Rockhopper’s progress in developing the Sea Lion development remains strong. During the six months to 30 June, FEED contracts for the development were awarded to a set of highly regarded contractors. Alongside this, Rockhopper has benefitted from the lower-cost environment present in the oil and gas industry. This has reduced its costs and has also caused the break-even oil price required to sanction new projects to fall.

The successful exploration campaign that was run by Rockhopper means it continues to believe in the commercial viability of the North Falkland Basin. In fact, Rockhopper is of the view that there are a billion barrels of recoverable oil and that they can be produced in multiple phases of development over the medium-to-long term.

Looking ahead, Rockhopper expects operating cash flow to broadly cover its overheads in future. It expects oil production for the remainder of 2016 to be around 1,500 boepd (barrels of oil equivalent per day) following its acquisition of Beach Egypt.

Is bigger better?

Rockhopper has considerable long-term potential and could turn around its 35% share price fall of the last year. However, it remains a relatively small company and with the outlook for the wider resources sector being highly uncertain, it could be a good idea to focus on a larger and more diversified peer such as Glencore.

Of course, Glencore is undergoing a period of intense challenges right now. Its debt levels were viewed as excessive by many investors and this caused its shares to come under severe pressure last year. However, the current strategy being employed by Glencore is allowing it to make rapid progress towards becoming less leveraged and more streamlined as a business. For example, it has made asset disposals, suspended dividends and reduced its cost base as it improves its overall business model.

Glencore is expected to return to profitability in the current year and then grow its bottom line by as much as 50% next year. This puts it on a price-to-earnings growth (PEG) ratio of just 0.6, which indicates that it offers 20%-plus upside.

Clearly, this is superior to Rockhopper’s valuation since Rockhopper is expected to remain lossmaking in each of the next two years. However, Rockhopper is an exploration company transitioning towards increasing production and so profitability is unlikely to be achieved for a number of years.

This doesn’t mean that Rockhopper should be avoided. It has 20%-plys upside given the strength and growth opportunities presented by its asset base. But with the outlook for commodity prices still uncertain, it may be prudent to stick to profitable, growing and cheap resources stocks such as Glencore. For these reasons, it is a better buy than Rockhopper at the present time since a 20%-plus return looks more likely and less risky.

The post Will this resources stock soar by 20%+ after today’s results? appeared first on The Motley Fool UK.

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Peter Stephens 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.

Still, the company continues to have a relatively strong balance sheet, with cash resources of $110m. And with significant progress having been made in advancing the Sea Lion development during the year, Rockhopper appears to be making encouraging progress in what was a transitional year.

Furthermore, Rockhopper has strengthened its asset base via the acquisition of Falkland Oil & Gas, and it appears to be in a better position as a consequence to deliver profitability in the long run. Certainly, its performance depends on the price of oil and on progress made in unlocking the potential value from its asset base. But with production increasing in its Mediterranean assets and the scope to develop its other assets, it may be of interest to less risk-averse investors.

Risky bet?

Also releasing news today was Victoria Oil & Gas (LSE: VOG). Its shares have risen by around 10% after it announced a $26m debt facility that will support its production expansion at Logbaba through 2016 and 2017. This is encouraging news for the company, since it now expects to increase gas production from the Logbaba project by 30% following the 107% increase in average daily production in 2015.

The move may be seen as positive by the company’s investors since it means there’s no need to raise the funds from shareholders. And with Victoria Oil & Gas maintaining a prudent view on its gearing levels, the outlook for the business remains relatively encouraging. As such, it could be of interest to less risk-averse investors, although with there being so many other opportunities among larger oil and gas plays that arguably have less risk, most investors may prefer to look elsewhere first.

Business momentum

Meanwhile, shares in iEnergizer (LSE: IBPO) have risen by a whopping 65% today after it announced a very positive trading update. The digital publisher and technology company expects to announce a significant increase in EBITDA (earnings before interest, tax, depreciation and amortisation) for the year to 31 March 2016, which is above and beyond its previous target. The reason for this is a combination of renewed business momentum, contract wins and the successful implementation of a transformation plan.

As a result of today’s positive update, investor sentiment in iEnergizer has markedly improved and this could push its share price higher over the short run. And while this may lead less risk-averse investors to become interested in the stock, it may be prudent to await further details of the company’s improved performance before buying a slice of it.

The post Are Victoria Oil & Gas plc, Rockhopper Exploration Plc And iEnergizer Limited ‘Screaming Buys’ Following Today’s Updates? appeared first on The Motley Fool UK.

