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Speculative Buy Lekoil at 38.5p says Doc Holiday

Friday 26 July 2013

Shares in AIM listed oil junior Lekoil (LSE:LEK) are currently trading just off year lows of 35p. You may say that this is not unusual in the current climate but hang on, let’s review what is actually going on here for the company which is now capitalised at £84 million. It is my free share tip for today.

The company has just raised funds at 39p – £13.2 million. That announcement last week comes not long after the company raised£32 million on its 17th at 2013 AIM admission at 40p.

Exclusive New Interview with David Lenigas of Afriag (LSE:AFRI) and Leni Gas & Oil (LSE:LGO) – read it HERE

The net proceeds of the latest placing will be used to fund the drilling and testing of the sidetrack well: Ogo-1 ST, on the OPL310 licence offshore Nigeria, as referenced in the announcement dated 26 June 2013, as well as for general working capital purposes.

The Placing will be conducted in two stages, with the First Placing Shares being placed using the Directors’ existing authority to allot shares for cash on a non pre-emptive basis, as granted at Lekoil’s most recent EGM, and the Second Placing Shares being placed conditionally upon, inter alia, the passing of the Resolutions at the Extraordinary General Meeting to be held on 7 August 2013.

Cupid (LSE:CUP) The Devastating new BBC expose – read and watch HERE

Since the IPO Lekoil has already delivered some pretty cracking drilling news from Ogo-1 where it has drilled to a total measured depth of 10,518ft (10,402ft true vertical depth subsea (“TVDSS”)), and has encountered a gross hydrocarbon section of 524ft, with 216ft of apparent stacked, net pay.  Lekoil has a 30% economic interest.

Afren, the operator, said that the well was targeting 78 million barrels of oil equivalents (mmboe) of gross P50 (50% chance of recovery) prospective resources, “but based on evidence to date, targeted resources are likely to be significantly in excess of previous estimates“.

Lekoil also has a c6.5% interest in another block which is set to commence production in 2015 and where its unrisked reserve is c25 million barrels of oil equivalent.

It strikes me that the asset base, the exploration upside and the strong balance sheet are not discounted in the current share price. It has to be worth a flutter.

Doc Holiday is one of 20 writers on www.shareprophets.com which today features Cupid, Mr Lenigas, a sparky new Tullow Oil report, Arian Silver, Johnson Matthey and much more plus free share data on all UK listed stocks. For immediate access go to www.shareprophets.com

 

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