In particular, I think long-suffering investors in Pantheon Resources (LSE: PANR) could be in for a bit of respite in 2018, with their shares having slumped from 2016’s peak. Years of low oil prices combined with no profits from Pantheon have taken their toll, but that could be about to change with a turn to profitability on the cards for the 12 months to June 2018.

There’s been a problem with the company’s Polk County production, but an update on Friday offered encouraging news.

Chief executive Jay Cheatham said: “I very much look forward to the frac of VOBM#1 which aims to remediate the known blockages in that well and to ramp up production into the Polk County gas plant. A good result will have very positive ramifications for our play.“

Profits almost here

In addition, the VOBM#5 well is “proceeding well and without issue“, and a frac plan is in place to minimise the chances of the kind of damage that impacted operations at VOBM#1. If it’s successful, work to bring it online would commence immediately.

The only downer is news that work is suspended at VOBM#4 as the site is under water from heavy rain.

Analysts are expecting a very big ramp-up for 2019 which would see EPS soaring to bring the prospective P/E down to 10. And I reckon further evidence to support that rosy outlook could easily see a re-rating of Pantheon shares this year.

Substantial resources

The early excitement over UK Oil & Gas Investments (LSE: UKOG) has died down a bit, but that was pretty much inevitable as it always takes time to progress from a hydrocarbon find to actual profitable production.

I was upbeat in December after the partners in the Horse Hill development north of Gatwick released their latest progress update, and further developments look good.

The latest is February’s update from the Broadford Bridge-1 find at the Weald Basin which, in the words of executive chairman Stephen Sanderson, revealed “positive and encouraging initial oil flows from the first-ever Kimmeridge Limestone 5 test.“

The well produced 96 hours of oil flow via near-continuous rod-pumping, with fluid return rates of between around 10 and 72 barrels per day. At this stage, with the fluid containing spent acid from an acid-wash programme, something over 30% was oil (with periods of over 50%). No obvious natural water was found in the mix.

Other prospects

That comes after January’s Isle of Wight update which told us the firm has let its offshore P1916 licence lapse due to “low geological prospectivity, high environmental sensitivity and consequential high associated drilling costs.” The focus will now be on the onshore PEDL331 Arreton oil discovery, in which UK Oil & Gas has a 65% interest.

UK Oil & Gas is still in its cash-burn phase and there are no profits forecast yet, and that makes it a very difficult investment to quantify. 

The share price has receded too, dropping from September’s excitement-led peak of 10p to less than 2p as I write. That, sadly, is a common phenomenon with growth stocks.

But again, I see potential for an uprating during 2018 if the positive news continues.

The post UK Oil & Gas Investments plc isn’t the only stock that could double in 2018 appeared first on The Twelfth Magpie.

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Alan Oscroft has no position in any of the shares mentioned. 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.

However, it is not the only resources stock to have generated 100%+ returns in recent years. Reporting on Friday was a company which could also perform well in future after a strong track record of growth.

Improving outlook

The company in question is oil and gas exploration company Pantheon Resources (LSE: PANR). Its operational update showed that it is continuing to make progress with its strategy. Operations on its VOBM#5 well and preparations to begin testing on its VOBM#4 well are under way. And the company has also been conducting in-depth analysis on its VOBM#1 well as it seeks to get it back on-stream.

Analysis of a fall in production in Polk County in January has shown that the cause appears to be wellbore-specific factors. This is most likely a result of the wells having been shut in for extended periods. Encouragingly, it does not suggest that there has been a downgrade in the potential of the company’s acreage.

With Pantheon Resources having risen by 166% in the last five years, it may be expected that the company’s valuation is relatively high at the present time. However, with it due to move from loss into profit in the current year and then follow this with earnings growth of 388% next year, the company has a forward price-to-earnings (P/E) ratio of 8. This suggests that it could offer a wide margin of safety, as well as further upside potential.

