When a small-cap like Hurricane Energy (LSE:HUR) experiences a major share price hike, I’m intrigued and want to learn more. At current levels, is the Hurricane Energy price an opportunity I should consider for my holdings? Let’s take a closer look.

Hurricane Energy share price soars

As a quick reminder, Hurricane is an oil and gas exploration business. It focuses on making discoveries in naturally fractured basement reservoirs. These are usually prolific producers of oil and gas globally, however, they are a new play on the UK Continental Shelf, which is the region of waters surrounding the UK.

So what’s the current state of play with Hurricane Energy shares? Well, as I write, they’re trading for 8p. At this time last year, the stock was trading for just 2p, which equates to a return of 300%!

So why has the Hurricane Energy price soared? I believe the current market for oil, coupled with the company’s impressive performance in recent times has definitely boosted shares. In July, Hurricane repaid an outstanding convertible bond worth £78.5m, which made the firm debt-free. This is a rare occurrence for small oil and gas firms like Hurricane to be totally debt-free. Furthermore, as of 31 July, it had $89m worth of net cash on the books.

The investment case

The recent oil and gas markets have been kind to many businesses in the industry, and this includes Hurricane Energy. As part of the operational update it provided earlier this month, all signs pointed towards 2021 being a transformative year for the business.

Hurricane reported that, due to stable oil prices and rising demand, it managed to generate $135.7m of free cash flow. This helped to post a profit of $18.2m after tax. This is a major turnaround when comparing figures to the previous year when Hurricane posted a mammoth loss of $625.3m.

It is worth noting that despite a bullish oil market, macroeconomic factors are playing their part. Soaring inflation, and the rising cost of materials, has had an impact on costs for Hurricane. Despite the impressive figures noted above, costs to produce a barrel of oil did increase to $28.20 this year. These issues could affect profitability moving forward.

What I’m doing now

Things look good right now for Hurricane Energy. The results I’ve noted above have boosted the Hurricane Energy share price in recent months. Existing shareholders could be in for a lucrative year ahead if this upward momentum continues.

After taking everything into account, I’ve decided I would be willing to open a small position in Hurricane shares. They look decent value for money on a price-to-earnings ratio of just eight. Furthermore, at 8p per share, the risk to reward ratio looks very low for me.

If Hurricane shares were to struggle, I wouldn’t have lost much money based on current levels and my investment. A big part of my investment strategy is to look for small-cap stocks doing well that could turn into major players in the long term. I wouldn’t be surprised to see the Hurricane Energy share price continue on an upward trajectory, at least in the short term.

The post Up 300%, is the Hurricane Energy share price an opportunity too good to miss? appeared first on The Motley Fool UK.

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Jabran Khan 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.

It’s still early days, but that call is already looking good with news the company has achieved first oil at its Lancaster field in the Rona Ridge area, west of Shetland. The field — discovered 10 years ago — has been estimated to hold more than 500m barrels of oil. 

This is a huge achievement by Hurricane and its CEO Dr Robert Trice — who first proposed looking for oil in fractured basement reservoirs in the UK — and an egg-on-face moment for those who doubted it would ever happen.

For sceptics, this method was too difficult and costly to be worth the trouble, despite already being employed successfully elsewhere in the world.

According to the company, the combined flow from the wells hit the planned production rate of 20,000 barrels of oil per day during the 72-hour production test and marks the beginning of the development of Hurricane’s “considerable” resources in this area. 

What next?

Having got the Lancaster field into production, Hurricane will now be looking to ramp up its Early Production System (EPS) with the goal of achieving operating efficiency of 85% over the long term.

As previously indicated by the company, it expects efficiency of 45% over the first three months with an average production rate of 9,000 barrels. This will then rise to 65% and 13,000 barrels for the following three months.

It’s hoped the data acquired during the EPS phase will allow Hurricane to “optimise” locations for additional wells in the future.  According to Dr Trice, as much as “12 months of stable production will be required in order to provide a clear view of the reservoir” and allow Hurricane to plan for turning Lancaster into a full field development. 

I don’t hold. Have I missed the boat?

