Gambling on wildcat drills in far-flung and politically unstable parts of the world has led to many forgetting what we have on our own doorstep. The North Sea has been producing significant amounts of oil for decades now and will continue to do so, and the largest new field in recent years is 100 per cent owned by a small AIM company called Xcite Energy (XEL).
Given the somewhat mischievous nature of the Closet Chartist, it is actually quite tempting to suggest that the much loved, much followed and almost entirely long interest from retail investors should guarantee the bear argument is backed at Xcite Energy (XEL) even if there is a modicum of doubt as far as the charting position for the North Sea focused explorer goes.
Commissioned researcher Edison admits that Xcite Energy (XEL) is taking longer than expected to farm out its Bentley prospect but it claims that the value in the stock – now languishing at 98p - is unchanged by the delay. Really?
As the case of life in general, when something in the financial markets takes too long to happen it is normally a bad sign and a reason to be concerned. This is certainly the case as far as the recent charting set up at Xcite Energy (XEL).
As you will have noticed this month’s Stock-Ping is early! This is due to events concerning oil companies: Norwegian owned Statoil (Oslo Børs: STL) and London listed AIM share Xcite Energy (XEL). XEL has been an infrequent pinger and popped up on the Radar only twice in March 2013 at 115.5pps and 121pps.
Frustration is the main emotion that shareholders of Xcite Energy (XEL) have suffered in the recent past. The reason: a, seeimgly, interminable consolidation by the shares in the 110p – 120p zone since late summer. That may change.
On a fundamental basis Xcite (XEL) strikes me as a binary bet. Either its vast (but deep water) oil is worth a fortune and the shares are worth a multiple of today’s price or there is some issue we do not understand and the shares are worth buttons. There is no middle ground. The charts, however, give a steer for the short term at least.
I have to admit that I am not a great reader of the financial press, but now and again something catches my eye. Today it was Tempus in The Times which was focusing on Xcite Energy and how it requires $700 million before the Bentley project turns cash positive in 2015. Clearly, if I had the cash I would be writing a cheque for those good people at Xcite immediately.
The start of May delivered a very threatening appearance to the chart of Xxcite Energy, the stock which ironically is one of my favourite oil plays.
An extended triangle formation based at 100p suggests that below this level Xcite Energy could head as low as 50p on a 3-6 month time frame.
Is Xcite Energy (XEL) set to follow the example of Gulf Keystone (GKP) and deliver a painful share price breakdown?
There are currently two technical issues and one fundamental issue of note regarding North Sea focused Oil & Gas group Xcite Energy (XEL). The technicals in terms of the charting picture remain flattered as they have been for the past 6 weeks by the way that new support for the stock has started to come in at and above the former January 110p intraday peak.
Shares in AIM and Canada-listed Xcite Energy (XEL) hit 395p in January 2011 as it reported on a successful “transformational well” drill on its flagship Bentley oil field in the UK Northern North Sea, 160 kilometres east of the Shetland Isles. However, market disappointment at a 10th May 2011 reserves report on Bentley saw the shares fall from 316.5p to close at 110p just seven weeks later. They hit a low of 67.5p in July 2012 and currently trade at 92.75p – capitalising the company at approaching £270 million. The stock is a darling of the Bulletin Boards. But is it good value?
