Is Now The Time To Buy Ithaca Energy Inc. & Falkland Oil and Gas Limited?

Are Ithaca Energy Inc. (LON:IAE) & Falkland Oil and Gas Limited (LON:FOGL) a buy after today’s news?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Ithaca Energy (LSE: IAE) announced another strong well testing result today, while Falkland Oil and Gas (LSE: FOGL) said that it had cancelled a planned exploration well in order to save cash.

The market’s reaction suggests that both pieces of news are broadly positive — so is now a good time to buy into Ithaca and Falkland Oil & Gas?

Ithaca Energy

Ithaca has now completed flow testing the fifth and final well in its Stella field. This well was a little different to the other four wells, as it was designed to access the Ekofisk chalk reservoir, which lies underneath the main Stella Andrew formation.

The well appears to have been a complete success and has flow tested at more than 8,000 barrels of oil equivalent per day (boepd). This means that the combined flow test result from all five wells has been in excess of 53,000 boepd — nearly double the initial planned production of 30,000 boepd.

In my view, this confirms that the 30,000 boepd target is realistic and should be delivered promptly when Stella production starts up in 2016.

I have had concerns about Ithaca’s finances, but the firm’s recent results were fairly reassuring and I believe Ithaca could be a strong performer over the next two years — although if oil prices don’t recover by mid-2016, then Ithaca’s debt could become a big issue again.

Falkland Oil & Gas

Falkland Oil and Gas has made headlines recently, after the firm reported that its Zebedee exploration well had found both gas and oil in an area close to the previously discovered Sea Lion field, which operator Premier Oil plans to develop for production.

The firm has now decided, at partner Nobel Energy’s suggestion, to postpone a second well planned for the South and East Falkland basin, in order to save cash and hopefully benefit from lower drilling costs at a later date.

The revised drilling schedule means that after the current well, Isobel Deep, is completed, the next well will be Humpback, in which Falkland Oil and Gas has a 52.5% interest and which the companies believe contains unrisked gross prospective resources of between 250m and 650m barrels.

Falkland Oil and Gas shares have hardly moved following today’s news, but I believe it is positive, focusing the firm on its most prospective drilling targets. Now could be a good time to buy.

Of course, Falkland Oil and Gas remains a highly-speculative stock, as it’s heavily dependent on high-risk exploration results.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Roland Head has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

The Rolls-Royce share price is down 10% since a 52-week high. Is this a buying dip?

H1 results from Rolls-Royce are just around the corner, but what might they mean for the share price? I expect…

Read more »

Investing Articles

5.5% dividend yield! Is this FTSE 100 stock a great buy for dividend growth?

A falling share price has supercharged the dividend yield on this FTSE 100 share. Here's why it could be a…

Read more »

Investing Articles

UK shares: a once-in-a-decade chance to bag sky-high passive income

The FTSE 250 is offering up incredible passive income opportunities right now. Our writer takes a look at one stock…

Read more »

Investing Articles

2 dirt cheap FTSE 100 and FTSE 250 growth shares to consider!

Looking for great growth and value shares right now? These FTSE 100 and FTSE 250 shares could offer the best…

Read more »

Investing Articles

No savings? I’d use the Warren Buffett method to target big passive income

This Fool looks at a couple of key elements of Warren Buffett's investing philosophy that he thinks can help him…

Read more »

Investing Articles

This FTSE 100 hidden gem is quietly taking things to the next level

After making it to the FTSE 100 index last year, Howden Joinery Group looks to be setting its sights on…

Read more »

Investing Articles

A £20k Stocks and Shares ISA put into a FTSE 250 tracker 10 years ago could be worth this much now

The idea of a Stocks and Shares ISA can scare a lot of people away. But here's a way to…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

What next for the Lloyds share price, after a 25% climb in 2024?

First-half results didn't do much to help the Lloyds Bank share price. What might the rest of the year and…

Read more »