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Views from the Trading Floor - 27th February 2012

Published: 16:54 27 Feb 2012 GMT

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Saints & Sinners
 
Oil & Gas


Red Emperor (LON:RMP) jumped 5% to 21.5p on huge volume of 16 million shares after the company announced a placing, of 38,472,204 new ordinary shares at 18 pence per share, raising GBP6.925 million before expenses. Placing Shares will rank pari passu in all respects with existing ordinary shares in the Company. Placing provides additional funding to progress the current exploration programs in Puntland and Georgia, business development opportunities and working capital. Puntland Shabeel-1 well already at a depth of 1,230 meters and Georgia Namakhvani well expected to spud in mid April 2012. Supprt looks to be around the 19p area, with resistance not looking to kick in until 25p.


Max Petroleum (LON:MXP) jumped out the traps in early trading, pushing almost 4% better to 14.75p, before retreating with the broader market down to 14p. Shares were active after the company said the inclement weather in Western Kazakhstan hasn't had a material impact on its operations to date and it will continue to monitor the situation and work to mitigate any potential material adverse impact in the future. Western Kazakhstan has experienced unusually severe winter weather conditions over the last several weeks including heavy snowfall and high winds, which has on occasion prevented the trucking of oil and the resupply of more remote drilling an d production operations in the Blocks A&E License area in the Pre-Caspian Region. SAGW-3 appraisal well in the Sagiz West Field has reached a total depth of 1,486 meters, with electric logs indicating 15 meters of net oil pay at depths from 1,201 to 1,254 meters. Reservoir quality appears very good with porosities ranging from 15% to 25%. 15p looks to be the first line of major resistance here, with 13p looking to act as support.


After the rush up in Bowleven (LON:BLVN) from 120p to 136p on Friday after the Cove Energy counter bid, it was no surprise to see a few profit takers show up to the party, knocking the stock 6p easier to 129p. The market is still waiting for the volumetric study that could give a guide as to the potential price Dragon Oil would have to pay.


Lansdowne Oil & Gas (LON:LOGP) pushed 14% higher to 40p in early trading after the company said it welcomes the announcement today of an operational update by Providence Resources plc. (LON:PVR) on the on-going joint-venture well operations in the North Celtic Sea. The 48/24-10z Barryroe appraisal well is located in c. 100 metre water depth, c. 50 kilometres offshore Ireland in Standard Exploration Licence (SEL) 1/11 in the North Celtic Sea Basin. Providence (80%) operates SEL 1/11 on behalf of itself and partner Lansdowne. 40p has proven to be a stubborn resistance level for these in the past, so any break and close above could be seen as a very bullish sign.
Tower Resources (LON:TRP) moved 6% higher to 3.1p in early trading, as the shares rebounded from the recent disappointing Mvule-1 well update. Tower Resources raised £5.4 million at 3p back on the 9th of February, so it would be no surprise to see the people that pumped money in at the 3p level, continuing to support the stock at these levels.


Gasol Plc. (LON:GAS) jumped 33% to 0.52p during lunchtime trading, and on huge volume of 20 million shares. Now for a shares that tends to trade only a few million shares, 20 million changing hands by the end of lunch does catch the eye. We will be watching this one over the next few sessions to see if anyone reports the volume.
Nighthawk Energy (LON:HAWK) continued its recent bullish run, moving another 18% better to 5.1p. Holders here have seen the price rise from 2.5p to 5.3p over the last few weeks. One snippet from the update on the 9th of February that could be the reason for the recent rise might be “Next month Nighthawk will commence a comprehensive work-over program focussed on 15 existing wells on the Jolly Ranch Project. Two work-over rigs are currently being contracted and are expected on location in March. The work-over program is anticipated to extend through most of the second quarter of 2012, with a total gross cost of approximately US$750,000.” So the marke t could be in store for an update regarding the work-over rig at some point in March. We will be watching the news wires for any sign of this update.


