UK Oil & Gas Investments plc News | The Twelfth Magpie

Should you buy risky Ryanair Holdings or even riskier UK Oil & Gas Investments?

Harvey Jones — Mon, 23 Jul 2018 12:34:34 +0000

Budget airline Ryanair Holdings (LSE: RYA), which has suffered a series of bumpy landings over the last year, banged into the tarmac again this morning. Its stock was down 4.1% as Q1 results show a 20% fall in profits to €319m.

Life of Ryan

At least the straight-talking airline has not buried the bad news. It’s right up there in the introductory paragraph, alongside its explanation: “Strong traffic growth (up 7%), overcapacity in Europe, and the earlier timing of Easter led to a 4% decline in ave. fares. Higher fuel and staff costs offset strong ancillary revenue growth in the quarter.”

Traffic grew to 37.6m, despite over 2,500 flight cancellations caused by staff shortages and strikes. “Ryanair’s lower fares delivered an industry leading 96% load factor,” it added. Fuel prices have risen to $80 a barrel, up from just $50 this time last year. And despite 90% hedging at $58 a barrel, its full-year bill will increase by at least €430m, including additional volumes.

Turbulence ahead

Ryanair still rakes in plenty of cash, allowing it to fund €460m of capex and make €265m of shareholder distributions in the quarter, while paying down €24m of net debt, cutting it to €259m on 30 June. Its €750m share buyback programme is now 70% complete.

Ryanair has returned over €6bn to shareholders since 2008. But the future may not be as rewarding as it faces a series of headwinds including climbing oil prices, European air traffic control strikes, rising wages and competition, not least from IAG. City analysts reckon earnings may drop 6% in the year to 30 April 2019. Ryanair will doubtless take off again, so look out for a good time to hop on board.

Domestic shale play

The budget carrier looks positively low-risk compared to UK Oil & Gas Investments (LSE: UKOG). The domestic shale explorer continues to exert a hold over private investors, even though its share price has plummeted from a peak of around 11p to today’s price of 2.3p. This was largely due to disappointing test results and costly write-downs, which saw pre-tax losses for the six months to 31 March hit £4.4m, up from £1.1m a year earlier. I hope you didn’t get sucked in by the clamour.

However, my Foolish colleague Roland Head reckons this AIM-listed company could be heading for 7p again. He notes that it has sorted out its debt concerns, with its lowly net cash balance of £700,000 now revived by a successful £10.5m share placing — which should keep it busy for another 18 months — plus another £2m earlier this month.

Blind love

UK Oil & Gas has also changed its trading status from an investing company to an operating company, in order to take direct control of operating interests in its oil and gas sites.

Anybody who buys the stock now is in for a testing time, literally, as we await further results from its Horse Hill-1 well in the south of England. My worry is that it has risen to prominence due to its novelty of a shale explorer in the Home Counties. I cannot deny it’s an exciting prospect but you have to invest blind, test results unknown, to really make money. Too risky for me.

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harveyj 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.

Why now could be the time to buy into the UKOG share price

Rupert Hargreaves — Wed, 04 Jul 2018 09:40:35 +0000

UK Oil & Gas Investments (LSE: UKOG) has undoubtedly been an exciting company to cover over the last few years.

In 2016, the company made headlines after testing at its Horse Hill development produced the highest flow rates of any onshore wildcat well in the UK. Then in 2017, canny investors who bought into the story saw the value of their shares rise eight-fold as excitement around Horse Hill grew.

Unfortunately, since the shares peaked at 9p last September, investment returns have proved disappointing because development there has slowed.

The main problem is that while the company is working hard to unlock value from the so-called Gatwick Gusher, flow testing has been disappointing. As my colleague Alan Oscroft has pointed out, oil is flowing from the wells drilled at decent rates, but only for relatively short periods at a time.

Time for a turnaround?

UKOG has suffered some setbacks, but management isn’t giving up just yet. One of the most significant issues the company currently faces is its level of cash burn. Drilling for oil and gas isn’t cheap, and the business has been relying on the kindness of investors to keep the lights on while it tries to develop the Horse Hill prospect.

However, I believe that the latest flurry of deals over the past 30 days has put the business in an extremely advantageous position. UKOG has now raised £12.5m since the beginning of June, enough cash to see it into 2019. By this point, we should have more clarity on the firm’s production prospects.

