While Xcite also states in today’s update that it has received indicative proposals for development funding, it goes on to say that there can be no guarantee that they will lead to funding being secured by the company. But, having undertaken a cost review, Xcite’s new forecast for development costs to be reduced to $30 per barrel is a major step in the right direction and has the potential to improve the company’s long term outlook in a low oil price environment.

Although Xcite has clear long term potential and the Bentley field is a highly appealing asset, it seems prudent to wait for confirmation regarding funding. That’s because investor sentiment towards the oil and gas sector remains relatively weak, which means that even after today’s update Xcite may find it challenging to obtain the cash required to make further progress.

Also reporting positive news flow recently was Soco International (LSE: SIA). Its update released last month highlighted the relatively strong position which the company is in, with it having no debt, a strong net cash position and very low cost base. In fact, Soco reported cash operating costs of less than $10 per barrel in the 2015 financial year and this bodes well for the business in what could prove to be a prolonged period of low oil prices.

With Soco’s bottom line forecast to rise by 54% in 2016, the company’s shares trade on a price to earnings growth (PEG) ratio of only 1.2. Clearly, there is the potential for downgrades to this growth rate, but with a fully funded drilling programme for 2016 and a wide margin of safety, Soco seems to be a very appealing buy for the long term.

Among the major fallers today are shares in Madagascar Oil (LSE: MOIL), which are down by over 50% after the company stated in an update that it may be forced to delist from AIM in order to gain access to funding.

In today’s update it says that following discussions in the last two months its lenders were unwilling to provide further cash and that with its cash balance standing at just $2.8m as of 31 December 2015, it urgently requires funding to continue its operations.

As such, Madagascar Oil has approached its major shareholders to request further funding and while there is no guarantee that any cash will be made available, a condition which could be imposed on the company by its major shareholders is that it delists from AIM. The approval of 75% or more of the company’s shareholders would be needed to effect this at a special general meeting, with the alternative being insolvency should further efforts to find funding be unsuccessful.

Clearly, Madagascar Oil is enduring a highly uncertain period and it seems wise to avoid buying shares in the company since there is a realistic prospect of either a delisting or insolvency in the short run.

The post Are Xcite Energy Limited, Soco International plc And Madagascar Oil Ltd Worth Buying Following Recent Updates? 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.

The company expects revenue for the full year to be in line with previous guidance, with sales having performed to expectations since the company’s last update. That’s despite the anticipated softening in demand for ceramic tile printing in China, with revenue growth in packaging helping to offset it.

However, as a result of improved operating efficiency at Xaar’s manufacturing sites in Sweden and in Huntingdon, it now expects to deliver an adjusted operating margin of 20% in 2015. And with it having a net cash balance of £70m at the year-end, Xaar continues to enjoy a relatively sound financial outlook.

With Xaar forecast to post a fall in earnings of 4% in the current year, its shares may struggle to maintain the momentum that has seen them rise by 30% in the last year. That’s especially the case since the company trades on a price-to-earnings (P/E) ratio of 25.6, thereby making Xaar seem like a stock to avoid in favour of other, better value options.

Watch and wait?

Meanwhile, companies such as Madagascar Oil (LSE: MOIL) continue to struggle with a declining oil price. Although Chinese trade surplus data released today was better than expected and has boosted the price of oil, it seems likely that the price of black gold will come under increasing pressure as the US dollar appreciates in tandem with interest rate rises. As such, the outlook for stocks such as Madagascar Oil could be rather challenging, with financing in particular likely to be more difficult to come by as investors and lenders back more established, profitable businesses.

Despite this, Madagascar Oil reported in its half-year results that it has secured a bridge financing facility of up to $21.9m from its four major shareholders. This is designed to fund the company through to the conclusion of the partner process. And with Madagascar Oil reporting a loss of $6.6m for the first half of the year and a cash balance of $1.8m, such financing appears to be rather timely.

