Is It Time To Load Up On BowLeven PLC, Falkland Oil and Gas Limited & SOCO International plc?

BowLeven PLC (LON: BLVN), Falkland Oil and Gas Limited (LON: FOGL) & SOCO International plc (LON: SIA) could be nice bargains now.

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With its shares trading down around 24p, BowLeven (LSE: BLVN) is on a market cap only around £80m now — and that’s a company with net asset value per share of more than £1. of course, that depends on the actual realizable value of those book assets, and the firm did take a $76m impairment hit in its latest full-year results to account for the falling oil price and other developments.

But there was $145.3m in cash in the books, and there’s no debt. And chief executive Kevin Hart reckons that “Following completion of the Etinde farm-out we are well positioned with a strong financial foundation to deliver on our strategic objectives“.

Despite the positive outlook, BowLeven’s shares are down 20% in the past 12 months and down 52% over two years. BowLeven seems to have the resources to ride out this low-oil period, and looks to me like it could be a nice longer term bargain.

Atlantic disappointment

Falkland Oil & Gas (LSE: FOGL) shares took a battering after its Humpback exploration well failed to find any commercial quantities of the black stuff, but I think they’re looking a bit oversold now. The post-Humpback crash has knocked 50% off the share price, to just 10.3p today, implying that as much value had been placed on the firm’s previously untested South Falklands possibilities as on its proven North Falklands resources.

It seems wrong to me to place so little value in the firm’s Zebedee and Isobel Deep discoveries, and the likely extent of the North Falklands Sea Lion field, and to apparently completely write off any future South Falklands prospects.

It’s obviously a very risky business, but when overenthusiastic investors come to expect perfect results every time and run for the hills when they don’t get them, that can leave opportunities for the rest of us.

A profitable oily!

If it’s all gloom at BowLeven and Falkland, the mood among SOCO International (LSE: SIA) shareholders seems positively ebullient by comparison, with the shares up nearly 50% since late August — even though interim results on the fifth of that month lifted full-year guidance only a little.

The strange thing about SOCO is that analysts are expecting a dividend yield of around 5% for the full year, though that won’t be remotely met by earnings — and there’s a drop to a more realistic 1.8% on the cards for 2016.

But SOCO is profitable, even if a forward P/E of over 80 might seem a bit eye-watering — though that is set to drop to 40 on 2016 forecasts, and it’s based on current oil prices. When (not if) oil prices rise again, SOCO’s profits should be geared up accordingly and that P/E should drop further. But what’s a good P/E valuation for an oil stock right now? It’s impossible to say really.

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.

Alan Oscroft 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.

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