And we could have more good news on this front relatively soon. Last week, UKOG said Horse Hill Development Ltd, the operator of the Horse Hill-1 oil discovery, has started planned flow testing operations of each of the Kimmeridge Limestone4 and KL3 oil pools. This “comprehensive long-term production testing campaign will provide the necessary data to fully assess Horse Hill’s Portland and Kimmeridge commerciality,” according to chairman Stephen Sanderson.

A lot is depending on the results of these tests. If oil flows as expected, I believe UKOG’s share price could really take off as investors buy back into the Horse Hill story. Even though there will still be plenty of work to do to make the prospect commercially viable if the flow testing is a success, proving that the oil in the ground is indeed recoverable should reignite interest from investors. I can see the scent of profits also leading to increased institutional demand.

So, will I be buying UKOG now that the company is on the cusp of a transformational change in fortunes? The answer is, not yet. While I would certainly not write off UKOG as an investment, I believe that at this point the risk/reward balance is off. I’d like to see more concrete evidence that Horse Hill is a viable oil asset before buying into the growth story.

With a comprehensive long-term production testing campaign already underway, it may only be a matter of time before management can provide this confirmation.

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Rupert Hargreaves owns no share 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.

Why the UKOG share price could be about to skyrocket

Rupert Hargreaves — Sun, 29 Apr 2018 12:00:09 +0000

As my Foolish colleague Kevin Godbold pointed out only a few days ago that shares in UK Oil and Gas Investments (LSE: UKOG) have plunged over the past 12 months, from a high of 9p per share, to 1.5p at the time of writing.

The company, which was once touted as being the saviour to the UK’s energy woes — thanks to its world-beating oil discovery near Gatwick airport — has struggled with one of the critical elements of oil production… getting the stuff out of the ground.

Due to its problems, investors have fled the UKOG share price. City analysts, who were once so optimistic about the firm’s prospects, have also turned cautious.

A lack of results

Despite management’s efforts to reassure stakeholders, it’s the lack of tangible results that have turned investors off.

UKOG has bounced from one problem to another and is very close to running out of cash. During the past 12 months, the company lost £2.27m and raised gross proceeds of £7.46m — via the issue of equity — to help fund operations.

The concern is that the business continues on its current path, losing money and issuing new equity, diluting existing shareholders. In this scenario, there could be further significant downside ahead for the UKOG share price.

However, I’m not willing to write off the business just yet. Indeed, there’s still a possibility that management could turn the ship around as the company is fully funded until the end of 2018. And throughout the rest of this year, there’s significant exploration activity planned.

Not giving up

Even though it has had little success at the wellhead so far, UKOG is optimistic about its prospects.

The company is planning a further sidetrack to the BB-1z well, which had encountered operational problems, and is also investigating the use of different techniques that may help unlock resource from the prospect. Also, it has finalised two further potential drilling sites within the broader PEDL234 licence area, described as being “within the thickest, most thermally mature and oil generative area” in the firm’s acreage.

Initial planning applications to drill these prospects will be submitted later this year and drilling is expected to begin in 2019, which could prove to be another catalyst for the stock.

Then there’s also the Horse Hill project, near Gatwick airport, to consider. Horse Hill will be a crucial focus for UKOG and it’s partners throughout 2018. UKOG is the largest London-listed stakeholder in Horse Hill, with a 32.435% interest. By the end of the year, management hopes to have a roadmap in place for commercial production and significant cash flow from this asset. Further development work is also expected throughout 2019.

Overall, while the UKOG share price has slumped to a dangerously low level over the past 12 months, over the next two years there are many catalysts that could cause the price to return to all-time highs. It’s not the time to write off the enterprise just yet.

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Could this tiny growth stock and the UKOG share price both double in 2018?

Alan Oscroft — Fri, 27 Apr 2018 13:30:14 +0000

Quindell was famously tainted by an investigation by the Serious Fraud Office (SFO), after Gotham City Research shorted the stock based on its belief that the company’s accounts might not be as shiny as they seemed. That was vindicated by Quindell’s eventual need to restate its figures, and by the firm’s accountant Arrandco (formerly RSM Tenon) being fined £1m.

Quindell went on to sell the bulk of its insurance business to Slater Gordon (and there’s ongoing litigation over that), and reshaped the rest of its business as Watchstone Group (LSE WTG). How has it been faring since? Well, the share price has crashed for starters.

Watchstone has been recording losses for the past few years, but they’re coming down. The year to December 2017 has brought in underlying revenues of £44.9m (from £42.7m in 2016), with a loss after tax of just £2.6m (from a hefty £69.1m a year previously).

That’s moving in the right direction, but it has to be tempered by a rising operating loss of £7.4m, up from £4.5m.

