The Motley Fool

Forget the 88E share price, here’s an oily I expect to beat it in 2019

Image source: Getty Images.

The mini-surge in the 88 Energy (LSE: 88E) share price in early 2018 has firmly gone into reverse since the summer. We’re now looking at a 35% fall over the past 12 months.

Flow test fail

It started when the company’s exploratory Icewine #2 well failed to get the oil flowing. Then, just as we thought a recovering oil price was set to relieve the pressure on small explorers, a new mini-slump that pushed the price down almost as low as $50, shook up already-beleaguered investors once again.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

As my Motley Fool colleague Roland Head has pointed out, there are companies said to be considering making a bid based on overall Alaskan Icewine prospect data. A combination of the impressively-large reserves that 88 Energy is potentially sitting on, the low oil price, and the difficulty that 88 Energy is apparently facing trying to raise funds of its own, suggest a successful bid could made at a relatively low price.


A sell-out, or farm-out, is pretty much the direction all small prospectors hope to go, but it really does depend on whether that big provable oil strike can be made, what the commercial viability looks like, and how long a company can go before its cash runs out.

The firm’s latest update was pretty run of the mill, focusing on the building of an ice road, a new Winx-1 exploration well drilling permit, and other relatively mundane tidings.

In my view, 88 Energy needs more than this. I see it as just a gamble on that big strike happening — and time is running out.

Better prospect?

If I wanted an oil explorer stock, I’d be looking at lot more closely at Cairn Energy (LSE: CNE) than at 88 Energy.

As fellow Fool Peter Stephens suggests, Cairn is expected to move into a period of tempting profitability. That’s the one key thing I’d want from any oil investment — profit coming in rather than cash burn.

While Cairn Energy has attractive potential, I’d still want to see some sort of safety margin in an oil company — and not having to go cap-in-hand to lenders and shareholders, especially during times of oil weakness, goes a long way towards that.

Cairn’s relative safety was buoyed on Tuesday by the firm’s latest operational update, in which chief executive Simon Thomson said that “Cairn enters 2019 with balance sheet strength and cash flow from North Sea production to fund significant growth opportunities.”

Increasing producition

In 2018, net production to Cairn from its interests in the Catcher and Kraken fields came to approximately 17,500 barrels of oil equivalent per day, with 2019 estimates suggesting between 19,000 and 22,000 boepd.

Overall, the 2018 year has seen revenue from oil and gas sales of approximately $395m, with the company achieving an average price of $68 per barrel. With an average production cost of around $20 per barrel, Cairn looks to me to be in decent financial shape and should be able to face any further oil price dips in relative safety.

To that end, the company has managed to hedge around 2.7m barrels of 2019 production with weighted average prices of between $67 and $83 per barrel.

The Cairn Energy share price is already climbing in 2019, and I can see a good year ahead.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.