Mining


Bellzone Mining (LON:BZM) jumped 9% to 36p in early trading after the company said it is confident of receiving a mining permit for the Forecariah iron ore joint venture after Guinea's government approved first blasting. Bellzone said the technical aspects of the project have been approved by the ministry of mines and geology and all that remains to start mining are the final permits. Production is anticipated to start by the end of the first quarter. Chief Executive Nik Zuks said: "It is clear that the issue of the mining permit is now a procedural matter. The project will be in production and stockpiling material as planned and on schedule. Bellzo ne, with a cash balance of $145 million, is in a strong position to manage our joint-venture obligations and continue with our operations and development plans. Volumes have been huge over the last few trading sessions here, and if the stock can close above the 34p major resistance, a retest of the 40p resistance could be the next area of interest to watch for.


After the aggressive run up from 9p to 14.5p in EMED Mining (LON:EMED), it was no surprise to see a few short term profit takers showing up in the stock. The shares have been a good market recently as various snippets of speculation have shown up in the Spanish press. All speculation aside, 12p looks to be the first line of major support here, with 14.5p now looking to act as a thin resistance level. As always, we will be watching all the newswires for any update regarding the reopening of  the Rio Tinto copper mine.


Soloman Gold (LON:SOLG) slipped 3% to 9.5p albeit on very thin volume, after the company reported a much widened first-half fiscal 2012 pretax loss due mainly to a A$0.95 million share based payments charge and said drilling continued at two prospects on the Fauro Island Project. Revenue for half year ended Dec. 31, 2011 A$182,717 (2010: A$54,193). Operating loss before/after tax A$2.24 million (2010: A$1.08 million). Loss per share 0.8 cents (2010: loss 0.4 cents). Major support looks to be around the 9.5p level, with 8.5p looking to be the next support line if 9.5p breaks.


Gemfields (LON:GEM) jumped 5% to 25p during early trading after the company said that following its acquisition of a controlling interest in a ruby deposit in the Montepuez district of Mozambique, the government has granted it an exploration and mining license, with production anticipated this year. The company said the mining and exploration rights, which would adding a new gem to its portfolio, cover an area of about 34,000 hectares. It said that mining had previously taken place on a relatively small and informal scale, and that activities will be expanded considerably. 26p looks to be the first major area of resistance to watch out for here, wit h 24p looking to act as support.


Ferrex (LON:FRX) continued its recent rally, pushing another 7% to 3.375p on almost 4 times the average daily volume. The shares have been in bull mode since the beginning of February, and look to be on course for a test of major resistance and all-time high at 3.75p.


From the trading floor


Today was another rather uneventful trading session, with continued worries over the Greek situation, and escalating oil prices. The FTSE 100 slipped 56 points by the end of lunch to 5879 (-0.95%) on thin volume of 400 million shares by the time the US opening bell had rung. The FTSE AIM All-Share was 0.77% lower on volume of 1.2 billion shares.


The Dow Jones put out a story on the newswires that said Exxon Mobil Corp. (XOM) confirmed it negotiated last year exploration and production contracts with Iraq's Kurdistan Regional Government. "Exploration and production activities in the Kurdistan region of Iraq are governed by production sharing contracts negotiated with the regional government of Kurdistan in 2011," Exxon said in its 10-K filed with the Securities and Exchange Commission Friday. The company said the exploration term is for five years with the possibility of two-year extensions, while the production period is 20 years with the right to extend for five years. The confirmation comes after months o f silence by Exxon, which had declined to comment on remarks made by the Kurdistan Regional Government, or KRG, which had said the company signed the deals. The move has infuriated Iraq's federal government, which considers as invalid any deals signed with the KRG, which in turns states that any and all deals it has signed comply with the country's new constitution. Some of the blocks in the Exxon-KRG deal are in a hotly contested oil-rich territory claimed by both the central government and the KRG, stretching from the Iranian border to the east and to the Syrian border in the northwest.


Commodities Corner

 
Gold – ↓Trading at $1773, down $1 (-0.05%)
Silver – ↓Trading at $35.41, down 2c (-0.07%)
Copper – ↓Trading at $8448, down $70 (-0.82%)
Zinc – ↓Trading at $2071, down $12 (-0.58%)
WTI Crude – ↓Trading at $109.03, down 75c (-0.58%)
Brent Crude – ↓Trading at $124.57, down 90c (-0.72%)
Natural Gas (HH) – ↑Trading at $2.58, up 3c (+1.22%)
        
Any questions please don’t hesitate to contact me at steve.asfour@fox-davies.com


Written by Steven Asfour, Sales Trader at Fox-Davies

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