Is Now The Time To Buy Xtract Resources PLC, Nighthawk Energy Plc And Genel Energy PLC?

Xtract Resources (LSE: XTR) has jumped by more than 5% today after the company issued two positive news releases. The first release was a third-quarter operational update from Xtract’s Chepica Gold and Copper Mine in Chile. During the third quarter, Chepica reported revenue growth of 153% to $448k and profit growth of 186% to $150k. Costs fell 15% to $298k. 

Xtract’s second positive piece of news was the announcement that the company has signed a joint venture agreement with Mineral Technologies International Limited, to mine alluvial gold on the Manica gold project.

Xtract expects the joint venture to produce approximately 32,000oz gold per annum, (16,000oz net to Xtract), and Mineral Technologies will cover the cost of the construction of an alluvial gold plant. When in operation, it’s estimated that the Manica gold project joint venture’s payback period will be less than six months. Construction is expected to commence during the third quarter of 2016. 

These two positive news releases only boost the investment case for Xtract. The company has made staggering progress over the past year improving its prospects and last month the group acquired the Fair Bride gold project, jacking up Xtract’s resource base to over 1m ounces of gold. 

Now could be the time to buy Xtract as the company’s mining projects get off the ground. 

Struggling with costs 

Unfortunately, as Xtract powers ahead Nighthawk Energy (LSE: HAWK) is struggling. 

Nighthawk announced today that the company is implementing a number of margin enhancement and operational efficiency measures to reduce group costs as the low oil price eats into profitability. A management shake-up has seen Nighthawk’s CFO leave, to be replaced by Mr. Kurtis Hooley, who will take up the roles of both CFO and company secretary. 

Nighthawk reported an operating loss of $5.2m for the six months to June 2015, compared to a profit of $11m in the same period last year. Moreover, the company seems to be running out of cash. Nighthawk was forced to issue a $10m zero coupon unsecured convertible loan note at the end of August to bolster its balance sheet. But as the company burnt through $7.4m during the first-half, this cash won’t last long.  

Even with the cost savings announced today, it looks as if Nighthawk is going to struggle going forward.

Cutting guidance 

Genel Energy (LSE: GENL) is another oil producer that’s struggling with the low oil price. The company announced this morning that it was reducing production guidance for 2015 to a range between 85,000 and 90,000 barrels of oil per day, from 90,000 to 100,000 bopd. 

Genel went on to say that reduced production guidance would mean a lower revenue figure for the year. It cut its revenue guidance to a range between $350m and $375m, down from $350m to $400m, based on a crude price of $50 a barrel. 

However, Genel has now reached a turning point with the Kurdistan Regional Government as the flow of oil payments from the KRG has improved. Management is confident that the KRG will continue to return owed cash to producers, removing much of the uncertainty that’s surrounded Genel for the past few years. Group net debt at the end of September was $211m. Genel currently trades at a forward P/E of 26.6. 

Hidden gem

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The Motley Fool's top analysts have identified this company as one of the market's top small caps. They believe the shares could jump by as much as 45%. 

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Rupert Hargreaves 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.