Oil explorers Rockhopper, Encore, Nautical and Premier strike black gold...
These past 24 hours have been extraordinarily rewarding for some investors in small-cap oil producers and explorers. Indeed, some of these shareholders have struck it seriously rich in recent weeks.
Rockhopper rockets again
Shareholders in Rockhopper Exploration (LSE: RKH) -- the North Falkland Basin oil and gas explorer -- have had a wild ride recently.
Since announcing an oil find in its Sea Lion prospect, Rockhopper's shares have enjoyed an incredible run. Indeed, they are up an astonishing 738% in the past month alone. Today, there was even more fun for Rockhopper fans, as it the company -- named after a breed of penguins found in the Falkland Islands -- upgraded its forecasts for potential oil reserves at Sea Lion.
This announcement, which also hinted of further upgrades, sent Rockhopper's shares soaring once more. As I write, they are up a third (33%) at 320p, having hit nearly 370p earlier today.
Rotten Rockhopper rumours
Alas, something shocking happened to Rockhopper's share price on Wednesday. At around 12.30pm that day, a false rumour circulating around the City and Internet discussion boards caused Rockhopper's share price to fall off a cliff. This untrue report claimed that the oil discovered at Sea Lion well 14/10-2 was low-grade heavy oil, making it commercially unviable to extract.
Having opened at 265p, RKH's share price plunged as low as 110p (down 58%) before bouncing back to close at 240p after the oil firm issued a statement on Wednesday afternoon denouncing the false allegations. This is as good an argument as any for ignoring market tittle-tattle and not using stop-losses when holding volatile shares!
Today's announcement confirmed the Sea Lion find was indeed medium-gravity crude oil -- and a commercial prospect even were the oil price to fall to $50 a barrel. Independent evaluator RPS Energy has raised its estimate for recoverable reserves from Sea Lion to 242 million barrels from 170 million barrels.
The shares of other Falklands-based oil explorers also leapt on this news. As I write, Borders & Southern (LSE: BOR) is up 11% at 75p, Desire Petroleum (LSE: DES) has shot up 27% to 104p, and Falkland Oil & Gas (LSE: FOGL) is ahead 10% at 205.5p.
For more on high-risk, high-reward oil exploration off the Falklands, read this excellent article by Fool stalwart Hallucigenia.
Black gold in the North Sea
Yesterday afternoon, the excitement was much closer to home, as an oil find in the North Sea sent the share prices of three oil explorers soaring.
At 2pm yesterday, stock-market tiddler Nautical Petroleum (LSE: NPE) announced a significant discovery of light oil at the Catcher well located in UK Central North Sea block 28/9. Nautical owns a 15% share of Catcher, but its shares were a little slow to react to this announcement. However, by the 4.30pm close, they had almost tripled, soaring 174% to close at 138p.
As I write, Nautical's shares are down 5p to 133p, although one broker estimates they could go as high as 300p in a best-case scenario.
The second firm to benefit from the Catcher news was Encore Oil (LSE: EO), another 15% partner and the operator of the well (which may hold 25-50 million barrels of high-quality oil). Encore's shares gushed 85% to close at 30p, but are down 0.5p as I write.
The major partner in Catcher also did well from this news. Shares in FTSE 250 member Premier Oil (LSE: PMO) -- which owns 35% of the prospect -- rose 6% yesterday to £11.98, giving the company a market value just short of £1.4 billion. As I write, its shares have firmed 11p to £12.09.
Keep an eye on your gains
My congratulations to those brave shareholders in frontier drillers as they enjoy triple-digit returns in just days or weeks. However, I'd keep an eye on your gains -- and further news on this sector -- by visiting our popular Oil & Gas - Companies discussion board.
More from Cliff D'Arcy:
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