Rising sentiment

Of course, Zanaga Iron Ore could also perform well in future. The prospects for the iron ore industry have turned around in a relatively short space of time. Demand from China has increased as the country has sought to invest more heavily in infrastructure developments. While this trend may or may not continue during 2018, the idea that the commodity ‘super-cycle’ is over may not prove to be correct. As such, there could be further steady growth in demand for iron ore over the medium term.

In terms of Zanaga’s progress as a business, its strategy appears to be sound and it seems to have sufficient cash to make progress over the medium term. Certainly, it remains a relatively risky investment opportunity due to it being at a fairly early stage in its lifecycle and lacking the diversity of many of its peers. However, if the iron ore price remains buoyant and it can execute its strategy, its shares could deliver further gains in the long run. As such, now could be the right time for less risk-averse investors to buy it.

The post Zanaga Iron Ore Co Ltd isn’t the only growth stock that could double again in 2018 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. 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.

With that in mind, now may be a good time to buy Pantheon Resources (LSE: PANR). That’s especially the case since the exploration company reported positive news last week.

Improving outlook

On Thursday, the company announced that the VOBM#4 well has reached its target depth of 12,050 feet. In doing so, it encountered the Wilcox horizon. This was a welcomed bonus for the company and has the potential to be hugely successful given its 75% working interest in the well. The wellbore is currently being prepared for logging operations, while the gas facility is progressing as expected. Higher production rates are anticipated as the wells clean up in future.

Looking ahead, the stock is expected to move from five years of losses to a profit in the next financial year. It’s forecast to record pre-tax profit of over £5m, which puts it on a forward price-to-earnings (P/E) ratio of 25. While not exactly a low rating, the company appears to have significant growth potential, not just from its improving operational performance, but also from the prospect for a rising oil price.

Although the level of supply over the medium term may be uncertain, various oil-producing countries have indicated that may be supportive of a higher oil price. Therefore, Pantheon Resources could see its profit rise, which may make its current valuation seem attractive over the long run.

Turnaround complete?

Also set to deliver a black bottom line after a troubled period is resources sector peer Glencore (LSE: GLEN). The company has experienced three years of losses in the last five, which is clearly disappointing for its investors. However, after a major cost-cutting programme that has left the company with lower leverage on its balance sheet, it’s expected to move into profit in the current year.

Despite this, Glencore continues to trade on a relatively low P/E ratio. It currently stands at 12.1 on a forward basis, which suggests that it may be cheap when compared to some of its sector peers. And with its financial and operational performance on the up, it may be much easier for investors to justify a higher valuation. This could act as a catalyst on the company’s future share price performance.

Clearly, commodity prices could be volatile over the medium term. However, with what appears to be a wide margin of safety and a lower-risk business model after its debt reduction plan, Glencore could be a worthwhile investment for the long term.

The post Why Pantheon Resources plc is a high-growth stock you might regret not buying 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. 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.

Shares in Pantheon Resources (LSE: PANR) haven’t exactly been sparkling of late, dropping 47% over the past 12 months, to 53p. 

The oil and gas explorer, which operates in Tyler and Polk Counties in East Texas, has surely been suffering from the side effects of stubbornly low oil prices and the general feeling of gloom afflicting the whole sector. And, of course, there’s the fact that Pantheon isn’t actually making any profit.

But that could be all set to change, as analysts have profitability marked in for for the year to June 2018. And Pantheon looks to have the cash needed to break through to such heady days after a placing in July this year was apparently heavily oversubscribed.

Chief executive Jay Cheatham said that the new capital will enable the firm to accelerate its drilling programme, and told us that cashflow from Polk County was expected later this year.

Set to flow

The latest of a series of operational updates, on Tuesday, said the company has started drilling a sidetrack of its VOBM#4 well to target the Wilcox formation. This was encountered while drilling the main well, and it’s likely to take 30 days to complete the new exploration (barring problems).

With the assembly of the Kinder Morgan gas processing facility complete, saleable gas from Polk County is now expected to be flowing into the pipeline by November.

