UK 18:13 Friday, 23 October 2026
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
This morning, Red Emperor Resources (RMP) announced that the Hawkeye-1 exploration well, offshore in the Philippines, has failed. The company’s share price is down 60%, as of writing. Once again private investors on AIM have suffered horrific losses at the hands of a pure play oil exploration company. This further calls into question the appropriateness of listing such shares on the market.
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Comments
Striebs
I’ve held Otto for over a year and they recently distributed cash from the proceeds of a sale of Galloc field interests back to shareholders .
The Philippines is desperate for oil and gas and the aforementioned sale of Galloc was at a premium to what might have been expected at prevailing commodity prices .
Otto are a proper company and were carried for a fixed amount by BHP (who exited the license) through the drill which came in under budget . Otto have fallen 37% .
There is correlation of risks between the Hawkeye and Cinco projects . The presence of albeit uncommercial hydrocarbons in Hawkeye may make it possible to achieve a farmout of Cinco .
Completely agree with you that the probabilities quoted in CPR’s are misunderstood and generally optimistic but that is not a reason to deny pure explorers a listing or investors a chance to participate in them .
DUCK AND DIVE
If punters want to back a 25 to 1 shot, they should be allowed to. The problem is not that success is unlikely but that wildcat explorers and their “competent person” are empowered by the rules to gild the lily when ramping the prospect. Tom’s Irish chums, USOP, even invented a new kind of survey to almost guarantee riches with a 97% probability of locating commercial hydrocarbons. No-one believed it, of course. Hang on…they did believe it.
wildrides
Your off target Ben ……..Unusually for you . Oil still needs finding and a good discovery can still be sold on to a bigger outfit . The capital for exploring has to raised by someone and to say its wasted is to say “dont explore” . The problem is just with thick investors who dont understand the COS . Contrary to what you say there is a lot of money to be made investing on small oil company drilling . You just have to get in four or five months before spud and sell BEFORE TD every time . You will make alot of money , but never the multibag on the rare as hens teeth real gusher discovery.
Ben Turney
@Striebs – Thank you. Do you think these results strengthen Cinco?
@Duck & Dive – Yes, exactly.
@wildrides – On reflection, I could have refined my point more, but these pure play oil exploration companies are horrifically wasteful and offer no economies of scale. At the moment the world is awash with oil so the market/economy doesn’t need companies like RMP to find more of the stuff. Even if this were not the case this is surely such an inefficient way to go about it
Striebs
Ben ,
I don’t know . The RNS is sketchy on details and my knowledge of geology is limited . One would have thought they would have mentioned it if there was .
What you say about economies of scale is true but things always look easier to people like us from other disciplines who are looking in from outside .
Construction projects can proceed on tiny margins whereas software projects overrun . The inference that if software projects were run like construction projects they would finish on time does not hold .
If blue chips could do it all there would be no need for juniors and the same is true in biotech and professional football . Far cheaper for them to use their capital and influence to buy the winners .
The probability of commercial success even in a $100 oil environment are very low , especially offshore .
Cheap to produce conventional oil is becoming harder to find .
I’d like to see countries like the Philippines and African countries use more of their birth right rather than export it to imperialistic Western powers who are too nimby and faux green to extract their own .