Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.
What: Shares in Victoria Oil & Gas (LSE: VOG), the Africa-focused oil and gas exploration and production company, fell by more than 11% in early trade this morning, following an update on its Logbaba gas supply operations in Cameroon.
So what: Despite the company proudly declaring that they supplied an average of 4.2 mln cubic feet of gas per day to gas-to-power customers during the last (five-day commercial) week, which is a significant lift in gas sales considering the average was 2mln cubic feet this time last year, investors were still piling out of this stock this morning.
The reason for the ‘Pied Piper’ reaction was that management also revealed that it plans to outsource development of its gas pipeline to its main contractor Britanica, which in turn has caused further delays as the contractor was waiting on parts to be delivered. Victoria Oil & Gas’s Gaz du Cameroun S.A subsidiary has several agreements to supply gas to new customers once the main pipeline passes under the Wouri River, but Britanica’s crossing of the river is now estimated to commence later in July, rather than by the end of June as was previously anticipated.
Now what: Today’s share-price dip is an inherent danger for investors in penny stocks, and is a prime example of why it is always so important to read much more than just the headline of a company’s market update.