Not necessarily. Given that Hurricane’s shares are up 33% in value in less than a month, there were bound to be a few investors out there wanting to bank some profit and ‘sell on the news’. Indeed, the stock already appears to have lost momentum after initially spiking 7% this morning.

Nevertheless, I’m of the opinion Hurricane’s potential resources make it one for risk-tolerant investors to tuck away for a while. Let’s not forget that Hurricane believes Lancaster and another discovery (Halifax) have the potential to be a single, massive accumulation of oil and that it owns 100% of the licences covering this area. 

The same goes for the Greater Warwick Area — which features the Lincoln field and Warwick prospect — which is currently being developed through a 50/50 joint venture with Spirit Energy. 

Last week, analysts at Berenberg set a target price of 100p on the stock. That’s 66% higher than where it is right now. Naturally, it may be a while before it gets there but today’s update, coupled with the fact Hurricane delivered first oil when it said it would (and within budget) leads me to suspect it could hit this target within the next year. 

The £1.2bn-cap will hold a Capital Markets Day next month where it intends to reveal the results of initial analyses.

The post Today’s news makes me even more bullish on the Hurricane Energy share price appeared first on The Motley Fool UK.

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Paul Summers owns shares in Hurricane Energy. 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.

Of course, this is easier said than done. For every millionaire-maker there are dozens of duds. Today, I’m weighing up the potential of oil stock Hurricane Energy (LSE: HUR) and pharma player Circassia (LSE: CIR), which released its annual results today.

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Heavily backed by cornerstone investors Neil Woodford and his protégé at former employer Invesco, Circassia pursued the development of a whole platform of allergy treatments that were said to build immunity quicker than existing remedies and without the risk of anaphylactic shocks. When its lead cat allergy failed a Phase III study, the entire programme collapsed.

At the height of investor confidence, Circassia was a member of the FTSE 250 index, with a share price of 350p and market capitalisation of over £1bn. Today, it’s on the AIM market, its share price is 31.5p (down a little on the back of its results) and its market cap is £118m. Its accounts show an accumulated loss of over half-a-billion quid.

However, it now has a small portfolio of revenue-generating products, including via a commercial collaboration with AstraZeneca, which has also become a 19% shareholder in Circassia. Could the stock be set to rise like a phoenix?

Recovery?

Just over a year ago, I wrote that I wouldn’t touch Circassia with a bargepole, noting also a 5.42% short position in the stock held by hedge fund Mangrove.

Today’s results showed a £37.2m operating loss on revenue of £48.3m. There are signs of promising revenue growth, and with the share price much lower than a year ago, the valuation picture has improved.

However, continued losses are forecast into next decade and Mangrove has maintained its chunky short position. I’m not convinced the risk/reward proposition with Circassia is compelling, and so continue to see it as a stock to avoid at this stage.

Share price to double?

By contrast, when I last wrote about Hurricane Energy (November 2017), I felt its progress to date, potential to become a major player in the West of Shetland region, and share price of 26.75p (market cap £524m) represented an attractive risk/reward proposition. The shares are currently trading at around 47p (market cap £921m), but I continue to see a compelling investment opportunity.

The company is on track to deliver first oil from its 100%-owned Lancaster discovery before the end of June. Planned initial production is 17,000 barrels a day, and management expects to generate over $200m in operating cash flow on a full-year run-rate basis at a $60 a barrel Brent oil price.

Meanwhile, a 50% farm-in to its Warwick and Lincoln fields by Spirit Energy, providing up to $387m, has enabled an acceleration of activity, including the drilling of three wells this year, one of which was spudded last month.

If we see the company successfully executing on this year’s work programme, I think the share price could easily double from its current level. And with total 2P reserves and 2C contingent resources across the asset base standing at 2.3bn barrels net to Hurricane, there’s potential for the value of the company to continue increasing as time goes on.

The post Could the Hurricane Energy share price be the bargain of the year? appeared first on The Motley Fool UK.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended AstraZeneca. 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.

