Dealt a blow
Shares in oil and gas company Rockhopper (LSE: RKH) were dealt a blow today with news that it will not be awarded a production concession for the Ombrina Mare field which is located offshore Italy. As a result, the company says that it may seek damages and compensation against the Italian government.
This follows the reintroduction of the ban on exploration and production activity within 12 miles of the Italian coast and despite Rockhopper having completed the required technical and environmental authorisations, the concession will not be awarded. Of course, Rockhopper retains its interest in the exploration permit covering the Ombrina Mare Field Area and none of its other interests in Italy have been affected.
Clearly, this is a blow for Rockhopper’s long term future since the project could have improved investor sentiment in the company. Although it may reduce Rockhopper’s diversity, it’s still attractive in this regard versus many of its small exploration and production rivals. As such, it could have appeal for less risk averse investors in the long run, but seems to be a stock to watch, rather than buy, at the present time.
Major question mark
Also reporting disappointing news flow recently was potash mining company Sirius Minerals (LSE: SXX). It has decided to delay the definitive feasibility study for its planned mine in York and this hurt investor sentiment. In fact, the company’s shares have fallen by 19% since the turn of the year.
Of course, delays to such a major project are inevitable and it now appears that the market is a touch more realistic about the progress which will be made. However, there is still a major question mark surrounding financing for the £1bn+ project, which is likely to be made even more difficult due to the general fear and uncertainty surrounding the mining and resources sector.
This could lead to further delays and while Sirius Minerals could prove to be an excellent long term buy, it may be prudent to await a keener share price before doing so.
On the rebound
Meanwhile, shares in copper miner Antofagasta (LSE: ANTO) have fallen by 21% since the turn of the year and part of the reason for this is the company’s failure to meet its production target for 2015. Instead of the target of 635,000 tons being met, Antofagasta produced 630,300 tons. However, it insists that the copper price will rebound and, due to this, it intends to increase production in the current year.
This seems to be a wise move because it should help to increase the company’s bottom line. And with Antofagasta expecting to record a fall in net cash costs of around 10%, its profit outlook could be a lot more positive than the market is currently pricing in. For example, a price to earnings growth (PEG) ratio of 0.5 indicates that following the recent disappointing update, now is the time to buy, rather than sell, Antofagasta.
