Small cap movers: New World lights touchpaper

By This Is Money
Updated: 10:06 EDT, 10 June 2011

Proactive Investors' small-cap specialist Jamie Ashcroft looks at a busy week for New World Oil & Gas, and big gains for LED International...

Frenetic week: New World hopes to complete the acquisition of Blue Creek in a few weeks

It has been a frenetic week for the AIM newcomer New World Oil & Gas - which doesn't actually own an asset yet – as the shares chalked up an 88% rise.

The oil-focused cash shell, fronted by former Victoria Oil & Gas man Bill Kelleher, completed its listing on May 11 with a £3m placing.

It is now carrying out due diligence on the Blue Creek project in Belize and on Tuesday it opened formal negotiations with the project's current owners.

But it was Thursday's independent study by oil consultants RPS Energy that really lit the blue touchpaper.

The report highlighted the potential of Blue Creek, which lies in very close proximity to four productive oilfields.

Kelleher described the RPS verdict as highly encouraging. He now hopes to complete the acquisition of Blue Creek in the next few weeks, before kicking off a seismic exploration programme.

Starting the week at 5.7p, the stock is currently trading at 7.82p.

Across the broader market it has been quieter. Indeed the FTSE AIM 100 index has barely twitched in the past five days.

At midday the main small-cap index was down just 4.2 points on the week, standing at 4,025.10.

'It's been a quiet week for small-caps, and the market in general,' said Tim Freeborn, an analyst at small-cap specialist Xcap Securities. 'Volumes remain low.'

On a stock by stock basis, however, there's still been plenty to hold investors' attention. Friday's top riser was LED International whose shares rocketed 82% to 1.05p after it won an energy management contract.

Another high-flying stock this week was Global Energy Development. The shares (down 7.25p today at 83p today) soared 66% on Wednesday. This was in response to a work-over programme designed to clear up bottlenecks which doubled oil production in Colombia from 1,100 to about 2,200 barrels a day.

Charlie Sharp at City firm Matrix Capital reckons this production uplift should provide a launch-pad for a busy period of operational activity.

'In the past few months GED has been successfully getting on with its operational programme to increase production and prepare for the key 3D seismic programmes in Colombia,' the analyst said.

Meanwhile, closer to home a group of AIM-listed explorers moved nearer to unlocking the potential of known, but undeveloped, oilfields off the coast of Ireland.

On Thursday Providence Resources (down 4p at 242p today), along with its partners Lansdowne Oil & Gas (flat at 18.8p) and San Leon Energy (down 0.75p at 29.75p), began work on a seismic survey on the Barryroe oil discovery as a pre-cursor to drilling a high-impact well this summer.

Barryroe is the first in a series of undeveloped oil discoveries, largely ignored since the 1970s, but it could now spark a whole new oil and gas industry in the waters surrounding the emerald isle.

In the clean-tech sector SeaEnergy (up 2.42p today at 33.8p) agreed a deal to sell its wind-farm development business to a subsidiary Spanish oil giant Repsol. However, the £30m deal disappointed the market.

On Monday frustrated investors peppered the internet's bulletin boards with negativity whilst selling the shares down from 69.5p to 36p, valuing the stock at about £25m - less than the amount of cash it will net from the sale.

Innovise Group (down 1.05p at 14.45p today) was another notable faller as it shed a third of its market value on Tuesday and called time on its AIM listing, telling investors it is just too pricey to maintain a stock market presence.

Leed Petroleum, meanwhile, dodged liquidation this after its main creditor released it from its obligations relating to an unpaid loan. Leed sold its oil assets in the Gulf of Mexico nearly three weeks ago. Now its AIM listing is the firm's only asset but crucially it no longer has any liabilities either.

The plan is to re-capitalise it as an investment business with a £2m issue of convertible loan notes.

Elsewhere several other new ventures are coming to the AIM market. A few of the week's notable ones were social media investor Jellybook, iron ore explorer Strategic Minerals, Polish shale-gas firm 3Legs Resources and African agri-business Zambeef Plc.

'They are getting in before the summer market lull,' one trader said.