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Views From The Trading Floor Thursday 19th January

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Saints & Sinners 

  

Oil & Gas 

 

President Petroleum (LON:PPC) the oil & gas exploration and production company, with assets in Argentina, jumped 16% higher to 41p before the start of lunch. The company  announced it had found oil at the Pozo Escondido Field in northern Argentina. The field is estimated to hold approximately 20 million barrels of oil, but following a petrophysical review of old wells there, the company said it could hold an additional 50 million barrels. The company expects to start drilling a second well at the field shortly. Retail investors helped the stock trade 6 times the average daily volume by lunch. Even after this move higher, the stock is still a long way off its high from this time last year of 80p.

 

Mediterranean Oil & Gas (LON:MOG) continued its rich vein of volume, trading another 20 million shares by lunch. That was on top of the 59 million shares traded from yesterday. Retail investors got the bit between the teeth, on speculation a large seller had been cleared up. First thing this morning they got the confirmation of that, along with an announcement  that said “the gas sales contract between its subsidiary Medoilgas Italia SpA and Elettrogas SpA covering the entirety of the company's net gas production from the Guendalina gas field, has been transferred to the Italian utility Energetic SpA, commencing on and from Feb. 1.” Shares traded as high as 5.25p (+12%) during the day. The stock is a long way from its 23p high this time last year. One for the watch list.

 

Sticking with the, huge volume that could equate to a large seller being cleared theme, Petroneft Resources (LON:PTR), a stock that tends to trade approximately 1 million shares a day, the 35 million shares traded before I had finished my lasagne did happen to catch my eye. The shares are a long way from the lofty heights of 70p back in January 2011. The last operations update was back on the 6th of December when the company said “An additional five well hydraulic fracturing program planned on Pads 1 and 2 in January / February 2012.” So we will be watching this one for any developments.

 

Caza Oil & Gas (LON:CAZA) the Oil & Gas exploration company, with assets in south and central United States, has been drifting easier since its last update in November. Volumes have been slow and the stock has been rather uneventful. Support does look to be at 9p and scanning the RNS from the 15th of November last year I came across this little snippet “Caza has five additional proven undeveloped locations to drill on the San Jacinto property. The next two wells on this property were planned for the fourth quarter of 2011, however, the scheduling of these wells may be subject to change in the context of a more comprehensive drill plan for 2012.” Now unless I have missed an update, the two wells planned for the San Jacinto last year never materialised. The stock was trading at 25p this time last year, so a fair way off those lev els here at 9p. I will be watching this one carefully to see if we get any update on when these are planned for. 

 

Tower Resources (LON:TRP), which has been rooted to 3p for some time, finally broke out with decent volume to boot. The stock traded as high as 3.44p up 15% around lunchtime. Possibly retail investors are positioning ahead of this little snippet from the last RNS “Tower's wholly owned subsidiary, Neptune, has reached agreement with all interested parties to use the OGEC K900 drilling rig, currently committed to Tullow, to drill Mvule-1. It is planned that site preparation will begin shortly with a view to spudding the well by the middle of February 2012. The well is anticipated to reach a total drilled depth of about 600 metres within two weeks of spud. The well is testing estimated recoverable resource potential of 80 million bbls.” One for the watch list.

 

Kea Petroleum (LON:KEA) kept on running today, pushing another 16% higher during the trading day to 5.75p. Volumes have continued to catch the eye compared to historical trading volume, and I am a firm believer that volumes are a big indicator. Bulletin boards were awash with possible reasons for the move, but I would not be surprised if the reason behind it was the potential spudding of the Mauka-1 well.

 

Gasol (LON:GAS) moved a touch better today, pushing 3.3% better to 0.44p by lunch. The volumes were the eye catcher here, trading 2.3 million by early afternoon. For a stock that trades a few hundred thousand a day 2.3 million is a decent day of trading.

 

Mining

 

Not sure where to start with the mining sector, what a day for movers and shakers! I will start with Afferro Mining (LON:AFF) the iron ore development company, with projects in West Africa, has been on an almighty run recently. The stock has moved from 50p to its high of the day today of 81.5p (+18%).  The volumes have been steadily increasing over the last week or so as well. I can’t see that any updates are due from the previous announcements, so we will be interested to see if anything materialises as the reason for the run.

