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

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.

Staying ahead of the market

In my view, Circle Oil, BowLeven and Petrofac could all be attractive buys. However, I have to admit that none of these stocks made it into the Motley Fool's latest wealth report, "Where We Believe The Smart Money Is Headed".

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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.