On the liquidity front, Watchstone looks stable enough, with cash and term deposits totalling £62.8m, and net assets of £66.1m, representing 144p per share — and with the shares at 99p as I write, they’re trading at a significant discount to that.

New chief executive Stefan Borson said: “The Group losses are now stemmed and the central team efficiently run,” but his statement also covered legacy issues from the old days. The SFO investigation is still continuing, and the case by Slater & Gordon is being defended — with Mr Borson saying that “Slater & Gordon’s allegations of deceit and the associated breach of warranty claim are wholly without merit.“

The company’s pt Health and ingenie divisions seem to be in leaner shape and could well be set for renewed growth, but there are still significant legacy uncertainties for investors to deal with.

Wealthy oil future?

My second recovery-based growth candidate today is UK Oil & Gas Investments (LSE: UKOG), a major partner in the Horse Hill oil development at the Weald Basin in Surrey — once hopefully labelled the Gatwick Gusher.

The UKOG share price soared to 11p during the height of the optimism, but since then we’ve seen a slump as low as Friday’s 1.5p as confidence in the hoped-for billions of barrels of oil has waned. The stuff might be there, and there might be very large quantities of it, but the geology of the region seems to be making it very hard to get hold of.

The company’s full-year report at the end of March was full of the exciting possibilities, with the Broadford Bridge-1 well currently its key hope. But though regular updates keep confirming the existence of the black stuff and oil flows keep being reported, many investors are starting to fear for its commercial viability.

The big problem for me is that until we see commercial quantities of oil being pumped, it’s really anybody’s guess whether there are untold riches to be had, or whether an investment would be nothing more than throwing money down a hole.

Those who understand the risks better than I do might see an attractive growth opportunity here, and I’ve been bullish in the past, but the increasing uncertainties combined with my technical ignorance are enough to keep me away now.

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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.

Can UK Oil & Gas Investments plc or Hurricane Energy plc still make you rich?

Harvey Jones — Sat, 10 Feb 2018 12:00:00 +0000

Oil explorers are the investor’s great temptation. If you strike it lucky, the profits will gush. However, all too often excitable talk of major oil finds are crushed by disappointing exploration results.

Beyond the shale

That happened to domestic shale explorer UK Oil & Gas Investments (LSE: UKOG). The AIM-listed company was riding high one year ago, its share price more than tripling in six months on promising early tests in the Weald Basin in southern England, and planning permission success at West Sussex County Council. Its stock peaked at 11p. Today it trades at 3.25p.

UK Oil & Gas lost a quarter of its value on 17 December after it admitted a zone at its Weald Basin operation was probably not economically viable due to low reservoir productivity. Investors stopped their ears to executive chairman Stephen Sanderson’s positive talk about encouraging analysis on its BB-1 Kimmeridge clay well, and fled for the exits.

Wight out

Last month, the firm announced it would not be seeking a further extension to its P1916 licence offshore of the Isle of Wight, as the “low geological prospectivity [and] high environmental sensitivity” of the site made drilling too expensive. It has now switched its focus to the onshore PEDL331 Arreton oil discovery, also on the Isle of Wight. This time, investors largely kept their heads.

UK Oil & Gas is far from finished, even though investor interest has waned. Temptingly, the share price is far cheaper than it was. However, recent results show the scale of the challenge facing the company. Worse, the oil price is sliding again, which could frighten away backers unless it has a positive story to tell. My foolish friend Peter Stephens rightly says it could still triple your money, but you have to balance that against the risk that you could lose all of it.

Storm warning

Another UK-based oil and gas explorer, Hurricane Energy (LSE: HUR), is also sharply down from its 52-week high of 67.7p, halving to around 34p. It was punished by ill-timed accusations of poor corporate governance as the group sought a main market listing. This more than offset the surge in the oil price, which was boosting sentiment across the sector at the time.

Hurricane’s prospects look better today, as it works hard to comply with the UK Corporate Governance Code ahead of a premium listing. The share price is reviving, up 13% in three months.

Reap the whirwind

Its Lancaster field, west of Shetland, is expected to start producing oil as soon as Q1 next year, which could deliver an anticipated 17,000 barrels of oil per day. Lancaster’s reserves could total 523m stock tank barrels of oil equivalent and success here could have a positive effect on the long-term share price performance.

Two other discoveries, Halifax and Lincoln, have 2C Contingent Resources of 1.84bn barrels. Its Warwick and Whirlwind assets could add another billion or so barrels, best case. Now could be a good entry point, but please, do your due diligence, and beware of the risks.

