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Why Ruspetro PLC And Energy Assets Group PLC Jumped Today

Small-cap energy companies Ruspetro (LSE: RPO) and Energy Assets (LSE: EAS) are rising today, up 8% and 8.5% respectively at time of writing, as both companies have impressed the market with business updates.

New contractgasring

Energy Assets, the largest provider of business gas metering services in the UK, announced today that it has signed a game changing deal with British Gas Business.

The company will install advanced gas meters for around 50% of British Gas Business’ customers throughout the UK. The installed meters will have a 20-year contracted term, allowing for an annual inflation price adjustment.

This agreement provides Energy Assets with a significant long-term recurring revenue stream, bolstering the company’s already impressive customer base.

But more importantly, this strategic agreement underlines the company’s reputation. Indeed, with a customer such as British Gas on board, Energy Assets has cemented its reputation for quality, competency and excellent service. It’s likely that other prospective customers will see this deal as an affirmation of the company’s strengths.   

Recurring cash flow

As managing energy costs becomes an increasingly important part of doing business, the demand for Energy Assets’ metering services should continue to rise.

For investors, this is great news. Indeed, Energy Assets’ business model locks in recurring revenue streams, giving investors more clarity on the businesses’ outlook.

It would appear as if City analysts are really excited about the company’s prospects. Analysts are currently forecasting earnings per share of 26p this year, followed by 34.9p for 2015, which puts the company on a forward P/E of 10.3 for 2015.

However, it is likely that estimates will be revised higher following this deal. 

Well success oil

Meanwhile, Ruspetro announced today a successful ten-day flow test of its first multi-stage fractured horizontal well, within the company’s Pottymsko-Inginsky license area.

The well-produced at an average rate of 1,350 barrels of oil equivalent per day, with a watercut of approximately 50%, although this watercut is steadily declining, as expected. The well has been contributing to sales volumes since the beginning of July, and is expected to meaningfully impact production.

Further, drilling of Ruspetro’s second well within the region is under way and is expected to be completed by the beginning of September.

However, all three of Ruspetro’s exploration and production licenses are located within Siberia, which is worrying, considering the recent developments between Russia and the US.

Indeed, thanks to Russia’s involvement in the Ukraine crisis, the US has slapped hefty sanctions on Russian companies. These sanctions have been designed to stem the flow of capital from international markets into Russia.

Nevertheless, as of yet, Ruspetro’s operations do not seem to be under any sort of threat and the company is making solid progress unlocking value from its assets.

Moreover, Ruspetro’s is employing advanced technology in its exploration programme. This new tech, being used for the first time within Russia by Ruspetro, will allow the company to improve the efficiency of its drilling programme. 

A risky bet

Still, there's no denying that both Energy Assets and Ruspetro have huge potential. However, as their shares skyrocket, some investors may have missed the boat.

But there are plenty of other opportunities out there. The key, when searching for growth stocks, is looking under the radar. You want to get on board while the company is still an unknown quantity.

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