UK 18:57 Saturday, 7 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.
I am really surprised at the number of commentators and ordinary shareholders, who view the current valuation of oil stocks as a God-given buying opportunity. As I’ve written before, all the evidence suggests we are in the early phases of an aggressive global price war. Saudi Arabia (and for that read OPEC) appears determined to crush the US “fracking boom”, through a sustained campaign of price suppression. Times are almost certainly going to get a lot tougher before they improve. Any talk of farm-outs or a flurry of deal making seems greatly misplaced. This morning, Global Energy Development (GED) released an announcement, far more in keeping with the times.
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Comments
JSB
Ben, the sp is supported by cash of around 70p per share (from memory) from the disposal of the Llanos Assets
Ben Turney
@JSB – I have seen that figure referenced, but couldn’t see it in the accounts. On reflection, it looks like I have missed this in the RNS announcements. I will go back and have a look and update this article, if appropriate. Thanks for pointing it out.
JSB
TBH they would be better shutting up shop and distributing the cash to shareholders.
A few years ago they had a famous water to oil incident and everyone seemed to lose faith.
Always seemed too conservative. Just happy to plod along without ever doing anything to excite the market. Has been on my watchlist for years but they’ve never got my excited enough to put some dosh in.
JSB
LOL…….oil to water
Ben Turney
@JSB – I am going to publish a follow up piece. Looking at the share price chart I can see what you mean, but this sort of rangebound stock can be a very profitable trade, especially in a dire market like this. Got to admit I am much more interested in this one than I was.
Thanks again for commenting.
Paul Curtis
You completely missed that they sold over 90% of production for $50m and therefore immune to oil price! You advise readers to avoid the oil sector. Is this as well researched?
Please explain why mostsmall cap oils have bounced off their December lows despite oil price falling a further 15-20%?
Look at Faroe, Ithaca, Amerisur etc
We know from previous boom/bust cycles that the smart money buys before oil price bounces and oil price will bounce before supply demand balances. Market will extrapolate changes in supply decline/demand growth. Imo the smart money is starting to buy now since close enough.
to a bottom.
The risk:reward is sensational. Oil has to bounce from here since fall way past marginal cost. Hence just a matter of time. Investing in a company that can survive until oil bounces is a no brainer.
And all this crap in the Press about OPEC bring a busted flush is nonsense. The Saudis are playing a no blinder and poker at its best. They are spooking the funding markets for all > $70 oil projects and capex is clearly being drastically curtailed. Plus they want non OPEC to agree to share the pain of cuts. The greatest risk is future undersupply and excessive economy damaging price spike which the Saudis won’t want. I’m expecting March OPEC meeting and production cuts.
The damage to high cost production will still be significant and should secure $100 oil within a couple of years
Ben Turney
@Paul – in all honesty I should have stuck to my wider point, which is I believe we are going to see more partners pull out of farm outs before things start to get better. GED isn’t a company I’ve come across before, but I am not so precious I don’t mind being corrected.
Why do I think most oilies have bounced 15-20% since the December lows? – two words – suckers’ rally
I am convinced we are in the early stages of a fundamental change in the oil industry. Honestly, $20/brl oil could be on the cards.
The simple fact is there are far too many contrarians out there for this to be a genuine contrarian play.
FWIW I think there is zero chance of an OPEC meeting before the next scheduled one. I think you completely misinterpret what the Saudi game plan is. Go back and look at what happened in 1986. It is almost a carbon copy.
You also need to cross reference the marginal production costs for gold producers and look what has happened there in the last few years.
Happy to be proved wrong, but I am staying out for now.
Paul Curtis
Thanks for reply Ben
Did you see Goldman report that oil companies setting new price deck at $70 will take c. 7m barrels off future supply? This is happening now although effect will be several years away. Can’t just turn a tap on to reinstate.
Do the Saudis want this? No because would be catestrophic for world economy. Saudis want $100 which means Goldilocks solution. Not a spike to $150 pushing world into recession AND big switch to renewables.
So Saudis want to take several million off supply and curb US shale supply growth. We are close to pretty much job done. By end Q1 should do the trick
$20 would be overkill and inevitably lead to distructive under supply
And can’t compare oil to gold. Oil is consumed (disappears) and essential. Gold stockpiles.
Will be fascinating to see how it plays out, especially US shale re year one 60-75% depletion rates, hedging and junk bond debt