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Why Leni Gas & Oil PLC Is Today’s Best Oil Stock

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.

oil rigWhat: Shares in Leni Oil & Gas (LSE: LGO) soared by more than 11% in early trade, following positive results from the GY-665 well’s initial flow rate in the Trinidadian Goudron oil field, propelling it among the top traded stocks of the day.

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So what: Initial production tests yielded a flow rate of 700 barrels of oil per day, described by Leni’s chief executive Neil Ritson as “very encouraging”. The well is also producing 41-degree water-free oil (here comes the science bit!) at a rate of 415 bopd through a 12/32″ choke with a well-head flowing pressure of 475 psi”. Ultimately, this means a very healthy, stabilised flow, news that the market welcomed this morning with open arms.

Now what: Following the success of GY-665, the three remaining wells drilled from this pad are now set for production shortly, while Leni is moving its drilling rig to the next pad primed for four further wells.

Investors rushed back into the shares today, making Leni today’s top-performing oil stock. However, the key word in that previous sentence is ‘back’ — looking at its price chart, Leni’s stock has been susceptible to peaks and troughs since it came to the market in 2007. Yes, this year has seen it recover to prices last seen in 2010, but its history of uncertainty and lack of a dividend means that I, for one, think there are better small-cap opportunities outside of Leni Oil & Gas today.

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Sam Robson 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.