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Peter Stephens 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.

For example, the falling oil price has had a negative impact on Rockhopper Exploration’s (LSE: RKH) valuation over the last year, with it falling by 47%. However, the company’s shares have become increasingly popular in recent weeks as the price of oil has risen and Rockhopper is now up by a whopping 17% in the last month.

Clearly, the price of oil will make a huge difference to Rockhopper’s performance, but putting that to one side, the company appears to be relatively appealing for a small-cap exploration business. That’s at least partly because it has a reasonably strong balance sheet. This includes a substantial amount of cash that should be able to fund its near-term drilling requirements. In addition, Rockhopper has a fairly well-diversified asset base, with it having considerable potential in the Falklands as well as assets in Europe.

Despite Rockhopper’s failure to be awarded a production concession in Italy recently, its tie-up with Falkland Oil & Gas should produce a stronger combined entity that’s better equipped to face a low oil price environment. As such, and while Rockhopper is a risky buy, it could continue to make gains over the medium term.

Share price soaring

Also rising in recent weeks has been Sirius Minerals (LSE: SXX), with the company’s shares recording capital gains of 38% in the last month. That’s despite there being no significant news flow released during the period. As such, it could be a response to a more positive outlook for the wider commodities sector, with Sirius’s share price having come under a degree of pressure prior to the last month, due in part to question marks surrounding the cost of the fertiliser it plans to produce.

Although Sirius Minerals recently announced a delay to the definitive feasibility report for the planned mine in York, such challenges are to be expected when such a major project is being delivered. But with finance still being rather uncertain due in part to the risk-off attitude of investors towards the commodity sector at the moment, Sirius could be a stock to watch rather than buy at the present time.

Think long term

Meanwhile, Rare Earth Minerals (LSE: REM) continues to offer excellent long-term potential due to the expected global increase in the use of lithium. Although its shares have fallen by 29% since the turn of the year and it has no revenue at the present time, it has an upbeat long-term outlook. That view is enforced by the potential for deals with major customers such as Tesla, as well as the upbeat update released by European Metals Holding earlier this year, in which Rare Earth Minerals has a 12% stake.

Despite this, it may be prudent to invest elsewhere right now since sentiment in commodities could easily worsen if commodity prices fall. Rare Earth Minerals may have a relatively well-diversified asset base that could deliver huge profitability in future years, but with other resources stocks being profitable and offering good value right now, the risk/reward ratio of Rare Earth Minerals may be trumped by a number of its peers.

The post Are These 3 Small-Cap Resources Stocks ‘Screaming Buys’? Rockhopper Exploration Plc, Sirius Minerals PLC And Rare Earth Minerals PLC appeared first on The Motley Fool UK.

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

Shares in iron ore producer Ferrexpo (LSE: FXPO) have surged by around 24% today on the back of rising metals prices. As such, investor sentiment in the wider resources sector has been given a boost and, suddenly, the outlook for investors seems to be a little brighter.

However, the reality is that companies such as Ferrexpo face highly challenging outlooks. For example, in the 2015 financial year Ferrexpo is expected to have recorded a pre-tax loss of £19m, even though it delivered record production during the year. As a result of this, Ferrexpo’s shares have fallen from a high of 80p to a low of just 15p in the last year.

However, with Ferrexpo due to return to profitability in the 2016 financial year, its shares could begin to move upwards. And with there being the scope for a further increase in metals prices, now could be a good time to buy them. Certainly, they remain relatively high risk, but with Ferrexpo trading on a forward price to earnings (P/E) ratio of only 7.1, it could prove to be a surprisingly strong performer in the coming years.

Downbeat

As well as metals price rising in recent days, the price of oil has also been creeping up. This could be good news for investors in Rockhopper (LSE: RKH), especially since its shares have fallen by a whopping 59% in the last year. However, with the recent disappointment of the failure to award Rockhopper a production concession for the Ombrina Mare field in Italy still likely to be weighing heavily on investor sentiment, the company’s short term outlook may appear to be rather downbeat.

Looking further ahead, though, Rockhopper continues to be relatively well-funded and has an asset base which offers considerable long term profit potential. Certainly, a decline in oil prices would hurt it, but for less risk averse investors seeking a small oil explorer, Rockhopper could be of interest. That’s especially the case since Rockhopper has a relatively well-diversified asset base when compared to a number of its similarly-sized exploration peers.