It’s not all sweetness, mind, as difficulties with hard rocks at the VOBM#2H well are expected to impact the ability to maximise flow rates. But Mr Cheatham says he’s “very excited about the potential of the Wilcox reservoir.“

Risky, but I’m optimistic.

Successful restructuring

Restructuring has been the order of the day for Mitie Group (LSE: MTO), after a bad patch that saw earnings crumble. For the year to March 2017, the facilities management and services outsourcer reported an operating loss of £42.9m. That was hit by a number of one-offs, though after excluding those, we still saw a £6.3m loss.

But even then, Mitie’s order book was standing solid at £6.5bn and its sales pipeline had risen 10% to £8.7bn.

Analysts are now predicting a return to solid profit this year, followed by a 21% hike in earnings per share next. In addition, the dividend, which was slashed in 2017, is slated for a return to progressive growth in the year to March 2019.

Recent feedback from the company is supporting that optimism, with a pre-close update in September saying that “we are making steady progress in the transformation of Mitie” and telling us that “top line growth in the first six months has been encouraging.“

Cost-cutting

A serious effort is being made to control costs too, with a strategy of outsourcing some of its own needs and consolidating some of its infrastructure expected to result in savings of around £40m per year by 2020. 

We’re looking at a forward P/E of 14 for the year to March 2018, dropping to under 12 by 2019 when the dividend yield is expected to be back to 2.1%.

That’s not screaming bargain territory, and a further fall in the shares over the past month does suggest there’s still some weak sentiment out there. But I see a reliable long-term investment here, and the shares are a cautious buy for me at the moment — especially as those buying now could be locking in big effective future dividend yields.

The post 2 hot turnaround stocks that could make you very rich appeared first on The Twelfth Magpie.

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Alan Oscroft has no position in any shares mentioned. 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.

Disappointing update

The company in question is oil and gas exploration company Pantheon Resources (LSE: PANR). It operates via several working interests in conventional projects onshore in Texas, and has therefore been negatively affected by the sustained period of extreme weather in the region.

It released an update on its recent operational activities on Wednesday. Tropical storm Harvey has impacted all of south and south east Texas, with rainfall in some areas exceeding 40 inches. More rain is forecast over the coming days as the storm is forecast to move northwards. This means that the company’s operations have been suspended, with everything having been made secure prior to the storm reaching the region.

While Pantheon Resources has no information to suggest any of the wellheads or associated facilities have been compromised by high water levels, the human resource needed on-site to continue operations has been impacted by the local conditions. It is unlikely to be until early September that it can assess damage to locations and roads. In the meantime, its operations will continue to be suspended.

Share price

Due to the challenges faced in Texas, it may be the case that Pantheon Resources experiences further share price declines in the near term. There is no guarantee that its operations will be in good working order following the tropical storm. This means that there is a risk of further pain for the company’s shareholders in the short run.

However, looking ahead to next year, the company is expected to move from loss into profit. This could stimulate investor sentiment and lead to a recovery from its disappointing share price performance since the start of 2017. In the near term, there could be further large falls in its valuation. But in the long run, it could mount a successful recovery.

Growth opportunity

Also expected to move from loss into profit next year is fellow oil and gas exploration company, Cairn Energy (LSE: CNE). It has benefitted to at least some extent from the lower oil price of recent years, with the cost of exploration and development spend decreasing across the industry. As well as this, the company has been able to execute its strategy and it is expected to ramp-up production over the next few years from multiple developments in its portfolio.

With the company having a diverse range of assets, it could deliver impressive earnings growth over a sustained period. While there may be more reliable, lower-risk and more profitable business on offer elsewhere within the sector, Cairn Energy could prove to be a surprisingly strong performer over the next few years.

The post Is this turnaround stock a falling knife to catch after dropping 45% in 2017? 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 of the shares mentioned. 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.