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Harvey Jones 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.

Will UK Oil & Gas Investments plc be the hottest stock of 2018 too?

Harvey Jones — Sat, 23 Dec 2017 15:23:14 +0000

UK Oil & Gas Investments (LSE: UKOG) is the UK stock of the year. This onshore shale explorer (market cap £149m), is the second most traded company of all, according to The Share Centre, trailing only Lloyds Banking Group (market cap £44.48bn).

Spikey stock

Lloyds is 300 times bigger but UK Oil & Gas Investments has caught the imagination of investors. The AIM-listed shale minnow is up 157% year-to-date, its share price rising from 1.6p to today’s 4.12p (peaking at 11p), while Lloyds has only grown 3% over the same period.

UKOG has a stake in oil and gas assets located in the Weald Basin in Surrey and West Sussex. Its two flagship exploration wells are Broadford Bridge in West Sussex and Horse Hill, dubbed the Gatwick Gusher. As such, its fate lies in the hands of the planning committees of Surrey and West Sussex county councils, which certainly isn’t something, that giant peer BP has to worry about.

Drill baby, drill

Shale drilling remains controversial in the UK, despite our urgent need for energy, with campaign groups fighting excavation plans wherever they are submitted. However, in September, both West Sussex and Surrey green-lighted separate planning applications, and Environment Agency approval for the full programme was also granted. Protesters at Horse Hill site were cleared in a “swift and successful eviction” on 2 December

UKOG is also working to advance licences in Markwells Wood, Baxters Copse, Holmwood and the Isle of Wight. Executive chairman Stephen Sanderson, an experienced petroleum geologist who has uncovered multi-billion barrel wells off the coast of Norway, says it has an interest in 12 licenses covering 950 square kilometres.

Profit and loss

The stock is highly volatile, spiking on every piece of positive news, then crashing almost as quickly. So you have to be careful when you buy, otherwise you risk making an instant loss, especially if you dive in just as the profit takers are cashing out. If you bought in September, after the stock touched 10p, you will definitely not be sitting on a 157% gain.

UKOG has been steadily trading downwards since then, so much of the activity registered by The Share Centre will be selling. Although the group is potentially sitting on 100bn barrels of oil, it is not making a penny at the moment. Investors who buy today are taking a punt that all will go according to plan, so pore over its reports and make sure you understand the risks. It could be ready for take-off.

Well, well, well

Its 2018 programme will start the moment it has discharged Surrey’s pre-commencement conditions, expected by the end of this winter. Then we have to wait to hear if its wells are commercially viable. I am optimistic but cannot give you a definitive view, even Stephen Sanderson cannot know for sure. UKOG remains a gamble.

That is the risk you take in this sector, so manage it carefully. But you can eliminate other risks, such as overpaying. The price slide of the last three months reduces that risk. Watch UKOG over Christmas, it might slide lower still. Just be sure to buy before the next spike, not directly afterwards.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. 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.

Is UK Oil & Gas Investments plc your opportunity to make a million?

Rupert Hargreaves — Sun, 17 Dec 2017 07:30:55 +0000

UK Oil & Gas Investments (LSE: UKOG) has racked up the best performance of any AIM stock this year. After starting the year trading at around 1.6p, by the beginning of September, investors were sitting on gains of 480% as excitement about the firm’s prospects began to build.

Unfortunately, since reaching this high point, the shares have since fallen back. Still, even after this decline, the shares are still up 140% year-to-date, and over the next few years, even more significant gains could emerge.

Investing in the future

The last time I covered UKOG, the company had just suffered its second significant setback in as many months. The latest problem was related to the cement bonding within the Broadford Bridge well at its Kimmeridge play, which indicated that the well was not connected efficiently to “much of the best open natural fractures” in the Kimmeridge. This issue followed a notification that the firm had abandoned its first Bradford well after sections were washed out.

These issues, while not terminal, have been costly to fix and have set back the firm’s drilling timetable.

Overall, 2017 has been something of a washout for the group, although it has by no means been a disaster. Next year, management plans to build on the firm’s successes (and failures) and push ahead with drilling.

Last month, the company raised £10m from a group of investors fully funding it to deliver the “planned drilling and testing programme through 2018.” Following this fundraise, UKOG has raised a total of £16.5m during 2017, which should be enough to take it to first commercial oil production by 2019.