Underlying replacement cost profit — the company’s preferred reporting measure — came in at $2.4bn. That’s less than the $2.6bn achieved at the same point last year but this was attributed to the “weaker price and margin environment” seen at the beginning of 2019. Positively, it’s actually better than some analysts predicted.

Oil and gas production averaged 3.8m barrels a day of oil equivalent over Q1 — 2% more than last year due to the integration of recent acquisitions from mining giant BHP Group and three major projects in Trinidad, Egypt and the Gulf of Mexico.

Speaking of the latter, BP paid out $600m on claims relating to the 2010 disaster over the period but still managed to generate operating cash flow of $5.9bn.

Commenting on today’s numbers, CEO Bob Dudley said the company’s performance over the quarter demonstrated “the strength of its strategy” and that today’s “resilient” results had been achieved during a “volatile period.”

For many investors, however, quarterly figures aren’t anything to get too worked up about.

That’s because BP is understandably regarded as a dividend-generating machine by most holders. For this reason, a 2.5% hike to the quarterly dividend — to 10.25 cents per share — will be the most important thing to take away from today’s update. 

Assuming the same happens over the next three quarters, this leaves BP returning 41 cents per share in 2019, equating to a dividend yield of 5.7% at today’s share price. 

And although nothing can be guaranteed (particularly anything connected to the oil and gas industry), this payout looks secure for now.

As part of a fully diversified portfolio focused on generating income, BP — like Royal Dutch Shell — still has a lot going for it.

For the brave

Of course, dividends aren’t important for many investors, especially those lucky enough to have several decades in the stock market ahead of them.

For capital gains, I think there’s a far better alternative in the form of fractured basement explorer and producer Hurricane Energy (LSE: HUR).

The £900m-cap is currently focused on generating oil from its potentially highly lucrative Lancaster field.

That said, news on the spudding of the first of three wells in its Greater Warwick Area earlier this month shows the company is content to have more than one plate spinning at a time.   

Unfortunately, this recent activity has failed to move Hurricane’s share price and it continues to consolidate between the 45p-50p range.

Nevertheless, confirmation of success at the former will surely see buyers flood back in, especially when the market gets a better idea of the volume of oil we’re talking about. 

Further developments at Warwick could compound these gains. There’s even talk that this area might be just as valuable to the company, if not more so, than Lancaster.

To be clear, Hurricane is a world away in terms of risk compared to BP. While the methods adopted by the firm have been employed successfully elsewhere in the world, it’s the first time they’re being used in UK waters. A lot can, and might, still go wrong.

I’m in for the ride with fingers and toes firmly crossed.  

The post I’d buy FTSE 100 stock BP for its 5.7% dividend yield, but this oil stock for capital growth appeared first on The Motley Fool UK.

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Paul Summers owns shares in Hurricane Energy. 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.

In a trading update published ahead of its full-year 2018 results, the company revealed that it is expecting to report year-end net debt of $2.3bn, around $100m below management’s initial guidance of $2.4bn and a total reduction in net debt of $390m on 2017. 

Reducing net debt by 16% year-on-year admittedly isn’t that impressive, but it is a step in the right direction. It will also help the company accelerate debt pay-down in 2019 as interest costs fall. 

Falling costs 

According to my research, during the first half of 2018 the company paid $126m in interest on debt and some of the debt is costing firm as much as 7.1% per annum. The good news is, if we assume interest costs have fallen by a similar 16%, this means the enterprise has freed up another $40m per annum to reinvest back into debt reduction. These are only back-of-the-envelope figures — Premier’s cash flows are influenced by many different factors — but I think the number shows just how quickly the group’s fortunes will change now that it has started to get its finances under control. 

Production hit a record 80,500 barrels of oil equivalent per day (kboepd) in 2018, rising to 92 kboepd in November and December, implying the company will have much more free cash flow in 2019 to continue deleveraging. 

As Premier continues to shore up its finances, I think this is one company that’s worth keeping an eye on in 2019. 

Big year

Another stock that I think could be set for big things in 2019 is Hurricane Energy (LSE: HUR).

If everything goes to plan, this company is planning to commence production from its flagship Lancaster prospect in the second half of the year. So far, everything is going right, and the construction of the early production system, designed to get the well in action as soon as possible, seems to be on track. 