Potential turnaround

Reporting on Friday was oil & gas exploration company Pantheon Resources (LSE: PANR). Its shares rocketed 17% on the back of some good news, but they are still down 55% over the course of the last year.

Pantheon Resources delivered a high share price rise on Friday because of its signing of a contract for the Polk County gas processing facility. The contract has been signed with Kinder Morgan, which is the largest energy infrastructure company in the US, to install and operate a 15mmcf/d capacity gas processing facility. Installation of the facility is due to start in August, with targeted first production by September. At current pricing levels, the facility is forecast to generate over $1.5m per calendar month of free cash flow to Pantheon.

Clearly, investor sentiment has improved significantly after today’s news. However, the company continues to trade on a relatively low valuation. Using next year’s forecast earnings, it has a price-to-earnings (P/E) ratio of just 9.4. This suggests that while its past performance has been disappointing, it may offer considerable upside over the medium term.

Improving outlook

Also offering capital growth potential within the oil & gas sector is Amerisur Resources (LSE: AMER). It has recorded a share price decline of 34% in the last year, although much of this could be due to weakness in the wider sector rather than internal challenges faced by the company.

Looking ahead, more difficulties are possible for the oil & gas industry. Although OPEC has signalled production cuts, thus far they have been insufficient to bring demand and supply into equilibrium. Therefore, the supply glut which has been present in recent years may continue over the medium term. This could cause downgrades to earnings outlooks and lead to more share price declines over a short timescale.

However, with Amerisur forecast to return to profitability in the current year before delivering growth of 87% next year, it could be worth buying at the present time. It currently trades on a price-to-earnings growth (PEG) ratio of just 0.1, which suggests that it offers high growth at a reasonable price.

Of course, both Amerisur and Pantheon could prove to be highly volatile in terms of their business performance and share price outlooks. However, with high potential returns, they appear to be worth the risk in the long run.

The post Can these 2 small-cap shares still provide a high source of growth? appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended Amerisur Resources. 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.

Premier, on the other hand, is an old dog, producing around 80,000 barrels of oil per day from many different wells around the world with more potential production waiting in the wings. 

However, the company is also drowning in debt and while the recently announced refinancing deal will go some way to improving the Premier’s financial position, management’s targeted debt to EBITDA ratio of three times severely limits the company’s options.

Pantheon meanwhile has a debt-free balance sheet. The company reported a net cash balance of £17.9m for the period ending 30 June 2016, and since then some production has come on-stream, which should have reduced cash burn. 

Early stages 

Nonetheless, compared to Premier, Pantheon is still in its early stages of life. Shares in the company are falling today after it reported that preparation works for the commencement of flow testing operations on the VOBM#2H and VOBM#4 wells have taken considerably longer than expected. While management expects flow testing operations should commence on both wells within the next fortnight, this setback will delay the company’s growth. 

City analysts have pencilled-in earnings per share for Pantheon of 4.2p for the year ending 30 June 2017, rising to 13.3p for 2018. So, while today’s announced delay is a setback, it’s unlikely to derail long-term growth projections. 

As Pantheon grows off the back of its expanding production profile, Premier is set to struggle over the next few years, according to City analysts. 

Continuing losses

Assuming the debt refinancing goes to plan, Premier is set to report yet another full-year loss for 2017 before returning to profit in 2018 if the price of oil remains stable. If oil prices drop further, all bets are off as Premier’s outlook could be revised significantly lower. 

With this being the case, if I had to pick between Premier and Pantheon I would choose Pantheon. The company has a cash-rich balance sheet to help fund its exploration plans. What’s more, the firm is growing quickly via the drilling of new wells, unlike Premier that right now has to focus on debt repayment. 

Still, Pantheon is not a sure thing. The firm has a lot riding on just a few prospects, and if things don’t go to plan at these wells, the company could quickly find itself in a sticky position. Even though Pantheon has cash on the balance sheet, this money may not last for long if production growth runs out of steam and the firm makes mistakes. 