High risk, high reward

There’s speculation that UKOG’s Broadford Bridge site in the Weald Basin is linked to the high profile well at Horse Hill (nicknamed the ‘Gatwick Gusher’ with reserves of as much as 100bn barrels of oil projected), near Gatwick Airport. And if this is the case (and if the company can extract these resources) then I believe the shares could produce enormous returns for investors during the next few years as drilling taps this vast resource.

But UKOG is not a risk-free play. Dilution is the most prominent risk investors face. The recent £10m loan attracts 0% interest but can be converted into new ordinary shares in tranches of not less than £250,000, with a limit of £3m per quarter. Since the loan was announced in mid-November, £2m worth of ordinary shares have already been converted.

This dilution is concerning, but in the grand scheme of things, if UKOG does strike oil, it’s not the end of the world. In fact, if the company can extract just a fraction of the 17.1bn barrels of oil it believes are hidden within its Weald Basin licence interests, the shares could be worth multiples of their current value.

If everything goes to plan, shareholders should have much more clarity on the company and its outlook by the end of next year, as management targets production in 2019.

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UK Oil & Gas Investments plc could still make you brilliantly rich

Rupert Hargreaves — Sun, 15 Oct 2017 08:15:40 +0000

It’s been a rough week for UK Oil & Gas Investments (LSE: UKOG). Since Monday, shares in the shale oil company have fallen by 28% due to problems at its Kimmeridge play.

On Wednesday, the company revealed that it had encountered problems related to cement bonding within the Broadford Bridge well at the Kimmeridge play. These issues indicate that the well is not connected efficiently to “much of the best open natural fractures” in the Kimmeridge. “Therefore, the testing to date has not properly evaluated the full flow potential of the overall Kimmeridge reservoir sequence,” UKOG said in a statement.

As a result, the company is having to conduct an unplanned workover to fix the problem. Management hopes that after the work is complete, the company will be able to get back on track.

This is the second major setback for UKOG in as many months. Indeed, two months ago the company confirmed that it had permanently abandoned the first Bradford well after sections were washed out and it had drilled a sidetrack well, called BB-1Z.

The company had been expecting to be testing oil flows by now, and while some light oil has been produced, it’s nowhere near enough to be able to accurately evaluate the full flow potential of the overall Kimmeridge reservoir sequence.

Time to bail out?

This week’s negative newsflow has clearly shocked investors. It was only four weeks ago UKOG was riding high on the news that it had struck oil at its Broadford Bridge site in the Weald Basin. It was believed that this find is linked to the high profile well at Horse Hill (nicknamed the “Gatwick Gusher” with reserves of as much as 100bn barrels of oil projected), near Gatwick Airport. The shares rallied to an all-time high of just under 9p off the back of this news.

The one thing the market hates most is uncertainty. Right now, UKOG’s future is extremely uncertain. Problems at the well-head have raised the question of whether the company will have to ask shareholders for yet another round of funds to keep the lights on.

The last time the firm raised funds was in May. Managment raised £6.5m through the placing of 812,500,000 new ordinary shares at 0.8p.

There’s been no mention of the cash burn rate within reports issued over the past few months but its likely that drilling activities have already consumed most of these balance.

High risk, high reward

Despite all of UKOG’s problems, I believe that the company could still produce enormous returns for investors. It’s all a question of risk and reward.

Oil & gas exploration and production is a risky business and companies often go under chasing relatively small, high-cost projects. UKOG, on the other hand, is pursuing a low-cost, high-reward project. If only a fraction of the estimated barrels are recoverable from its prospects, the rewards could be enormous for the £171m market-cap company.

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Rupert Hargreaves does not own any share 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.

Are these two small-caps AIM’s top growth stocks?

Rupert Hargreaves — Mon, 26 Jun 2017 11:46:00 +0000

Shares in UK-based UK Oil & Gas Investments (LSE: UKOG) jumped by as much as 25% in early deals this morning after the company announced that it had made a significant oil discovery at its Broadford Bridge-1 exploration well in the PEDL234 Licence, Weald Basin, UK.

Today’s findings are the latest in what has been a string of good news for the company, which is currently conducting a drilling programme in the Weald Basin.

Management reported this morning that a recently drilled core section showed mobile light oil seeping from multiple sections of KL4 calcareous shales and limestones throughout. Further, wet gas readings maintained high levels throughout the coring, almost identical to that seen at the Horse Hill-1 oil discovery, 27 km to the northeast from Broadford Bridge-1. According to the firm, this development, coupled with other findings at Horse Hill-1 means there’s a possibility that an oil reservoir 600 to 700 ft thick has been discovered.

