The unconventional oil group Tomco Energy (LON:TOM) built on the 22% gain it posted on Monday by advancing a further 5% on Christmas Eve as the market continued to digest a potentially breakthrough announcement.
It came not from the company itself, but neighbour Red Leaf Resources, which secured a groundwater discharge permit from the authorities in Utah.
It means Red Leaf is able to move forward with the construction phase of its Seep Ridge Project in the state, next to Tomco’s Holliday Block.
The American firm is effectively a pathfinder, with AIM-listed Tomco expected to submit its groundwater discharge application in the first quarter of 2014.
The pair are targeting shale oil, which shouldn’t be confused with oil shale as it is mined rather than drilled and fracked.
TomCo and Red Leaf aim to do this using the EcoShale in-capsule process, which gently heat-separates the oil.
Any success Red Leaf and its joint-venture partner Total has establishing this commercially unproven technology works will have a direct and very positive impact on Tomco.
It effectively de-risks the opportunity and assigns a far higher value to the JORC compliant 126mln barrels of oil estimated to be contained within the Tomco’s Holliday block.
And there is a belief, among investors at least, that Total may swoop to tie up this entire corner of Utah and the process if EcoShale works.
The small-cap specialist Beaufort Securities repeated its ‘speculative buy’ rating on the stock, calling the Red Leaf water groundwater permit a “breakthrough development”.
At 9am, shares in Tomco were changing hands for 1.48p, up 0.07p and valuing the group at £27.6mln.