Overall then, despite today’s drop, Pantheon looks to be a better buy than Premier, but the shares are not for the faint-hearted. 

The post Pantheon Resources plc falls 10%, Premier Oil plc flies 10%: which should you buy now? 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.

Multiple setbacks 

Today, Pantheon announced that drilling operations at its vertical VOBM#3 well are now complete. The well has been drilled to a depth of 14,500 feet and data from the well indicates a potentially significant hydrocarbon reservoir in the primary target, the Eagle Ford/Woodbine sandstone.

As yet, Pantheon can’t say how substantial the find is, yet the market’s reaction to today’s news indicates investors believe that after a few setbacks, Pantheon is back in business. 

The last two wells the company has tried to drill on its Polk County, Texas acreage this year have run into problems. The first, VOS#1 was completed and delivered a flow rate of around 920 barrels of oil equivalent a day, although most of this production was gas. The second well, VOBM#2 had to be abandoned after the sandstone proved surprisingly hard, and there was a series of equipment failures. The failure of Pantheon’s second well sent a shockwave through the market, and the shares plunged by as much as 40% in a single day. 

Third time lucky?

Could it be third time lucky for Pantheon? It looks as if the company has regained some composure from its previous setbacks. Initial indications from the VOBM#3 are good, and the company proclaimed today that once the flow testing on the new well is complete, Pantheon will be in a position to finalise the gas processing facility arrangements and bring both VOBM#1 and VOBM#3 onto production after that. 

The more sceptical analysts might claim that the success of VOBM#3 could make or break Pantheon. However, it would seem that VOBM#3 is more likely to build the foundations for Pantheon’s growth rather than lead to the company’s demise. As today’s news release from the company shows, the presence of hydrocarbons at the prospect is clear, it’s just the size of the prospect that needs to be established. Results will be announced at the conclusion of testing operations.

City analysts are optimistic. Analysts believe the company will report sales of £12.4m for the year ending 30 June 2017, up from projected sales of £0.2m for the year ending 30 June 2016. On sales of £12.4m for fiscal 2017, City analysts expect the company to report a pre-tax profit of £7.7m or earnings per share of 4.6p, which translates into a forward P/E of 21.1. 

The bottom line 

Overall, Pantheon’s latest discovery is a great surprise for the company’s shareholders. When testing is complete the firm will be able to begin commercial production, revenue and profits should follow soon after. Of course, there’s still the risk that VOBM#3 could prove to be a dud, which would be another major setback for the business, although if initial indications are to be believed, the chances of this well being a gold mine are high. 

The post Is Pantheon Resources plc back in business after its latest discovery? appeared first on The Twelfth Magpie.

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• 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?

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.

Most small-cap oil companies don’t succeed, but those that do can generate huge returns for early investors if everything goes to plan. Finding these opportunities is the key. Investments where you can make 10 or 20 times your initial investment in the best case are worth taking a bet on. Of course, not every opportunity like this will work out but those that do more than make up for those that fail.

Pantheon Resources (LSE: PANR) and Rockhopper Exploration (LSE: RKH) are two such companies. Both have the assets in place to generate impressive returns for shareholders over the long-term, but at current prices is it worth getting involved? Does the potential reward make up for the risk taken on?

Double again? 

As the rest of the oil sector has languished, shares in Pantheon have charged higher this year. 

Year-to-date shares in the company are up by 260% as the firm has reported multiple successes on its acreage in Polk County, Texas. However, alongside the successes, there have also been failures. At the beginning of September shares in the company dropped by more than 40% after the company announced that its second well in Texas had to be plugged and abandoned. This dramatic markdown of Pantheon’s shares made it clear that the value of the company may have been too generous for the risk still associated with it. 

Assuming everything goes to plan going forward, City analysts expect the company to report earnings per share of 4.6p for the year ending 30 June 2017, which implies a valuation of 22.2 times forward earnings. This rich valuation coupled with the exploratory work Pantheon still has ahead of it signals that there’s plenty of risk ahead for the company’s shares and as a result, the potential upside may be limited.

