However, since Tuesday, investors have become suspicious of the rapid rise, and the shares have given up most of their gains. That said, Gulfsands’ shares are still up by around 200% over the past two weeks.

Hard to explain

The sudden explosion of interest in Gulfsands is difficult to explain as there’s been little in the way of positive news released by the company for several weeks. On 18 March the company reported its full-year results for 2015, revealing a loss of $69m for the year. But it’s unlikely this hefty loss would have inspired such an aggressive rally. 

Even Gulfsands’ management appears to be scratching its head over the recent rally. Management has been forced to issue a statement confirming it knows of no reason for a spike in the company’s share price twice in the past two weeks.

There is one possible explanation for the sudden spike in demand for Gulfsands’ shares. It emerged last weekend that Syrian oil tycoon Ayman Asfari had bought 50m Gulfsands shares, or 10.5% of the company, through his ME Investments vehicle. Ayman Asfari also runs oilfield services provider Petrofac and is considered by many to be an extremely shrewd operator with his finger on the pulse in the Middle East.

Asfari’s investment has given rise to speculation that the respected oil investor knows something others don’t. This could be that EU oil sanctions against Syria are about to be lifted, allowing Gulfsands to restart its production in the region, or there’s a possibility that Asfari could be looking to take over the whole company.

Built on sand

It should be made quite clear that at this point that sanctions against Syria remain in place, and Asfari hasn’t sought to increase his influence over the company. What’s more, Gulfsands is running out of cash fast. 

At the end of 2015, the company had only $0.4m available to it. After conducting an open offer during January, raising a total of £14.2m and then repaying a convertible loan facility, the company has been left with a cash balance of $5.6m for the rest year.

While Syrian sanctions remain in place, Gulfsands isn’t generating any revenue and operating expenses amounted to $7m last year. Management is trying to cut costs to improve the company’s survivability, but it’s pretty clear Gulfsands needs a spell of good luck quickly to help turn things around.

The bottom line 

So overall, after gaining 200% in two weeks Gulfsands might look like an attractive investment to some, but the recent gains aren’t backed up by any concrete evidence. With this being the case, it might be wise to avoid the company until there are some serious material developments.

The post After A 200% Gain In Two Weeks, Should You Buy Gulfsands Petroleum plc? appeared first on The Motley Fool UK.

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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.

With Tullow holding a 40% stake in the block, it’s clearly good news for the company. And with its shares rising by around 4% today, it seems to have been well-received by the market. Looking ahead, there’s the scope for further improvements to investor sentiment in Tullow, since it’s expected to ramp-up production in the current year as Project TEN in Ghana comes on-stream. This could significantly increase the company’s profitability and cash flow, allowing the prospect for a sustained share price rise over the medium term.

Clearly, Tullow’s share price performance is highly dependent on how the oil price performs in future. However, with it trading on a price-to-earnings growth (PEG) ratio of 0.1, it appears to have a rather enticing risk/reward ratio.

Long-term play

While Tullow appears to be worth buying, Genel Energy (LSE: GENL) continues to be a relatively high-risk option within the oil space. Certainly, its asset base is very appealing even though it recently reduced its reserves estimates, which caused an impairment of around $1bn to the value of its asset base. As such, it has the potential to deliver excellent profitability in the long run.

The problem though, is that the potential rewards on offer seem to be outweighed by the risks it faces. The geopolitical instability of the Northern Iraq/Kurdistan region could hurt its production capabilities in future, while there are also concerns surrounding payment for oil.

Although recent payments have caused investors to become somewhat more upbeat regarding the payment of outstanding amounts owed to Genel Energy, the situation could easily change and leave Genel with a cash flow issue. With a number of oil stocks being cheap and offering less risk, there seem to be better options available elsewhere.

Investor sentiment

Meanwhile, shares in North Africa and Middle East oil and gas exploration company Gulfsands Petroleum (LSE: GPX) have soared by 36% since the turn of the year. In fact, the company released a statement just last week stating that it’s unaware of any reason for the share price movement. It’s likely that a buoyant oil price has caused investor sentiment to improve towards the wider sector and this has benefitted Gulfsands Petroleum to a degree.

Of course, this comes after a challenging period for the company which saw its management team replaced last year. And while it has undertaken a successful fundraising recently and has the potential to deliver profitability in the long run, there appear to be better funded and less risky exploration plays on offer elsewhere.

The post Are Tullow Oil plc, Genel Energy PLC And Gulfsands Petroleum plc 3 ‘Must-Have’ Oil Stocks? appeared first on The Motley Fool UK.

More reading

• 16,976 more reasons why Lloyds share price could sink
• By 2027, this dividend stock could rise 100%, according to brokers
• How to target a £21k second income for retirement with just 10% of your monthly salary
• 6%+ dividend yields and low P/Es! Are these income shares screaming buys?
• Will this huge deal harm the Vodafone share price?

Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended Tullow Oil. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.