It feels like being back in the dark days of 2009 the way that oil shares are being hammered by the markets right now with Brent crude oil down yet another $1.5 to $68.5 this morning. Back in June Brent was selling for $113 a barrel!
The mid cap and small cap oil explorers are taking the brunt of the selling but even FTSE 100 giants like Shell and BP are firmly in the red. Companies exposed to high levels of debt are especially vulnerable to the latest round of selling. Afren is down 11% to 46p, Premier Oil down 5% to 178p, Ophir Energy down 8% at 133p, Ithaca Energy down 6% at 61p, Tullow oil 7.5% to 394p, Rockhopper Exploration down 6% at 70p, Hurricane Energy down 7% at 15.75p, Xcite Energy down 4% at 40p. Many of these companies are favourites of private investors and it has been painful for many to see so much red ink in the sector in recent days. After a dreadful end to last month, the pain is continuing in December.
The institutions are heading for the exits big time but for those companies with plenty of longer term hedged production and low production costs when the dust settles there are going to be some bargains. Many are saying that the floor for oil is around $65 and in the longer term (2015 onwards) prices are likely to rebound. In the meantime it feels like trying to catch a falling knife but when others are fearful it can be time to be greedy. When the likes if BG group are selling below £9 (currently £8.66) and BHP Billiton at £14.63 (with a yield over 5%) things start looking interesting for those with a contrarian mindset.
Contrarian Investor UK
IMPORTANT: The posts I make are in no way meant as investment suggestions or recommendations to any visitors to the site. They are simply my views, personal reflections and analysis on the markets. Anyone who wishes to spread bet or buy stocks should rely on their own due diligence and common sense before placing any spread trade.
by contrarianuk
Oil stocks hammered as oil continues to fall
Dec 1, 2014 at 9:29 am in Market Commentary by contrarianuk
It feels like being back in the dark days of 2009 the way that oil shares are being hammered by the markets right now with Brent crude oil down yet another $1.5 to $68.5 this morning. Back in June Brent was selling for $113 a barrel!
The mid cap and small cap oil explorers are taking the brunt of the selling but even FTSE 100 giants like Shell and BP are firmly in the red. Companies exposed to high levels of debt are especially vulnerable to the latest round of selling. Afren is down 11% to 46p, Premier Oil down 5% to 178p, Ophir Energy down 8% at 133p, Ithaca Energy down 6% at 61p, Tullow oil 7.5% to 394p, Rockhopper Exploration down 6% at 70p, Hurricane Energy down 7% at 15.75p, Xcite Energy down 4% at 40p. Many of these companies are favourites of private investors and it has been painful for many to see so much red ink in the sector in recent days. After a dreadful end to last month, the pain is continuing in December.
The institutions are heading for the exits big time but for those companies with plenty of longer term hedged production and low production costs when the dust settles there are going to be some bargains. Many are saying that the floor for oil is around $65 and in the longer term (2015 onwards) prices are likely to rebound. In the meantime it feels like trying to catch a falling knife but when others are fearful it can be time to be greedy. When the likes if BG group are selling below £9 (currently £8.66) and BHP Billiton at £14.63 (with a yield over 5%) things start looking interesting for those with a contrarian mindset.
Contrarian Investor UK
IMPORTANT: The posts I make are in no way meant as investment suggestions or recommendations to any visitors to the site. They are simply my views, personal reflections and analysis on the markets. Anyone who wishes to spread bet or buy stocks should rely on their own due diligence and common sense before placing any spread trade.