Terrible year but plenty of potential 

Compared to Pantheon, shares in Rockhopper have had a downright terrible year. During the past 12 months shares in the company have lost a third of their value, but at current levels they may be attractive for long-term investors.

Rockhopper’s value is tied up in the company’s assets, specifically in the Sea Lion Complex. It’s thought that this asset contains 517 mmbbl of resources and has a break-even cost of $45 per barrel. So, even in the current environment where oil prices are struggling to move above $50 a barrel, Sea Lion will be profitable. 

City analysts estimate that Rockhopper’s net asset value stands at around 93p per share, more than 200% above current levels. There’s $63m of cash on the balance sheet as well to protect against the downside. What’s more, if the oil price returns to $70 or $80 a barrel this net asset value could see significant upgrades. In other words, Rockhopper has the sort of attractive risk/reward profile small-cap oil investors require. 

Overall, Rockhopper looks to be the better investment of these two early stage small-cap producers. 

The post Is the risk worth the reward with Pantheon Resources plc and Rockhopper Exploration plc? appeared first on The Twelfth Magpie.

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• 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?

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.

The news couldn’t prevent two London-listed oilies sinking after the release of their latest operating updates, however.

Alaska-focused 88 Energy (LSE: 88E) was recently trading 18% lower from Friday’s close, while Pantheon Resources (LSE: PANR) collapsed 39% from the previous session.

Texan troubles

Pantheon announced that work at its VOBM2 well in Polk County, East Texas had ceased thanks to difficulties drilling through the sandstone at the Eagle Ford project.

The company advised that “drilling of the horizontal section of the well was delayed by a series of equipment failures, causing the operator to replace contractors a number of times.” Problems were encountered due to the rock’s “abnormally abrasive characteristics,” Pantheon advised, which saw drilling halt to just two feet per hour at times.

The well has now been plugged, the driller noted, and the drilling rig moved to Pantheon’s VOBM3 well. However, the oil play plans to return to VOBM2 and to drill vertically once work on the latter is completed.

Indeed, Pantheon remains bullish on the commercial viability of VOBM2, commenting that “the well has encountered significant hydrocarbons in the objective horizon with natural gas being flared for several days, confirming the presence of a productive reservoir consistent with pre-drill expectations.”

Cold as ice

88 Energy, meanwhile, retreated further from recent four-month peaks after finalising drilling plans at its Icewine #2 asset in United States’ frostier parts.

88 Energy advised, after consultation with its partner Burgundy Xploration, that Icewine #2 would now feature “a vertical well with a multi stage stimulation” instead of the initially-proposed lateral well.

The move will cut costs at the project by approximately $5m, 88 Energy advised, meaning that the company can now fully fund the project from existing cash reserves. The new plan also reduces risk as a vertical model is far less complex than a laterally-oriented one.

Risky business

Share price volatility is par for the course for those investing in oil and gas explorers.

88 Energy itself has seen its value explode in 2016 after the potential payloads at Icewine #2 became apparent. Indeed, the share is still up more than 550% since the turn of the year.

But the unpredictable nature of fossil fuel delivery and unexpected changes to production plans can easily send share prices sinking again, particularly as many operators carry cash-strapped balance sheets and don’t generate revenues to help offset their hulking capex costs.

The oil sector remains a risk-heavy sector, anyway, with bursting crude inventories and a lack of orchestrated action to cut supply threatening to keep fuel prices under pressure. Indeed, I reckon the huge economic and political considerations surrounding possible reductions mean that investors should read little into Riyadh’s and Moscow’s plans to establish a task force to battle the market imbalance.

I think investors should give Pantheon Resources and 88 Energy a wide berth given these factors.

The post These 2 oilies are sinking on today’s news! Time to buy? appeared first on The Twelfth Magpie.

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Royston Wild 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.