Is It Too Late To Buy Leni Gas & Oil PLC After Its Latest Surge?


Leni Gas & Oil (LSE: LGO) is proving to be one of 2014’s top resource plays, with shares in the exploration company rising by an incredible 652% since the start of the year.

Indeed, they have risen by a further 9% today (at the time of writing) and, although there is no news flow out today to cause this, investor sentiment seems to be strengthening.

However, as all Foolish investors know, sentiment can change. With this in mind, is it now too late to buy a slice of Leni, or is there is still potential for further gains?

Strong Updates

During the course of 2014, Leni has delivered a number of upbeat updates that have caused investors to become hugely positive on the stock. The most recent of these was just last week and confirmed that delivery of a new sales tank had taken place and the company had spudded the sixth well in its 30 well redevelopment of the Goudron field in Trinidad.

While this was clearly great news for investors in Leni, perhaps the most important aspect of the update was the fact that the company remains hugely focused on developing the infrastructure necessary to handle the increased volume of oil. This shows that Leni is confident in the potential of the field and bodes well for the company’s long term future – a fact that doesn’t seem to have been lost on the investment community.

Looking Ahead

Of course, when any company’s share price rises by such a large amount, there will inevitably be doomsayers who feel that it should pull back simply because it has risen. However, in Leni’s case, this argument has been present for some time and has not yet proven to be correct.

Certainly, news flow will not continue to be so positive in future. There are bound to be hiccups and setbacks to the company’s progress. The key takeaway for investors, though, is that Leni appears to have sizeable potential from the Goudron field and is willing to back this up with generous levels of investment. As a result, the company’s medium-term future appears to be relatively sound and, as a result, its share price could continue to move forward as more investors begin to realise the longer-term potential of the company.

So, while all investors would rather have bought earlier in the year, Leni still seems to have potential to make further gains. Although high risk and very volatile, it could be worth holding alongside a more stable and diversified stock from the oil and gas sector.

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Peter Stephens 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.