Oillies

[Fawkandles]

Hello

My first thread on this forum, and I have decided to focus it on a subject that coincides with my get-a-house strategy.

We have 12-24 months for the UK housing bubble to (slowly) burst according to the consensus view on this forum (please correct if I have mis-gleaned), and I intend to save up a hefty deposit in the meantime through trading high-risk oil and gas shares on the AIM. I'm doing well so far, rising from a £1000 starting pot when BP spilled their undevestating light oil, I now have a 7k stash, having topped up every payday on an average income plus 50% growth (ish).

I am either good or lucky - too early to tell, so will assume the latter and gather tps from any other oil investors on this site

So whats brewin'? Whats the next XEL? Anyone else in CAZA / VOG / DES / NPE / or anything else on my watchlist? This sub-forum should be buzzing with such threads given that our (housing) time is near!

[Fawkandles]

Regarding TA and FA, I am currently reading Trading For Dummies, so can get back to you once I fininsh it!

My general tactic is to find a news-driven share with a relatively low risk, decent funding, get in before the herd, wait for news. I have not sold yet, but it has worked in XEL, DES, CAZA, and AVN. XEL especially

I can't afford to trade a lot in a given share given my holding size and the cost of trading - but intent to do it more once I have more money to play with. I did with XEL successfully, and dont want to try again in case I mess it up. I did what I thought was a risky top-up at 104p

[Fawkandles]

So are you saying your profits are based on current market prices or on banked profits?

Regarding trading costs, they are very low now and you can be in and out of a share as long as you cover dealing costs which on a £2.5K deal is now only 1.3%. Try the fool.

Try 'mastering the trade' by James Carter. I've three book on the go currently, if you are interested give me a shout and I'll post the titles.

You could have a look at BLVN but you are going to have to be quick on the turn for that one and of course GKP.

Will add that book to my xmas list. Thanks.

You sort of prove my point about dealing costs. 2.5k trades are out of my league. I do 700-1000 for one holding, and doubled up on XEL as I was confident about it. I will do more trading once I have 7+ holdings in a 10k+ portfolio. Generally I need 5% growth to break even on the spread and costs. I use Barclays which has a deal fee of £13 (iirc). A little pricier than some, but I really like their service.

My 'profits' are current paper profits and mostly made up from XEL. I have actually banked/diversified about 20% so far, and the other 55% is all down to XEL paper profits.

What is you XEL exit strategy? My hunch is that there will be a big news gap after winter until the production starts late in 2011, so plan to sell after upgrades and CPR etc. Hopefully Feb 2011? £6?? £10???

I am still confident about flow rates.

[Fawkandles]

Oooooh just realised you are the same bulltraderpt on the iii site!

I would post there too but they no longer allow new people to post unless you phone them up and convince them you're not a scammer.

Shame. I was looking forward to posting my trades and adding several zeroes like everyone else

[OzzMosiz]

Turned £3500 into £14000 thanks to GKP.

Regal Petroleum are in discussions about a buyout and have several interested parties, SP currently 18p, year low/high is 11.35 - 103, so taking a punt there.

RRR and RGM (mining) look promising in the long run too.

Edited November 25, 2010 by OzzMosiz

[Fawkandles]

Thanks for your thoughts. Surely selling after positive flow rates would be folly given that others will be waiting to buy AFTER the risky event? (unless you mean such people will buy in over the 3 days you mention). Noted nonetheless. I bought RKH before flow, saw it go up 60%, then straight back down again!

If I sell XEL for over 600p I'm gunna buy an engagement ring for my gf

Buy 'shame' I mean its a shame iii prevent new posters signing up to the board. My noob drivel may not be missed, but what if someone useful wants to sign up?

[Fawkandles]

Turned £3500 into £14000 thanks to GKP.

Regal Petroleum are in discussions about a buyout and have several interested parties, SP currently 18p, year low/high is 11.35 - 103, so taking a punt there.

RRR and RGM (mining) look promising in the long run too.

Noted. Added the miners to my watch list. Regarding GKP, its too political for my liking so stayed out. Captain Hindsight says I'm an idiot, but no regrets. I remember having a choice between NPE, XEL and GKP in early September, and picked XEL.

As for BLVN, Regal, etc, I couldn't if I wanted to. No spare funds til xmas payday or til I sell DES. Plan is to sell on sentiment next week or hold if it looks like a biggun (thats what SHE said).

