3 Potential Oil Bargains: Petrofac Limited, Circle Oil Plc & BowLeven PLC

Petrofac Limited (LON:PFC), BowLeven PLC (LON:BLVN) and Circle Oil Plc (LON:COP) issue updates: which is the best buy?

| More on:

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.

oil rigThis morning saw Petrofac Limited (LSE: PFC), Circle Oil (LSE: COP) and BowLeven (LSE: BLVN) pump out news updates that moved the market.

However, while Circle shot the lights out with a major oil discovery, BowLeven’s share price went into reverse — so what’s happened?

Circle’s troublesome gusher

Circle Oil’s share price rose by 23% to 22p in early trading this morning, after the firm reported a potential 100 million barrel oil discovery in its Mahdia Permit, which is located offshore Tunisia.

The El Mediouni-1 well (EMD-1) was drilled to a total depth of 1,200m, and Circle said that the two oil-bearing intervals were found, totalling an impressive 133m.

However, EMD-1 wasn’t trouble-free and the firm said that ‘deteriorating conditions’ in the well forced them to abandon attempts to log the discovery and to suspend the well.

Despite today’s gains, Circle shares remain below their 52-week high of 25.9p, and I reckon that Circle — which is profitable and has minimal net debt — looks cheap, on just seven times 2014 forecast earnings.

BowLeven slips on delays

BowLeven’s share price opened down by 4% at 33.5p this morning, after the firm, which operates in Cameroon, reported that it has extended the deadline for the farm-out of its Etinde acreage to LUKoil and NewAge until 31 October 2014.

The main reason for the extension appears to be that the Cameroon authorities have not yet ratified the transfer of equity interest in the asset.

The deal involves LUKoil/NewAge taking a 50% stake in Etinde in return for cash and work commitments equivalent to approximately $250m, so is highly material to BowLeven, which has a market value of £113m and no revenue.

Successful guidance from Petrofac

FTSE 100 oil services firm Petrofac has fallen out of favour with investors this year, after a series of profit warnings.

However, the firm appears to be getting a grip on the issues in its Integrated Energy Services (IES) division, and this morning’s disappointing first-half results were in-line with previous guidance, and only nudged the firm’s share price down by around 2%.

Petrofac’s order backlog rose by 35% to $20.3bn during the first half, and the firm expects to report net profits of $580m-$600m this year, despite only managing $136m during the first half.

Petrofac now offers a prospective yield of nearly 4% and trades on a 2015 P/E of around 9, making it an attractive buy, in my view.

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 recommended Petrofac. The Motley Fool UK has owned shares of Petrofac. 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

Illustration of flames over a black background
Investing Articles

2 red-hot UK growth stocks to consider buying in April

These two growth stocks are performing well, but can they continue to deliver for investors through 2024 and beyond?

Read more »

Charticle

Is JD Sports Fashion one of the FTSE 100’s best value stocks? Here’s what the charts say!

The JD Sports Fashion share price remains a wild ride during the first quarter. Could it be one of the…

Read more »

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »