UK 11:42 Friday, 6 November 2026
Breaking news and expert analysis on fast-moving AIM and LSE listed shares
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.
A month ago, Gary Newman wrote that LGO Energy (LGO) “looks overvalued and in trouble”. His analysis drew quite a lot of criticism, but this morning it looks like his view has been vindicated, as the company announced an unimpressive set of interim figures. For good measure, hidden away in these, is a significant downgrade of the company’s production outlook.
Already a member? Sign in
• All premium articles
• Tom Winnifrith’s Bearcast
• Access to all the entire nearly 13 year archive
• ShareProphets Daily Newsletter
Cancel any time
This area of the ShareProphets.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ShareProphets.com. ShareProphets.com does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ShareProphets.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ShareProphets.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.
Comments
wildrides
What utter cobblers ………. no more in trouble than any other oil producer at present . Good grief you lot are a bunch of sheep following each other off an imaginary cliff . Try looking at your punt Trinty Gary .
Ben Turney
It’s a sad day when I have to nominate @wildrides for Bulletin Board Moron of the week!!! Where’s the reasoned argument against the points I made? The corrections?
None!
Instead you play the men rather than the ball. Shame on you wildrides!!!!
I shall tell Malcolm.
:-)
Gary Newman
Wildrides,
I’ve already said that I got that one wrong – but at the time I saw value based on debt restructuring that was supposed to be underway plus a JV (both previously RNSd but neither materialised), and both were in part why I saw value. Trinity is a good example of a Trinidad company producing 3000+ bopd yet still couldn’t make it work! I originally had LGO as a sell around 3.5p in January.
We all get some wrong – and with AIM these days it is often hard calling any of them other than based on a trade on sentiment at the time! The market is worse than it has ever been in my opinion and most want huge profits overnight and have completely unrealistic targets in many cases.
VINES
didn’t Enron do loans to broke companies and got repaid in gas deliveries, it didn’t sound like something you wanna be doing but LGO has. starting next month years these clowns have to deliver to the bank about 350 barrels a day free for the next two years. their shit margins are gonna go into the shitosphere !!
DUCK AND DIVE
Question is, are LGO hoping for $20pb oil? Even at today’s price, they are seeing a saving of $1-2m on the first tranche of the BNP Paribas loan. If oil drops to $20, they will effectively have to repay only 40 cents on the dollar. Or put another way, every barrel they hand over the BNP Paribas from October will be priced at circa $53, however low the POO drops.
Of course, the downside to $20 oil is that only madmen and LGO would still be producing any — and LGO don’t have any choice. The loan has been secured against the Goudron assets.
Rock and a hard place.
wildrides
Could never quite work out how I managed never to have won that title before . Malcolm ………… its not fair , their picking on my beloved LGO , sob , blubber , wail , more blubbering and general dribbley whining . When you have finished sorting out the Labour party I need you to pretend LGO is Onkers Bonkers for a day . Just one day …….. oh go on you know you want too. I cant hold up the sell off all on my own ….. opps ;-)
Gary Newman
Duck and Dive,
Effectively would just be a hedge (although not intended at the time) on part of production, which most producers take anyway.
BNP won’t lose out as they re-hedged against a drop in oil price when they forward-bought the oil from LGO.
Lot of producers will struggle when hedging ends if oil is still at these levels – although I expect some hedged some more when Brent bounced back to nearly $70 earlier in the year (end of April).
VINES
oil swapper was done at 47 WTI, slow cap for sitting on their asses when oil was 110
they aint gonna do 1500 bopd as they always miss targets. if they do 1000, until loan is gone its gonna be selling a third of its output for free. crapola margins! Lenibust !!
wildrides
Seriously tho Benny Boy ……….. your way over dramatic. Ritson has said output will be scaled to 1500 bopd whilst prices are low to make the most of those P1 reserves . The company drilled 7 wells this year and 14 in the last two years , none of which were dusters ………quite an achievement . Only three of this years batch had even started producing at this particular accounting period end . Leaving another four to come on stream . The company intends to water flood the old field and continue work overs of the old field as well . It has just got permissions for thirty new wells making 45 drill permitted sites waiting in line . It has said it will drill yet more wells in 2015 capital allowing and oil price depending .The spanish assets have doubled production to 170 BOPD since this current financial period end . There is cash in the bank . You can scare shareholders half to death with your over dramatic and unjustified headlines if you want ………. but ………… the company has many options and every where it drills out there it hits oil . You are critical of the company for adapting its output plans ,made in the past ,before the length and extent of low oil prices was /is known . This prudent adaption of the plan in the light of prolonged lower prices should be expected and no doubt many other oil companies are carrying out similar plan adaptation . Ritson is a prat the way he handles the media and should by now be giving out monthly BOPD sales fiqures . He is his own worst enemy in this respect and institutional investors will never really trust him because of this secretive behaviour . Leaving that aside he seems to be getting to grips with the best ways to get the most oil out of this field in Trini .
Malcooooooooooooooooooooooolm ! he still wont listen ………. its not fair Malcolm .
DUCK AND DIVE
@wildrides – an impassioned and uncharacteristically coherent rant, if I may say so. But LGO do seem to be running on the spot with new wells only compensating for the declines in existing wells; and with drilling now halted, the decline will become more noticeable. While it’s true that they are acting prudently and in line with many other producers, the BNP Paribas deal keeps them on the treadmill so that they can’t just shut up shop for a few months in the hope that the POO storm can be weathered. There doesn’t seem a lot for PIs to look forward to over the next 6-12 apart from more fundraising maybe. But you never know: if they don’t drill and cut back other costs, they might turn a profit.
Ben Turney
@wildrides – I deal with the cash in the bank at the start, but it doesn’t offer much of a buffer when compared to the current liabilities the company has and the fact that operations are bleeding cash. Arguably the cash burn isn’t too extreme, but in the context of current oil prices it doesn’t provide much protection. The production forecast downgrade is significant, irrespective of when the plans were made. What this surely tells us is that the company cannot profitably extract higher amounts of oil in a lower price environment. This be an indicator that the flagship assets aren’t necessarily as shiny as some would have us believe.
But what I don’t like about this company is its insistence on pumping out initial production rates in RNSs, knowing damn well that these offer no real insight into the company’s performance. A cynic might say the obsession with IPRs is more designed to help underpin the share price, by sucking in the unwary. If that doesn’t set alarm bells ringing, I am not sure what will.
With a £36million market cap, production forecast to decline, operational cash flow negative and the persistently weak oil price, I just can’t see the attraction for holding this stock, unless you are betting on a successful pre-placement ramp.
wildrides
And I still say your headline to the piece was unfair and has caused damage to the share price of this company when your comments should have been directed at the oil sector in general . Every single company in the sector is “in trouble” to a degree and you have picked on LGO holders and scared the shite out of them ……… congrats on your success ……… but unfair on LGO non the less .