[OzzMosiz]

Noted. Added the miners to my watch list. Regarding GKP, its too political for my liking so stayed out. Captain Hindsight says I'm an idiot, but no regrets. I remember having a choice between NPE, XEL and GKP in early September, and picked XEL.

As for BLVN, Regal, etc, I couldn't if I wanted to. No spare funds til xmas payday or til I sell DES. Plan is to sell on sentiment next week or hold if it looks like a biggun (thats what SHE said).

Keep an eye on THR - has broken out a bit yesterday, if it retraces to under 2p possibly worth a buy,

FAWK - I bought RKH at 140 - sold at 190, was gutted when it hit 500 a few weeks later

Edited November 25, 2010 by OzzMosiz

[Fawkandles]

Keep an eye on THR - has broken out a bit yesterday, if it retraces to under 2p possibly worth a buy,

FAWK - I bought RKH at 140 - sold at 190, was gutted when it hit 500 a few weeks later

Its not a mistake if you learn from it - thats what I tell myself. I'm yet to make any selling mistakes as I haven't sold anything other than quick escapes from bad buys!

[Fawkandles]

Do you think that will ever come about though?

I'm currently just in profit territory, and very disgruntled with the company, so plan to escape shortly. Its a risk, but I suspect it will go up a bit as the rumors start circulating. I can't see any bad rumors happening given that there IS oil there.

Time will tell!

[Fawkandles]

It depends on your times scales though.

This is the issue for me. We don't know all the time scales.

Early Dec - Flow results (assuming good)

Mid Dec - 'other news' such as upgrade estimates?

Jan - Some sort of forward looking statement of intent

Feb - Aug NOTHING

Late 2011 - start production

Its the big gap that scares me. What will happen with this extra oil they found? Does it need its own flow test or is that being done now too?

[OzzMosiz]

Ignore FT Alphaville, they suggested shorting GKP at 12p, and continually dismiss GKP as one for "mug punters" - it stands now at £1.79, they still diss it.

3.9billion oils of barrel minimum.

[martingale]

Speculative one:

Bahamas Petroleum Company

http://www.bpcplc.com/investor-relations/share-price

[Fawkandles]

Speculative one:

Bahamas Petroleum Company

http://www.bpcplc.com/investor-relations/share-price

My instinct says I would be too late. What is its near-term upside/dowside etc?

[Fawkandles]

In other news XEL is ticking up nicely this morning

Never been so excited about some numbers on a screen! (Other than reaching 2k rating in WoW 2v2 arena )

[martingale]

My instinct says I would be too late. What is its near-term upside/dowside etc?

Goldman short term target of 16p but to be honest its trading on momentum and a few leads at the moment rather than real news.

I'd put it on a watch list and only get in if it drops bellow 8p or there is new drilling/seismic data.

Edited November 26, 2010 by martingale

[guitarman001]

Good thread - sounds like a lot of people trade as opposed to investing. Mainly I buy shares for the long-term via my iii ISA. I've looked at spreadbetting as a means to short a share but it looks complicated (only glanced at it the once however) - easiest way?

My main investments are BP (post-crisis), LLOY and BDEV. I would like to do more research into other oilies but haven't had the time. Some of you have made eye-wateringly good profits, well done.

[Fawkandles]

Good thread - sounds like a lot of people trade as opposed to investing. Mainly I buy shares for the long-term via my iii ISA. I've looked at spreadbetting as a means to short a share but it looks complicated (only glanced at it the once however) - easiest way?

My main investments are BP (post-crisis), LLOY and BDEV. I would like to do more research into other oilies but haven't had the time. Some of you have made eye-wateringly good profits, well done.

Personally I have no intention to short as its a whole different way of thinking. When I learn about companies I'm programmed to spot potential, and wouldn't think "that sounds rubbish, I'll short it".

As for spread bettng generally, I would only consider opening an IG account if I had already got my CGT allowance and my ISA was full. The market at present seems to have a lot more long opportunities than shorts, post 2008, imho.

I was also in BP - my first ever investment 309p entry, stop-out whilst on holiday at 385p. I was so chuffed with my £200 of free money! Was also in BDEV from 102-111p iirc. Lucky escape. I think LLOY and BDEV are sound long term investments, but entry can wait imho, other shorter term stuff to play with until then.

[Lagarde's Drift]

Interesting thoughts on here. It does depend on whether you have the time and money to trade, or if you are an investor. If the latter, you may find that buying a share about 6-12 months before any concrete action (seismics, rig news, drills) may be the best course of action. A lot of the shares mentioned here are already in action, and therefore any gains to be had may be partially priced in.