However, until production has actually started, I think the market will continue to view the business with a degree of scepticism. 

Oil exploration and production is inherently risky, and there is still plenty that could go wrong over the next 12 months. A mistake when commissioning the early production system, for example, could set the business back months, or even worse, result in a catastrophic disaster that would cripple Hurricane. The company has undoubtedly done everything in its power to reduce the risk of a devastating accident, so I think in reality the chances of this are slim. Still, it is always worth considering the worst case scenario. 

If the company does get its early production system in action on time, the stock could jump as the risks to the group’s outlook decline. 

City analysts have pencilled in a possible net profit of $98m for 2019 if Hurricane can commence production on time, implying a forward P/E of 33.2.

The post Why I think the Hurricane Energy share price could take off in 2019 appeared first on The Motley Fool UK.

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Rupert Hargreaves owns no share 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.

One share which has fallen heavily in recent weeks is oil and gas company Hurricane Energy (LSE: HUR). It’s declined by 33% since the start of October, with a weaker oil price sending its valuation lower. After such a large fall, could it be worth buying, alongside another relatively unpopular share which released a trading update on Friday?

Uncertain future?

The company in question is support services and construction business Interserve (LSE: IRV). It released a third quarter update which showed that trading for the current financial year has been in line with expectations. Its Fit for Growth efficiency programme is on track to deliver its target of £15m savings in 2018, while year-end net debt is due to be between £625m and £650m. It expects to make a further announcement regarding its deleveraging plan in early 2019, with its balance sheet still appearing to be relatively weak.

The Interserve share price has fallen by over 50% in the last year, and is showing little sign of delivering a successful turnaround. It has been on a downward trend for a number of months, with a weaker outlook for the UK economy causing investors to become less interested in its turnaround potential. Since it’s highly-leveraged, relative to some of its sector peers, it could have an uncertain future. Therefore, its risk/reward ratio may not be appealing at the present time – especially since investors are somewhat cautious about the outlook for the wider stock market.

Long-term potential

As mentioned, the Hurricane Energy share price has declined significantly in recent weeks. There could be further uncertainty in the near term, since the oil price has the potential to move lower, as fears regarding the world economy’s prospects may hold back investor sentiment. This could reduce investor interest in more speculative stocks within the oil and gas industry. And with Hurricane Energy currently loss-making, its shares could be hit harder in the short run than some of its industry peers.

However in the long run, the company appears to offer investment potential. It’s due to commence production in the first half of 2019, and this is expected to transform its financial performance. Its forward price-to-earnings (P/E) ratio using next year’s forecast earnings is around 14, which suggests that it may offer a margin of safety. And with a ramp-up in production expected over the medium term, it may be able to generate improving share price performance.

Of course, Hurricane Energy’s financial prospects are closely linked to the performance of the oil price. But for investors who are seeking a more speculative oil and gas stock, it could be worth a closer look, in my opinion.

The post Thinking of buying the Hurricane Energy share price after 33% decline? Read this first appeared first on The Motley Fool UK.

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Peter Stephens 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.

The risks are still there, for sure, but a stronger oil price lessens them a little while significantly boosting the potential rewards. But which companies might I go for?

Profit next year?

I’m increasingly liking the look of Hurricane Energy (LSE: HUR), as recovering oil has helped push the share price up by 50% since the start of 2018 — though it’s fallen back a little since oil has declined from its $86 peak.

Hurricane’s operational update this month showed that its progress is very much on track, with first oil from its Lancaster field now targeted for the first half of 2019. Together with other assets, we’re looking at total 2P reserves and 2C contingent resources attributable to Hurricane of around 2.8bn barrels of oil equivalent.

Commercial viability

Potential reserves aren’t enough, though, as others have come unstuck in being unable to extract them commercially or just not having enough cash. But though there’s a modest loss on the cards for this year, Hurricane is forecast to turn in a pre-tax profit of £98m in 2019, followed by £185m the year after.

Forecasts for 2019 also suggest a P/E of only around 15, and I see Hurricane Energy shares as good value at that level.

