Tullow Oil
Today’s release from Tullow Oil (LSE: TLW) is rather disappointing, although not particularly surprising. After all, the collapse in the oil price was expected to hurt the company’s prospects and, even though Tullow Oil has announced $2.7 billion in write-offs, disposals and impairments, its shares are only down 2% today.
Of course, the company had warned in November that it was expecting substantial non-cash write-offs and impairments this year. And, since then, its forecast for full-year pre-tax operating cash flow has been downgraded to $1.5 billion (from $1.7 billion), owing to lower oil prices and reduced gas production.
Looking ahead, it expects net profit for 2015 to be flat versus last year, although the market is still pricing in earnings growth of 67% for 2016. This gives Tullow Oil a price to earnings growth (PEG) ratio of just 0.2 which still makes it a stock worth buying at the present time.
Sirius Minerals
Shares in Sirius Minerals (LSE: SXX) are down over 10% today after the company released a procedural update on the approvals process for the proposed Harbour Facilities at Teesside for the York Potash Project. Although it does not affect the timescales or other key planning decisions for the crucial Project, it seems to have weakened investor sentiment even further, with many investors apparently now highly pessimistic regarding the company’s future prospects.
In fact, shares in Sirius Minerals have fallen by 21% since the turn of the year, with further delays to the approvals process for the York Potash Project causing considerable uncertainty regarding the company’s future prospects. A decision will now not be made until May at the earliest and, although Sirius Minerals may have adequate cash to cover its near-term spending needs, doubts are beginning to emerge regarding its ability to raise financing even if the project is given the green light.
As a result, it could be worth holding off on purchasing a slice of Sirius Minerals – at least until there is greater clarity regarding its future prospects.
LGO Energy
Shares in LGO Energy (LSE: LGO) are down by 4% today after the company announced that it has raised £1.575 million in a share placing. It sold 52.5 million shares at 3p each and the funds raised are to be used for general working capital purposes and to continue developing the company’s work programme, especially in regard to its Goudron field in Trinidad.
Reassuringly, LGO has recently confirmed that the fall in commodity prices has not affected the viability of its star asset, the Goudron field, and that the project continues to offer significant economic upside. That’s because its cost base is extremely low, which clearly bodes well for investors in LGO Energy should the price of oil continue to fall.
And, with it continuing to make encouraging progress in Trinidad, LGO Energy seems to have a bright future. However, with it having made gains of 329% in the last year, it would be of little surprise if there was a degree of profit taking in the short term – especially with market sentiment towards the oil sector being somewhat downbeat.