While the company has the potential to offer long-term growth and the approval in the current financial year from the Malagasy government for Block 3104 Tsimiroro Development Plan is positive news, other oil and gas plays could prove to be better risk/reward opportunities at the present time. As such, it may be prudent to watch, rather than buy, Madagascar Oil right now.

Risky but worth it?

In addition to a low oil price, Genel Energy (LSE: GENL) is also facing the major political risk that comes with operating in Northern Iraq/Kurdistan. This has undoubtedly hurt the company’s share price performance, with its valuation falling by 79% in the last year.

Despite such problems, Genel Energy has a superb asset base that has the potential to deliver improving profitability over the long run. And in the current year, it’s expected to post a rise in earnings of 47% which, alongside a P/E ratio of 13.7, equates to a price-to-earnings growth (PEG) ratio of just 0.3.

This indicates that while Genel Energy’s share price may remain volatile, the risks to the company from operational disruption and a lower oil price appear to be priced-in. For less risk-averse investors, Genel Energy could be a sound long-term buy.

The post Genel Energy PLC, Xaar plc And Madagascar Oil Ltd: 3 Stocks To Help You Retire Rich? appeared first on The Twelfth Magpie.

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• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

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.

Now could be a good time to buy oil shares. In this article, I’ll focus on four companies I believe look cheap at today’s prices.

Genel Energy

Shares in Genel Energy (LSE: GENL) slipped lower this morning. The firm said that payment difficulties for Kurdish oil exports mean that trade receivables rose from $230m to $378m during the first half of 2015, despite lower oil prices.

Genel also confirmed that it would defy corporate governance norms by shifting chief executive Tony Hayward into the chairman’s seat.

Of course, Mr Hayward is no ordinary ‘hired gun’ chief executive. He was a co-founder of Genel, which has become one of the largest oil producers in Kurdistan under his guidance.

In today’s update, Genel said that net production is now peaking at more than 100,000 barrels of oil per day (bopd). Guidance of 90-100,000 bopd was confirmed for the full year.

Genel had $470m of cash at the end of June. Mr Hayward is confident that the Kurdish cash will arrive eventually.

I agree. At less than 500p per share, I rate Genel as a strong buy.

Hunting

Shares in oil service technology firm Hunting (LSE: HTG) have fallen by almost 12% since the start of July. The trigger for the slide was the firm’s warning that a sharp decline in US drilling activity means 2015 operating profit is likely to be 50-75% lower than in 2014.

However, the decline in drilling rig activity appears to be levelling off. A closely watched US rig count has risen over the last two weeks.

Hunting has a strong balance sheet and widespread headcount reductions have saved $41m so far this year. Hunting is continuing to invest in new facilities and could be a good long-term buy at current prices, in my view.

Lamprell

Another engineering firm that’s suffering from the oil market decline is Lamprell (LSE: LAM). However, the outlook for the Dubai-based rig builder is brighter than you might expect.

The firm had an order backlog of $1.2bn at the end of 2014, a 33% increase on one year earlier. At the mid-way point in the year, Lamprell has confirmed 2015 guidance, putting the firm’s shares on a 2015 forecast P/E of 13.6, falling to less than 13 in 2016.

Lamprell’s finances are strong following its refinancing. A strong order book and newly-updated facilities bode well for the future.

I recently added Lamprell to my own portfolio and rate the firm as a buy.

Madagascar Oil

Small cap exploration and production firm Madagascar Oil (LSE: MOIL) has been struggling for years to develop its Tsimiroro field in Madagascar, which has contingent resources of 1.7bn barrels.

Things finally seem to be falling into place. The firm was awarded a 25-year field development licence in April and has a new chief executive, 110,000 barrels of oil ready to sell and sufficient cash to meet near-term requirements.

Further funding will be required, which may explain why Madagascar’s shares remain 50% below last year’s peak. This project should remain profitable at current oil prices and I believe patient investors could see further gains.

The post As Oil Prices Crash Lower, Is Now The Time To Buy Genel Energy PLC, Hunting plc, Lamprell Plc & Madagascar Oil Ltd? appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Roland Head owns shares in Lamprell. 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.