Oil and gas minnow has big plans

 

If you followed the initial fortunes of Victoria Oil & Gas (VOG), then you might be familiar with the name of William Kelleher.

He is one of the founders who floated the company on AIM in 2004, taking its market capitalisation to over £300 million at one stage from an initial market cap of just £12 million.

Kelleher left the company in January 2007 after spending over 10 years in the former Soviet Union to join his family in the US.

Last month he, along with fellow directors George and Peter Sztyk floated AIM minnow New World Oil & Gas (NEW) at 5p a share, initially as a cash shell looking for deals in undervalued or underdeveloped oil & gas companies in Central and South America as well as in Eastern Canada.

New World Oil and Gas PLC chart

New World raised £3 million gross, of which the clients of Optiva Securities, the firm I work for, secured a significant stake in the company, with New World now valued at £6.3 million based on yesterday's closing price of 8.375p.

Even though the shares are up 67 per cent from the placing price, there could be significant upside if New World can sign similar deals to the one it has just agreed in Belize, where it has engaged in a non-binding Letter of Intent to invest in two oil concessions in North-West Belize, namely Blue Creek and Blue Creek South, subject to due diligence.

A few days ago the company announced that RPS Energy penned a Competent Persons Report (CPR), which stated that the new concessions are in a highly prospective area, albeit early stage given the close proximity and structural similarity to the recently discovered 'Spanish Lookout' and 'Never Delays', which are both said to each possess circa 25 million barrels of oil in reserves.

The shares are very tightly held with 78 per cent of the stock in the hands of significant shareholders, leaving just 22 per cent as free-float.

Last Thursday, 17 per cent of the issued share capital was traded following the CPR and if New World decides to enter into a definitive transaction, it could signal the beginning of similar deals across the aforementioned regions to come.

Note that the company has issued 60 million warrants at 10p, which might temporarily put a lid on the share price if some placee shareholders decide to cash-in their profits and retain their interest through warrants.

Additionally the company has been open to the fact that it may look to raise additional capital in six to 12 months time should it decide to carry out any drilling on its prospects.

Hopefully this should be at a significantly higher price if Kelleher and his team can maintain the current deal and/or news flow momentum.

Update

Circle Oil (COP) – tipped as a buy at 33p, the stock closed at 33.25p – the company announced significant increases in its oil and gas resources in Egypt and Morocco last Wednesday but the stock appears to be held back by other issues, possibly because of Gaddafi's 17.5 per cent stake. Should Gaddafi fall or become imprisoned by Western forces, arguably the shares may re-rate to the upside, as the Treasury is likely to come under pressure to auction the Libyan stake.

4Imprint (FOUR) – tipped as a buy at 271.5p, the stock closed at 284.75p. Continue to hold.

Bezant Resources (BZT) – tipped as a buy at 37.75p, the stock closed at 40.25p: keep holding in anticipation of a sale of its Mankayan project in the Philippines.

Immupharma (IMM) – tipped as a buy at 87p, the stock closed yesterday at 81.875p. Continue to hold as we await trial news about its Lupus treatment, Lupuzor.

Hambledon Mining (HMB) – tipped as a buy at 4.875p, the shares closed yesterday at 4.375p. Continue to hold, despite the small cap malaise as we await further drilling news at its Sekisovskoye concession in Kazakhstan.

Biofutures (BIP) - suggested to buy at 6p, the stock slipped to 4.25p – continue to hold for now, despite the poor performance.

GTL Resources (GTL) – suggested to buy at 88.5p, the stock closed at 75.5p yesterday. Results should be out by the time you read this and may have a bearing on how we view the company. Will update next week

Globo (GBO) – suggested as a buy at 17.25p, the stock closed yesterday at 23.625p. Continue to hold.

Optare (OPE) – tipped as a buy at 3p, the stock closed yesterday at 3p: Continue to hold as we await contract news.

Lochard Energy (LHD) - tipped as a buy at 15.13p the stock closed at 12.375p. Continue to hold as the company approaches production stage in Q4 this year through its 10 per cent exposure to Athena which should net Lochard 2,200 barrels of oil per day, or almost $100 million a year in revenue based on $120 a barrel oil price (Brent Crude).

ZincOx (ZOX) – tipped as a buy at 60p, the stock closed at 63.5p. Just over a month ago, the directors announced various stock purchases between 53-54p amounting to circa £159,000, which bodes well for confidence in its prospects. Hold for now.

GB Group (GBG) – suggested to buy at 36.75p, the stock closed yesterday at 41.5p. GB Group delivered excellent preliminary results, announced a strategic alliance with a Canadian partner and upped the dividend. Continue to hold

SocialGo (SGO) – suggested to buy at 3.55p, the shares closed yesterday at 1.65p. The shares were blasted after a sell recommendation by two tipster magazines, albeit the company says that sales are in line with management's expectations and that version 2 will be launched this summer (a slight slippage from June). Keep holding despite the disappointment.

Active Energy (AEG) – suggested to buy at 6.13p, the stock closed yesterday at 3p. The company is due to release its final results soon. Having already suggested to sell half at 6.625p, the company raised £1.8 million at 2.75p to help, initially, fund Red Line Engineering's quest to win lighting management business with the London Underground. Sit tight for the balance and await developments.

Edenville (EDL) – mentioned as a buy at 1.1p, the stock closed yesterday at 0.845p. Having already suggested to sell one's investment stake out at 2.51p, the balance should be in for free. The company will commence drilling at its Rukwa coalfield in July. Continue to hold.

Weatherly International (WTI) – suggested to buy at 8.1p, the shares closed yesterday at 8.5p. The company will be completing feasibility studies at its Tschudi copper-silver project along with the Berg Aukas lead-zinc asset in Namibia. Continue to hold or buy on weakness.

Toumaz Holdings (TMZ) – tipped as a buy at 8.625p, the stock closed at 6.875p. Continue to hold as the company addresses some time and cost saving technology as well as making life much easier for patients with wireless nodules contained in the plasters it provides.

Renewable Holdings (REH) – tipped as a buy idea at 15.25p, it closed yesterday at 15.25p. Its Carnegie Wave Energy investment, in which it holds 25.8 per cent of it, is starting to show commercial success in its trials and this could lead to a much larger deployment further down the line as it showcases its wave energy installation.

Bowleven (BLVN) – tipped as a buy at 177.25p, the stock closed at 322.25p yesterday having already suggested to sell half the investment after it doubled several months back. Hold the balance for now.

Tissue Regenix (TRX) – suggested as a buy at 16p, the stock has picked up from its lows and is now trading at 12.125p. Further positive trial studies of its dCELL combined with its £5.9 million in cash suggest we may have seen the bottom on this stock.

The material for this report comes from Sharescope. The writer does not hold any shares or derivatives in the above mentioned companies except Globo and SocialGo. Some clients of Optiva Securities may hold shares in the above named mentioned companies.