Potential

Meanwhile, shares in Rare Earth Minerals (LSE: REM) have continued their slide, with them being down by 24% in the last three months. However, today’s news that Rare Earth Minerals has increased its stake in European Metals Holdings by 7.9% to 19.8% at a cost of £670k could improve its long term outlook. That’s because it adds to the company’s equity positions in major lithium deposits, with there being the potential for large-scale, low cost production over the long run.

Clearly, Rare Earth Minerals has a significant amount of long term growth potential since demand for lithium is likely to rise in future years as the importance of cleaner energy rises and products utilising lithium battery power increase in prevalence. As a result, and despite their recent share price performance, shares in Rare Earth Minerals may be of interest to less risk averse investors.

The post 3 Resources Stocks Set To Shine? Rockhopper Exploration Plc, Ferrexpo Plc And Rare Earth Minerals PLC appeared first on The Motley Fool UK.

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Peter Stephens owns shares of Ferrexpo. 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.

Shares in oil and gas company Rockhopper (LSE: RKH) were dealt a blow today with news that it will not be awarded a production concession for the Ombrina Mare field which is located offshore Italy. As a result, the company says that it may seek damages and compensation against the Italian government.

This follows the reintroduction of the ban on exploration and production activity within 12 miles of the Italian coast and despite Rockhopper having completed the required technical and environmental authorisations, the concession will not be awarded. Of course, Rockhopper retains its interest in the exploration permit covering the Ombrina Mare Field Area and none of its other interests in Italy have been affected.

Clearly, this is a blow for Rockhopper’s long term future since the project could have improved investor sentiment in the company. Although it may reduce Rockhopper’s diversity, it’s still attractive  in this regard versus many of its small exploration and production rivals. As such, it could have appeal for less risk averse investors in the long run, but seems to be a stock to watch, rather than buy, at the present time.

Major question mark

Also reporting disappointing news flow recently was potash mining company Sirius Minerals (LSE: SXX). It has decided to delay the definitive feasibility study for its planned mine in York and this hurt investor sentiment. In fact, the company’s shares have fallen by 19% since the turn of the year.

Of course, delays to such a major project are inevitable and it now appears that the market is a touch more realistic about the progress which will be made. However, there is still a major question mark surrounding financing for the £1bn+ project, which is likely to be made even more difficult due to the general fear and uncertainty surrounding the mining and resources sector.

This could lead to further delays and while Sirius Minerals could prove to be an excellent long term buy, it may be prudent to await a keener share price before doing so.

On the rebound

Meanwhile, shares in copper miner Antofagasta (LSE: ANTO) have fallen by 21% since the turn of the year and part of the reason for this is the company’s failure to meet its production target for 2015. Instead of the target of 635,000 tons being met, Antofagasta produced 630,300 tons. However, it insists that the copper price will rebound and, due to this, it intends to increase production in the current year.

This seems to be a wise move because it should help to increase the company’s bottom line. And with Antofagasta expecting to record a fall in net cash costs of around 10%, its profit outlook could be a lot more positive than the market is currently pricing in. For example, a price to earnings growth (PEG) ratio of 0.5 indicates that following the recent disappointing update, now is the time to buy, rather than sell, Antofagasta.

The post Do Recent Disappointments For Rockhopper Exploration Plc, Sirius Minerals PLC And Antofagasta plc Make Them ‘Sells’? appeared first on The Motley Fool UK.

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• £5,000 invested in this red hot FTSE 250 growth stock last month is now worth…

Peter Stephens 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.

When it comes to the resources sector, though, investors may need to allow a lot of time for returns to come good. After all, miners, oil & gas businesses, and support services companies are enduring the worst period for many, many years and, looking ahead, there seems to be little hope on the near-term horizon.

In terms of timing, though, now seems to be an opportune moment for long term investors to buy into the resources sector. Valuations are very low, prospects are downbeat and margins of safety are relatively wide.

Rock-bottom

This situation is very evident when looking at resources support services company Cape (LSE: CIU). Its shares have fallen by 13% in the last year and now trade on a price to earnings (P/E) ratio of only 9. This indicates that there is significant upward re-rating potential on the cards, and this is further evidenced by Cape’s dividend yield, which currently stands at 5.9%.

Looking ahead, Cape’s bottom line is due to fall by 11% in the current year and by a further 1% next year. As such, there seems to be a lack of catalyst to push its shares higher over the short to medium term but, with dividends being covered 1.9 times by profit, its income prospects appear to be relatively secure. And, in the long run, even just a stabilisation in the resources sector, never mind a recovery, could lead to huge share price gains for Cape due to its current rock-bottom valuation.