 

Yesterday I highlighted, if Berkley Mineral Resources (LON:BMR) could break through its resistance at 3.5p, a test of 4p could well be on the cards. Well we saw exactly that test of major resistance of 4p by midday on huge volume of 25 million shares. I would be interested to see if these can break and close above the 4p level, if they can, then 4p could well act as the new support and 4.6p would be the next major resistance. If they can’t break the 4p level then 3.5/3.6p could be the support once again.

 

Arian Silver (LON:AGQ) continued to bounce again today, trading as high as 17.7p (+10%) during the trading session. The stock has bounced a little since it gave an encouraging exploration update at its asset in San Jose. This is another stock that is a long way from its high this time last year. Back in July 2011 the stock was trading at 44p, so a long way from that level here at 17p. First line resistance is 18p, if the stock can break that, 20p could be the next major level of resistance.

 

I spoke yesterday about the move in Frontier Mining (LON:FML). The volumes continued to catch the eye today, trading 10 million shares by the end of lunch, pushing 25% higher to almost 4p at that time. 3.5p was the resistance level to watch for, and the stock smashed through that early on in the trading session. 4p is the next level of interest, a break and close above that could see a test of resistance at 4.4p, and the previous resistance at 3.5p could act as a support level now.

 

Punters favourite Baobab (LON:BAO) started to move better today, trading 5% higher to 15.75p during the trading day. Volumes here have been edging higher, and resistance at 16.6p could be the next area of interest. Reading the RNS from the 7th of December last year it highlighted “Drilling programmes at the contiguous Tenge deposit are all but concluded, with 24 drill holes completed for an aggregate total of c.4,500m. Drilling is defining a substantial package of mineralisation, approximately 120m thick, that comprises a significant portion of the 100m high Monte Tenge and dips shallowly towards the west. Initial analytical results are expected during December with a resource statement scheduled for February 2012.” As we edge closer to February, I will be watching the news wires for this update.

 

Another stock I have been sifting through previous announcements in, is Sunrise Resources (LON:SRES). The stock has fallen asleep recently, and volumes today started to pick up. The RNS from the 12th of January said “The drill core from the programme has now been sampled and core samples submitted for analysis. Geological logging of the drill core is being completed and results will be evaluated together with down-hole survey data to allow more detailed information to be released after assay results become available later this month.” The last line of the statement is the one that interests me, and might explain the slight tick up in volume. I will be watching the news wires for any signs of the update.

 

Uranium Resources (LON:URA) traded almost 10 times the average daily volume by the end of lunch, which caught my eye. Looking through the RNS from the 20th of December I found this little snippet “The Company plans to carry out an in-depth interpretation of the 2011 results and conduct a more detailed field study at Gundua in early 2012 with a view to localising mineralisation and generating drill targets.” The stock was trading as high as 6p back in January 2011, a fair way from the 2p mid-price of today.

 

From the trading floor

 

A slightly better day of volume and activity all round today. The FTSE 100 was trading 23 points better at 5725 (+0.41%) at the time of typing, on volume of nearly 800 million shares. The FTSE AIM All-Share index was again the leader in terms of volume, with over 1.1 billion shares changing hands by the end of lunch.

 

The Society of Motor Manufacturers and Traders (SMMT) said that manufacturing had ended the year with a 1.6% rise in December, producing a total of 1,343,810 vehicles in the year. They also said that record exports had been a catalyst for the growth, with more than 80% of vehicles were exported.

 

Offshore drilling in the UK had fallen by a third in 2011 according to Deloitte. They highlighted that 49 new wells were drilled in the UK Continental Shelf (UKCS) in 2011, compared with 74 in 2010. They highlighted the current economic climate and delays in rig availability as possible reasons for the fall.

 

US Consumer Price Index (CPI) and Housing Starts were on the economic menu across the pond today. The former hit the wires flat in December versus expectations of a small rise of 0.1%. Housing starts were a little off the pace also, at 657k versus expectations of 680k.

 

Commodities Corner 

 

Gold – ↑Trading at $1655, up $7 (+0.41%) 

Silver – ↑Trading at $30.51, up 13c (+0.34%) 

Copper – ↑Trading at $8315, up $127 (+1.55%) 

Zinc – ↑ Trading at $2022, up $21 (+1.05%) 

WTI Crude – ↑Trading at $101.43, up 95c (+0.94%) 

Brent Crude – ↑Trading at $111.21, up 52c (+0.47%) 

Natural Gas (HH) – ↓ Trading at $2.41, down 5c (-2.39%) 

 

FX 

 

GBP vs USD = 1.5436

GBP vs EUR = 1.1981

 

 

 


Written by Steven Asfour, Sales Trader at Fox-Davies


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