For example, my first post about the Falklands oil was in, (looks), May, but I began building positions in late 2009 after some lengthy research. I will be holding till the final sell out, having decided my strategy based on fundamentals which have not since changed.

I would love to have been in stuff like XEL, BLVN, GKP etc in the early days, but these are now in action (or have other negatives I don't like), and some of that is priced in. The new oily shares I research now are the quiet, cheap ones with several months of nothing before the action commences.

This is not a unique approach, and by no means is it the only approach, so best of luck to you. If you are spread-betting - watch those stops! The AIM E&P sector is now one of the biggest private investor focuses, and may be the next (or current) ponzi boom.

[Lagarde's Drift]

I've been trying trade DES but I've not yet been brave enough to put any money on it. There is a nice range which has developed over the last couple of weeks (4 - 5) but I've just not yet committed, stupid really.

Edit: Correction.

This illustrates my point nicely. The DES trading range was 105-125 (roughly). With spreads and trading costs it will not be easy to make decent cash unless you are calling the absolute peaks and troughs accurately. Which only 5% of day traders manage to do regularly. Whilst I will admit to gleefully making some money in this trading range, I think it is much better to be in with a low price, my average is 75p and I have considered selling some to reduce my capital exposure but have decided not to due to my long term strategy, but at least I have the choice.

p.s. I'm sure you're aware next week is definitely not the right time to trade DES, the volatility will go crazily unpredictable again.

[Fawkandles]

Interesting thoughts on here. It does depend on whether you have the time and money to trade, or if you are an investor. If the latter, you may find that buying a share about 6-12 months before any concrete action (seismics, rig news, drills) may be the best course of action.

The new oily shares I research now are the quiet, cheap ones with several months of nothing before the action commences.

This is not a unique approach, and by no means is it the only approach, so best of luck to you.

May I ask what companies you think meet this criteria right now?

[Fawkandles]

Oh and in other news AVN has had a successful launch last night!

Hooray for money!

[Lagarde's Drift]

May I ask what companies you think meet this criteria right now?

Well, you can search for oily companies using a seemingly vast variety of screening methods. I am by no means an expert and am still finding my own way in this. I look for geology (and geographical location), market cap (size does not matter, value does), cash in hand (therefore likelihood of fund-raising), technical and political risk, the list goes on and on.

One of my most important criteria is finding something that is cheap, ie undervalued. This could be for any variety of reasons, but typically is because the market is overpricing a certain risk, e.g. technical, geological, political, financial risk. This applies to big oilies as much as small oilies. BP during the crisis is a good example.

I presume you are asking which ones are quiet now. I have been watching DPL for several months - go see what their timescales are. Recent blip up but perhaps better buying opportunities in the future. Better still, have a look at XEL, BLVN, GKP et al and see what their timelines in the past were, and when were ideal buying opportunities and reflect that towards your current research.

Do read the books mentioned on this thread - utterly invaluable if you are going to be a serious investor.

[Fawkandles]

Thanks, Cash

I'm hoping that CAZA fits this bill, but I did get bitten by the dilution monster.

I have ordered the book mentioned earlier, and am still reading my current one.

[Lagarde's Drift]

Whilst I do not dismiss technical analysis, I'm sure you're aware that junior oilies are news, and sentiment, driven. Even fundamentals are commonly overridden temporarily with euphoria or depression/fear. So be careful using TA when picking your trading spots - you are liable to be caught out by sharp movements, some of which have nothing to do with news releases. The relative lack of trading liquidity of some junior oilies doesn't help, try comparing one to the likes of BP or Tullow and you can see the difference. This is a big reason why I am wary of short term trading.

A personally instructive case for me is TRP. Drilled their final duster and having no cash left in the bank the share price collapsed and many people lost virtually their entire investment. Despite the ridiculous spread on that day, I took a small punt at about 1p and got out shortly after with a small 20% profit. In hindsight, a silly thing to do because I could have lost the whole thing, even at that price. I was not investing on fundamentals, merely on sentiment which was very negative on the day. I was stupid enough to equate that with a similar punt on BP during their crisis. Completely different bets but I was unable to differentiate between them. That being said, look at the share price now. You really never know in this game, which is why I look for really undervalued companies as this insulates me from such crazy drops. There are companies out there that are trading at such a discount that you may well get a "free drill" if you look hard enough.