Tremendous upside

Similarly, Lonmin (LSE: LMI) is also dirt cheap at the moment. Its shares have collapsed during the course of the last year, falling by 89% during the period. This means that they now trade on a price to book value (P/B) ratio of only 0.1, which indicates that there is tremendous upside potential.

Certainly, there is scope for asset write downs in future, and for the value of net assets to fall as a result of the losses that are forecast in each of the next two financial years. And, with its near-term future being decidedly uncertain due to the prospect of cash flow issues should the planned $400m rights issue not go ahead, Lonmin is clearly a high risk investment at the present time. However, with such a low valuation it could be of interest to less risk averse investors as part of a well diversified portfolio.

Encouraging progress

Meanwhile, Rockhopper (LSE: RKH) has also seen its share price fall in the last year, and is now down by 43%. Unlike Lonmin, though, Rockhopper’s finances appear to be in relatively good shape and sufficient to fund its near-term drilling programmes. On this front it has enjoyed considerable success in 2015 and, with Rockhopper having multiple assets in different locations, it appears to be better diversified than many of its exploration peers.

Furthermore, with Rockhopper making encouraging progress with regard to increasing gas production from its Guendalina asset, as well as exploration and production potential in the Falklands basin, it could prove to be a sound, albeit volatile, long term resources play.

The post Is Now The Perfect Time To Buy Rockhopper Exploration Plc, Lonmin Plc And Cape PLC? appeared first on The Motley Fool UK.

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Peter Stephens 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.

Of course, Petra’s share price has come under severe pressure during the course of the year, with it falling by 61% year-to-date. That’s at least partly due to a sharp fall in the price of diamonds, with Petra today confirming that they have fallen by an additional 9% from June to September. However, with the South African Rand also weakening, this has somewhat offset the fall.

For the full-year, Petra is forecast to increase its bottom line by 26% versus last year which, when combined with a price to earnings (P/E) ratio of 11.4, means that it offers a price to earnings growth (PEG) ratio of just 0.4. This indicates that its shares offer good value for money and, while the outlook for diamond prices is highly uncertain, Petra Diamonds seems to offer a sufficiently wide margin of safety to make it an appealing, albeit volatile, buy for the long term.

Similarly, copper miner Antofagasta (LSE: ANTO) has fallen by over 3% today after it cut its production guidance for the full year. This follows delayed ramp-up in production at Centinela Concentrates and also a minor pit wall slide at Centinela Cathodes. And, while net cash cost guidance has remained unchanged, the company’s profitability is likely to come under pressure due to falling commodity prices as well as lower than expected production.

Of course, Antofagasta appears to have a sound strategy to cope with the current downturn in the resources sector. For example, it is focusing on reducing costs in order to maintain its competitiveness and is also taking advantage of distressed asset prices via the purchase of a 50% stake in the Zaldivar copper mine in Chile. Trading on a PEG ratio of 0.4, it appears to offer a relatively wide margin of safety and, while its future is relatively uncertain, for less risk averse investors it appears to be a strong buy at the present time.

Meanwhile, Rockhopper Exploration (LSE: RKH) has also experienced a share price fall, with its valuation declining by 40% since the turn of the year. This is, on the one hand, rather surprising since Rockhopper has enjoyed better than expected results from its drilling campaign and, at a time when there is concern among investors regarding the financial stability of oil exploration companies, has a cash pile of $160m which should easily fund future projects.

On the other hand, though, Rockhopper has suffered from the falling oil price. With it seemingly unlikely to rise significantly in the short run, Rockhopper’s share price could continue to disappoint. But, for long-term investors, its diverse operations, potential for further drilling success and relatively strong balance sheet make Rockhopper a worthwhile purchase at the present time.

The post Are Rockhopper Exploration Plc, Petra Diamonds Limited & Antofagasta plc ‘Screaming Buys’? appeared first on The Motley Fool UK.

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• Up 11% today, could the Magnum Ice Cream share price be an overlooked bargain?
• As Endeavour Mining shares jump 7% on Q1 results, is this a way into the gold rush?
• £5,000 invested in this red hot FTSE 250 growth stock last month is now worth…

Peter Stephens 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.

Of course, a falling oil price hits oil support services companies to a lesser extent than oil producers. This is evident in Petrofac’s financial performance, with the company remaining profitable throughout the oil price slide to below $50 per barrel.

Certainly, net profit has been hit hard, with Petrofac reporting a decline in earnings of 11% last year and this is set to continue in the current year with a fall of 69%. However, it is due to be followed with earnings growth of 174% next year and, with Petrofac trading on a forward price to earnings (P/E) ratio of just 9.5, it appears as though the vast majority of this growth has not yet been priced in by the market.