There’s still a question of whether the oil price will hold up, and the recent reversal is very likely holding some investors back. But it might just be giving us an extra buying opportunity at bargain prices before the price of a barrel steadies — and even a stable price around today’s $76 makes Hurricane look attractive to me.

No profit yet

One thing Sound Energy (LSE: SOU) doesn’t have that Hurricane does is profit forecasts — and that’s surely the reason the shares have lost more than 35% of their value so far this year while Hurricane shares have gained.

Earlier I explained why I wouldn’t buy Sound Energy shares, but is that just me being conservative and risk-averse in my old age? Successful oil explorers were all once in a similar position, and just because some won’t make it doesn’t mean they all won’t.

The cash situation looked pretty reasonable at the halfway point at 30 June, with £14.7m on the books — and that was boosted by a new equity issue in July which raised a further £11.4m before costs. But that has to be seen in the context of a total loss in 2017 of £34m — admittedly £22m of that was from discontinued operations, but it’s still a high cash-burn rate.

Prospects look good

The company does have some tempting-looking prospects, with exploration progress at its sizeable acreage in Morocco coming along nicely. 

But though I really don’t mind a bit of uncertainty and I often see it as presenting buying opportunities, there are two big classes of risk here. One is that we still have no idea of how much of Sound’s estimated hydrocarbons will make it to the surface. The other is that we don’t know how much it is going to cost to reach first profit and how much dilution current shareholders will endure along the way.

Sound Energy is still at too early a stage for me, even if oil exploration prospects are improving.

The post Could Hurricane Energy be set to smash the Sound Energy share price? appeared first on The Motley Fool UK.

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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.

The share prices of gold miner Acacia (LSE: ACA) and oil exploration company Hurricane Energy (LSE: HUR) have been volatile in recent months. On Friday, the former released a trading update which sent its shares as much as 15% lower, while the latter has seen its stock price rise by 67% in the last year.

Looking ahead, does either company offer investment appeal? Or, are they simply too volatile to buy at the present time?

Political risk

Acacia’s trading update showed that the company continues to face significant political risk in Tanzania. There have been criminal charges brought against several current or former employees of the business. This could clearly have an impact on the outlook for the company, although it has been able to deliver impressive operational performance despite the challenges it has faced.

For example, in the third quarter it produced 136,640 ounces of gold at an all-in sustaining cost of $880 per ounce sold. It has been cash flow positive in the third quarter, with it now having a net cash position of $74m. It is targeting production of 500,000 ounces of gold for the full year, which would be a strong performance given the risks it has faced.

Although Acacia’s share price may continue to be volatile and its operational outlook is highly uncertain, it offers a wide margin of safety. Based on next year’s profit forecast, the stock trades on a price-to-earnings (P/E) ratio of around 6. This suggests that it may offer investment appeal for less risk-averse investors.

Changing outlook

As mentioned, the performance of Hurricane Energy has been impressive in the last year. The company has been able to move ahead with plans for first production from its Lancaster field in 2019. Recent updates have suggested that this is on track.

The company has also benefited from improved sentiment towards the wider oil and gas industry. A higher oil price has encouraged investors to take more risks within the industry, and this has led to higher valuations being placed upon a number of industry incumbents.

Looking ahead, Hurricane Energy is expected to report a pre-tax profit of $58m in the next financial year. This puts it on a P/E ratio of around 20, which seems fair given the potential for it to increase production in future years.

Clearly, the price of oil could fluctuate depending on the performance of the world economy, as well as supply growth over the medium term. But with what seems to be a sound strategy and the potential to generate improving financial performance in future, the stock could be another one of interest to less risk-averse investors over the medium term.

The post Think the Hurricane Energy and Acacia Mining share prices are bargains? Read this now appeared first on The Motley Fool UK.

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Peter Stephens 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.

The vessel will now sail to Rotterdam for the completion of final works before proceeding to the Lancaster field. 

As well as reaching this milestone, Hurricane also reported today that its efforts to prepare the Lancaster field for the installation of the early production system have been completed, opening the way for production to begin in early 2019. 

