SMALL CAP MOVERS: Baron Oil falls despite upbeat report; Accrol leaps after paper towel deal with Unilever
Baron Oil’s Competent Person Report (CPR) released on Tuesday was very significant and, by most accounts, the independent valuation of Chuditch’s asset of the AIM-listed oil and gas exploration group in Timor -Leste was good.
Baron’s technical director, Jon Ford, called the CPR, which is essentially a third-party view of the project and its scope, a “major milestone” while stressing that it confirms the “potential commercial viability of the asset”.
The report detailed a gas resource of 1.1 trillion cubic feet – a very significant discovery for any company the size of Baron (which has a market value of around £32m). Surely such promising news must have sent stocks skyrocketing, right?
Accrol Group’s deal with Unilever to exclusively produce and sell a Lifebuoy-branded paper towel product has caught the attention of investors
Quite the opposite, in fact. This week, shares of Baron Oil are down 22% after an immediate drop of 17.5% on Tuesday.
Maybe it was just profit taking. Baron general manager Andy Yeo himself noted Baron’s “good run” of late. Indeed, a zoomed view of the stock chart sees Baron up almost 140% year-over-year.
Alternatively, investors may have revised their expectations, given that potential resources appear to be lower than previously indicated. According to the company, this is due to incomplete survey coverage.
Analysts at real estate broker Allenby Capital seem less worried. In fact, its analysts increased the valuation of its project by 52%, noting that “the contingent resource for the discovery of Chuditch-1 constitutes a major element of risk reduction and underpins the potential of the asset”.
A caveat recognized by the broker is that the need for funding before a “drill or drop” decision in mid-June remained a short-term risk.
Longboat Energy also took a nosedive when investors reacted to news that a proposed appraisal well at the Egyptian vulture light oil discovery is not currently proceeding – as the joint venture partners have failed to trigger an extension of the Norwegian project’s license and it was dropped.
Longboat said it wanted to resume the project in a licensing round in 2024. It dropped the stock around 20% on Friday to 23.57p on Friday morning.
Sticking to small-cap oil tankers Angus Energy saw stronger share price action, thanks to a milestone in its UK onshore project. Shares jumped 13% to 1.59p on Thursday after the successful completion of the Saltfleetby ground.
Angus Energy has also entered into a £3m financing agreement with Aleph Commodities to expand Saltfteelby’s operations. Meanwhile, non-executive director Richard Herbert, who was previously head of exploration at BP, has now taken the helm as chief executive.
At 1.56p, Angus shares had fallen slightly to 1.56p on Friday.
Elsewhere, dual-listed Artemis Resources saw its UK shares fall 11% on Tuesday after pricing a further A$2.55m (£1.45m) capital raise.
Artemis had a turbulent start to the year, having suspended its commercial activities in Australia at the end of February to undergo this fundraising exercise. Now it will use the funds to support exploration work and for “general working capital” while its board completes a technical and corporate strategic review.
Conroy Gold & Natural Resources ended the week on a high note with a share climbing 11%, to 20.2p, boosted by the explorer’s new gold discovery in County Monaghan, Ireland.
Company chairman Richard Conroy described the latest positive result as “another step forward” in what he considers a “vast new gold district”.
Moving up a gear into a whole different industry, paper towels are a fascinating subject, aren’t they?
Well maybe not, but the Accrol Group’s deal with British multinational Unilever to exclusively produce and sell a Lifebuoy-branded kitchen towel product has caught the attention of investors.
Shares of Accrol rose 6% to 33.38p at the end of the week.
Across the broader market, small cap stocks gained. The AIM All-Shares Index rose 1.19% to 863.59 during the week, slightly outpacing the FTSE All-Share Index’s 1.04% gain.