Furthermore, Petrofac also yields 4.6% from a dividend which is set to be covered 2.3 times by profit next year. This means that as well as being a strong growth and value play, Petrofac is also a top notch income stock, too.

However, when it comes to a cheap valuation, Lonmin (LSE: LMI) is difficult to beat. Unlike Petrofac, its share price has slumped by 83% since the turn of the year and this means that the company now has a price to book value (P/B) ratio of just 0.1. This is incredibly low and, while asset writedowns are a real danger moving forward, there still appears to be a relatively wide margin of safety included in the company’s share price.

Looking ahead, Lonmin is likely to benefit from the recent rise in the price of platinum, with the precious metal making gains of over 10% in a matter of weeks. Certainly, there is a risk that demand from diesel cars is hurt by the recent VW scandal but, with such a low valuation and with Lonmin due to post a narrower loss in each of the next two years, its risk/reward ratio seems to be relatively appealing.

Similarly, Rockhopper Exploration (LSE: RKH) has posted a fall in its share price of 41% since the turn of the year, with a falling oil price being a major reason for this. In fact, Rockhopper has had a relatively upbeat year, with impressive finds in the North Falkland Basin as well as continued progress with its Mediterranean assets showing that it has the potential to become a highly profitable oil producer in the coming years.

Furthermore, with financial health becoming increasingly important to investors in the oil and gas industry, Rockhopper’s relatively large pile of cash plus a P/B ratio of 0.75 indicate that it could prove to be a worthwhile, albeit volatile, long-term purchase.

The post 3 Dirt-Cheap Resources Stocks: Lonmin Plc, Petrofac Limited And Rockhopper Exploration Plc appeared first on The Motley Fool UK.

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Peter Stephens owns shares of Petrofac. The Motley Fool UK owns shares of and has recommended Petrofac. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

In addition, Rockhopper is also aiming for production in the near term from its portfolio of assets in the Mediterranean, which would provide the business with a cash flow boost to aid in its development of assets off the Falkland Islands. Furthermore, a beneficial tax deal with the Falkland Islands government regarding a deferment of tax payable by Rockhopper from the farm-out to Premier Oil in 2012 has also boosted financial performance in the short term.

Of course, Rockhopper remains a loss-making business and, in fact, its losses have increased from $3.2m in the first half of 2014 to $5.1m in the first half of 2015. However, Rockhopper appears to have sufficient resources to continue its drilling programme, with the company having a cash balance of $160m. As such, its outlook appears to be positive and, with the company trading on a price to book (P/B) ratio of just 0.67, it seems to offer excellent value for money given its upbeat future prospects.

Clearly, Rockhopper’s share price has disappointed this year, with it falling by 33% since the turn of the year. Likewise, sector peers, Enquest (LSE: ENQ) and Ophir (LSE: OPHR) have also posted falls in their valuations, being down 22% and 40% respectively year-to-date.

Like Rockhopper, Enquest’s most recent results saw its profitability worsen, with EBITDA falling by around 20%. This was despite production increasing by over 17% during the period, with Enquest reiterating its full-year guidance for total production.

However, with a lower oil price likely to remain a feature of the oil sector, Enquest could struggle to turn a profit in the short to medium term – especially since its cost base is arguably less appealing than those of companies which operate in regions other than the North Sea. As such, and while Enquest has previously enjoyed a high level of profitability, news flow for Rockhopper could be more positive over the medium term.   

Similarly, Ophir is also struggling to turn a profit given the low oil price. It is expected to move into loss-making territory this year and, while the company is expected to bounce back next year, this may not be sufficient to positively catalyse investor sentiment and push the company’s share price higher.

Certainly, Ophir has a relatively strong financial position and its P/B ratio of 0.55 holds appeal. But, with a major investor, Kulczyk Investments, selling its stake earlier this year, market sentiment could continue to worsen in the short to medium term. As such, and while Enquest and Ophir could be strong long term performers, the potential for improving news flow at Rockhopper indicates that it is the best buy at the present time due to there being a clear catalyst to improve investor sentiment.

The post Is Rockhopper Exploration Plc A Better Buy Than Enquest Plc And Ophir Energy Plc? appeared first on The Motley Fool UK.

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• How Microsoft’s strong earnings affect the wider stock market
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• £5,000 invested in this red hot FTSE 250 growth stock last month is now worth…

Peter Stephens 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.