Hurricane is clearly making progress on its efforts to develop the field, and while the company still has a lot of work to do before production begins, I believe the shares could be an attractive investment at current levels. 

Time to buy? 

Running out of money is generally the most common reason why oil and gas companies fail to develop their prospects as planned, and Hurricane is no exception. 

But so far, the company seems to have kept a tight grip on its finances, and it looks as if its remaining resources are enough to support it through to first oil.

As my Foolish colleague Alan Oscroft recently pointed out, at the end of June, the company reported $210.1m of cash equivalents and liquid investments on the books, after a net decline of $149.4m in the period. The acquisition and refitting of the EPS vessel was the most significant expenditure. Cash outflow from operations was stated at $2.7m. 

Looking at these numbers, it appears as if the company has plenty of cash to fund itself through to first oil. That said, nothing should be taken for granted in the oil business. While the enterprise might look as if it has enough money to fully fund itself, a sudden misstep could land the firm on the rocks. 

High risk, high reward 

Considering the above, I’m not willing to dive headfirst into this opportunity, although I do believe as a speculative investment it does have great potential. 

If everything goes to plan, City analysts estimate the business could produce a net profit of $133m by 2019. If it can reach this target, Hurricane should be able to offset any doubts about its long-term prospects. And it’s the company’s long term potential that really excites me. 

Forecasts for 2019 only include production from the EPS system, which is limited to output of just 17,000 barrels per day. With more than 2.6bn of barrels of crude resources in the company’s asset inventory, I reckon long-term production potential is significantly higher.

Conclusion 

So overall, while there’s still a very significant risk that Hurricane might struggle to get its EPS up and running in the next few months, I believe that this is a risk worth taking, considering the tremendous potential the company has to create value for shareholders over the next five to 10 years.

The post Is the Hurricane Energy share price a bargain right now? appeared first on The Motley Fool UK.

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Rupert Hargreaves owns no share 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.

The company has been concentrating its efforts on its Lancaster Early Production System (EPS) development, and chief executive Dr Robert Trice told us he is “delighted to report that operations have progressed to plan and within budget, allowing us to reiterate our first oil guidance of H1 2019.“

We’re looking at a post-tax loss of $75.1m for the six months, but that was partly due to a one-off related to the firm’s convertible bond, and operating expenses came in at $4.7m.

Profit when?

The big question is whether the cash will last, and at 30 June there was reportedly $210.1m of cash equivalents and liquid investments on the books. That’s despite a net decrease of $149.4m in the period, but most of that was investment in the Lancaster EPS — cash outflow from operations was stated at $2.7m.

The big difficulty is valuing the shares with a view of whether to invest, and a lot of that will be down to gut feelings for experience oil investors. I’m not one of them and I’m keeping away for that reason. But if the Lancaster EPS really is as close to first oil as it seems, I think Hurricane could well be less risky than some.

High-flyer

If you want a more impressive oil share price rise, take a look at Eland Oil & Gas (LSE: ELA). Eland is up a bit less so far this year, at 70%, but over the past two years shareholders have seen their investment more than treble in value. That’s after my colleague Harvey Jones suggested a year ago that Eland could do well if the oil price recovery proved sustainable.

Eland is also different in that it’s in profit, with forecasts for big EPS rises putting the shares on forward P/E ratios of only around four and less. 

We had first-half results from Eland on Thursday too, reporting on a period that chief executive George Maxwell described as “the most important operational and financial period in Eland’s history.”

Record production

It included record high gross production from the firm’s OML 40 prospect of 25,000 bopd, thanks to success at its Opuama-8 and Opuama-9 wells. Average gross production came in a little lower, but at a still impressive 17,146 bopd.

Gross proved (1P) reserves have been uprated by 20% to 39.5m barrels, with gross proved plus provable (2P) reserves up a little to 83.4m barrels.

With a reported post-tax profit of $44.7m, operating cash flows of $50.6m and cash on the books of $29.8m, I see Eland as one that could seriously tempt oil investors.

The post Here’s why Hurricane Energy shares could keep on climbing into 2019 appeared first on The Motley Fool UK.

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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.