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Why Shares In Roxi Petroleum plc Got Burned Today

Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.

What: Shares of Roxi Petroleum (LSE: RXP) plunged by more than 10% in early trade this morning, following an operational update from the central Asia-focused oil and gas company.

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So what: Management announced on 9 July that they encountered oil and gas at the deep well A5 at the BNG contract area in Kazakhstan, causing shares to double in price on the day.

Today’s ‘update’ is really little of the sort — while shareholders were expecting progress since then, it seems that they have become impatient and that some are bailing out after Roxi declared that it is “awaiting additional heavy drilling fluids to reach the drill site which are required to take core samples”, and updated the market on little else.

Now what: The group’s long-term strategy is to build a strong portfolio of productive assets, but there are a slew of risks facing prospective investors, namely that there is no guarantee that exploration activities will deliver oil.

Roxi doesn’t pay a dividend currently, either, though it has almost four-bagged for investors who bought in at its 52-week low of 3.5p.

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Sam Robson has no position in any shares mentioned. The Motley Fool has no position in any of the shares mentioned.