Another recent production test at Horse Hill yielded nearly 1,700 barrels of oil per day, marking it among the very best exploration well results ever in Britain’s onshore oil industry.

High risk, high reward

Of course, as with all early-stage oil and gas development, there is much to be done before UK Oil & Gas can begin production from this prospect. And no matter how positive the well results might seem, there are still plenty of risks ahead.

Still, recent updates from UK Oil & Gas show that the company is operating its current drilling programme on time and on budget, which gives me confidence in the company’s outlook. A lack of fiscal discipline is generally the reason why small businesses tend to fail.

It’s clear that this company has tremendous potential, but as with all small-cap oil companies, there’s no guarantee the business will ever reach its full potential.

Can’t keep up with demand

Shares in Africa-focused business Victoria Oil & Gas (LSE: VOG) also ticked higher this morning, but have since given back most of their gains after the company announced that it had extended its gas supply agreement with ENEO Cameroon S.A.

According to today’s press release, the extension will allow Victoria to “optimise all technical and financial elements of a long-term gas supply arrangement aimed at increasing the current contractual power supply of 50MW to beyond 100MW.” A fixed off-take price of $7.50/mmbtu has been agreed between parties. This agreement should help support Victoria’s rapid growth rate. The company believes there’s demand in Douala region in Cameroon for more than 150mmscf/d per day of gas, more than it can supply, so management is trying to agree on licenses with third parties.

City analysts are expecting Victoria to report its first sustainable profit this year, with earnings per share of 4.6p expected. Analysts have pencilled-in a similar figure for 2018 although as management takes advantage of the huge untapped market for gas within Cameroon, I wouldn’t rule out positive earnings revisions. Nonetheless, like UK Oil and Gas, as a small-cap energy company, Victoria might not be suitable for all investors due to its size and relatively young age.

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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. 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.

Should You Buy Today’s Winners Legendary Investments plc (+17%) And UK Oil & Gas Investments PLC (+13%)

Rupert Hargreaves — Mon, 11 Apr 2016 11:03:54 +0000

Shares in Legendary Investments (LSE: LEG) have jumped higher by as much as 24% in early trade this morning, adding to gains made over the past few weeks. Year-to-date the company’s shares have gained around 170% as investors have once again started to buy into Legendary’s growth story.

2015 was something of a transition year for Legendary. Throughout the year, its shares traded in a tight range of 0.07 to 0.1p. However, at the end of 2015 the company received a boost when Moongpig.com creator Nick Jenkins paid a substantial premium to purchase a stake in Virtualstock Holdings.

A key investment

Virtualstock is one of Legendary’s key investments. The company owns a 7% stake in the inventory and order management software firm, which counts the NHS as its primary client. Nick Jenkins acquired a “small stake” in Virtualstock, which sent the firm’s value up to £58m, a substantial premium to the previous valuation of £25m. Legendary’s stake in the company was subsequently revalued up to £4.1m, approximately 50% of Legendary’s current market cap.

And Virtualstock has continued to expand, winning two new contracts with leading retail clients earlier this year. As Virtualstock continues to expand, the company’s valuation will follow suit and Legendary’s investors will reap the benefits. That being said, Legendary is still a highly speculative investment vehicle, and while the company’s shares are heading in the right direction today, there’s no guarantee this will continue to be the case.

Key report

UK Oil & Gas (LSE: UKOG) is heading higher today after the company revealed at the end of last week that it has commissioned a report to be published by Ernst & Young to assess the potential impact and benefit of tight oil extraction from the Kimmeridge limestones. The report hasn’t yet been published, but it’s clear how important the findings of this report could be for the company and its shareholders.

2016 is already shaping up to be a transformational year for UK Oil & Gas. The company has a number of assets across the south of England, several of which are already producing oil and revenue for the group, but the asset that’s attracted the most attention this year is the Horse Hill license. Recent testing has shown that the three intervals within the Horse Hill-1 well have produced a final aggregate flow rate of 1,688 barrels of oil per day. This is a flow rate that could generate hefty profits for UK Oil & Gas as it holds a 30% stake in Horse Hill Developments.

Nonetheless, UK Oil & Gas remains a speculative play on the UK’s fledgling onshore oil industry. If everything goes to plan, then the company could see its share price double or even triple from current levels. However, all early stage oil projects and oil companies are highly risky – this isn’t a sector for widows and orphans.

The post Should You Buy Today’s Winners Legendary Investments plc (+17%) And UK Oil & Gas Investments PLC (+13%) 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.