 per barrel, Nighthawk may not be able to persuade its lenders to fund new drilling in the current climate.

Today’s best buy?

All three of these companies are struggling with the low price of oil and gas, and I suspect all three could have further to fall.

The post Have Tullow Oil plc, JKX Oil & Gas Plc And Nighthawk Energy Plc Bottomed Out Yet? appeared first on The Twelfth Magpie.

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

Shares in JKX (LSE: JKX) soared by up to 18% yesterday, meaning that they are up a whopping 200% since the turn of the year in what has been a very eventful seven weeks for the company. Of course, JKX’s share price fell heavily last week after Russian investment firm, Proxima Capital, said that it was no longer interested in making a bid for the company.

Clearly, this was disappointing news and came just days after JKX announced that it was seeking up to $180m in compensation from the Ukraine government over alleged international treaty violations. And, with an emergency arbitrator last month ordering the Ukraine government to refrain from imposing royalties of more than 28% on the production of gas by JKX’s Ukrainian subsidiary, it is clearly a very uncertain period for the company.

As such, it may be worth watching JKX rather than buying a slice of it, since its share price appears to be highly volatile and lacking a clear long term direction at the present time.

Dragon Oil

Having fallen by 12% in the last year, shares in Dragon Oil (LSE: DGO) appear to offer a considerable margin of safety at the present time. That’s despite the company’s bottom line being forecast to fall by a whopping 51% in the current year, as a lower oil price starts to have a major impact on its income statement.

In fact, Dragon Oil now trades on a very reasonable price to earnings (P/E) ratio of 12.8 which, while the FTSE 100 has a P/E ratio of around 16, indicates that it offers good value for money on a relative basis. And, with Dragon Oil forecast to increase profitability by 58% next year, it trades on a price to earnings growth (PEG) ratio of just 0.2, which indicates that growth is on offer at a very reasonable price. As such, it could be a strong, albeit volatile, medium to long term performer.

Rockhopper

2015 has got off to a generally positive start for Rockhopper (LSE: RKH), with the exploration company announcing upbeat news flow with regard to its joint drilling programme in the Falkland Islands. In fact, the Eirik Raude rig is on the move from West Africa to the Falkland Islands, with drilling on the Zebedee well due to commence as soon as next month.

Clearly, the results of the drilling programme will provide clarity on reserves in the field and, while the outcome is a known unknown, a major positive for Rockhopper is the fact that it has a relatively sound financial outlook, with the company having sufficient cash to contribute to its part in the programme.

So, while its short term share price movements are likely to be relatively volatile and, to an extent, somewhat binary in terms of the volume of reserves that it finds, Rockhopper could prove to be a worthwhile medium to long term resources play.

The post Is Now The Perfect Time To Buy JKX Oil & Gas Plc, Dragon Oil plc And Rockhopper Exploration Plc? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• 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?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

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.