Standard Chartered

It’s been a disappointing year for investors in Standard Chartered (LSE: STAN) (NASDAQOTH: SCBFF.US), with the Asia-focused bank today releasing its second profit warning of the year. Indeed, the bank has lowered guidance for the second half of 2014 after reporting a fall in operating profit of 16% for the most recent quarter, caused mainly by an increase in bad loans and a restructuring of its South Korean business.

Despite this, shares in Standard Chartered still offer upside potential and, after a fall of 8% today, offer even better value for money. For example, they trade on a price to earnings (P/E) ratio of around 10 and, with the Asian economy continuing to have strong long term potential, the future could be much brighter for the bank than the past.

Certainly, more bad loans could be on the near-term horizon and trading conditions could remain challenging in the short run. For long-term investors, though, recent share price weakness could amount to a great buying opportunity.

Synthomer

Another disappointing update was released today by chemical maker, Synthomer (LSE: SYNT). Its update amounted to a profit warning, since guidance for the full year has been lowered and, as a result, shares have slumped by as much as 11% today.

The main reason for the cut in guidance is lower demand from construction markets across Europe and, perhaps more importantly, the company has warned that further reductions in forward guidance could be on the cards. With the European economy showing little sign of life, it would be unsurprising for this to take place.

Despite this, Synthomer remains profitable and, trading on a P/E ratio of just 10.8 (after the cut in guidance) it still appears to offer good value for money.

Oilex

After falling by around 14% yesterday, shares in Oilex (LSE: OEX) are down another 10% today as the company’s Cambay-77H well is about to commence its production test.

According to Oilex, the successful completion of this test could enable gas production to commence at the Cambay joint venture and, in doing so, the company would be taking a major step towards becoming cash neutral. Clearly, this would be a significant development for Oilex, since cash burn is unsustainable over the medium to long term.

As a result, the outcome of the test will be crucial to the success of the company and, although sentiment has weakened of late and there has been a possible sell-off of shares, its successful completion could provide a short-term boost to Oilex’s share price.

What: Shares in Oilex (LSE: OEX) saw another +10% rise in early trade this morning, after issuing a positive update on its Cambay-77H well in the Indian state of Gujarat.

So what: While business as normal was reported in recovering light oil and frac fluids, preliminary analysis of the water encountered during the flow-back operations showing that it is consistent with frac water and not formation water was received warmly by the company and investors alike, as it’s a strong sign that the well will be a strong performer. 

Furthermore, the oil that has been recovered has the appearance of other high-quality Cambay crude oils, and is being transported to a nearby refinery for sale, where it attracts a price similar to ‘Bonny Light’ crude oil. Oilex managing director Ron Miller commented: “It is a nice sweetener to continue production of crude oil which sells for an attractive price during flow-back and clean-up as some North American wells only flow water during early clean-up. “

Now what: Trading at just shy of 10p this morning, it’s easy to see how far the shares have come in the last month or two, especially in comparison to its price of 4p as recent as the beginning of May this year. However, the price has been volatile recently, with peaks and troughs alike resulting from news coming from this one well alone, and Ron Miller did cite some caution in the update, stating: “As the first well of this type in the Cambay Basin to “flow-back and clean-up”, it is not unexpected for some remedial work as part of those operations.” My advice is for investors to be cautious at this stage, too.

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 Oilex (LSE: OEX) dropped by almost 10% in early trade this morning, following an update on the oil & gas exploration/production company’s Cambay-77H well in the Indian state of Gujarat.

So what: Despite the shares spiking throughout the second half of July, including a massive 40% leap off the back of controlled flow-back of frac fluids at Cambay-77H, investor sentiment pared back a bit today. Management revealed the news that there was no evidence of formation water at surface during the flow-back and “this is interpreted to support Oilex’s hypothesis that formation water production is not occurring”.

While investors have heard that flow-back operations begun strongly and continue at a steady pace, Oilex managing director Ron Miller stated that “the shut-in periods for changing the frac tree and checking the well bore have extended the duration”, leading to some shareholders getting impatient, exacerbated by two more activities that have limited flow: two runs to the toe of the well with the coiled tubing unit, and preliminary build up surveys of wellhead pressure. Mr Miller commented further: “As this is the first multi-stage fracture stimulated well to flow-back in the Cambay Basin, there is no benchmark for comparison.”

Now what: Light crude oil continues to be recovered and most has been transported to a nearby refinery for sale. Trading at around 10p today, it’s easy to see how far the shares have come in the last few weeks especially in comparison to its price of 4p as recent as the beginning of May this year.

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 Oilex (LSE: OEX) lifted by more than 14% in early trade this morning following the release of the oil and gas exploration and production company‘s quarterly report.

So what: Net oil production more than doubled from the first quarter, to 665 barrels (Q1: 244 barrels). 355 of these came from the Cambay field in the Indian state of Gujarat, while 310 barrels came from the Sabarmati field, also in Gujarat.

Oilex also stated that it has made an insurance claim worth USD$1m, associated with the failure of the frac tree components at its Cambay-77H well. There were no ‘lost time incidents’ recording on this well during this quarter, however, which helped boost the production figures.

Now what: Monday’s announcement that higher than expected light oil/condensate was encountered at the Cambay-77H well, and is now being recovered to surface and separated for sale, drove the shares up 40%. Today’s further leap in the share price means that investors who held the shares at the end of last week are close to seeing their investment become a double-bagger in less than seven days.

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 Oilex (LSE: OEX) jumped up over 40% today, following the announcement that the oil and gas exploration and production company has commenced controlled flow-back of frac fluids at its Cambay-77H well in the Indian state of Gujarat.

So what: Higher than expected light oil/condensate was encountered, and is now being recovered to surface and separated for sale, along with associated reservoir gas. 

Management stated that “Cambay-77H continues to exhibit characteristics of a high performance multistage frac’d horizontal well”, with managing director Ron Miller commenting:

“We are very pleased that Cambay-77H is exhibiting all of the signs of a high performance well for Oilex. Flowback started very strongly and remains on track to take 2 to 3 weeks. The recovery of light oil/condensate with the gas under clean-up flow this early in the flow-back phase is considered positive and the hydrocarbon liquid volume exceeded our expectations. Oilex looks forward to commencing the production testing after sufficient frac fluids have been recovered from the well and the flow has stabilised.”

Now what: Oilex doesn’t pay a dividend, but at 9p trades at a significant discount to its high of 32.45p in 2007, a year after it became a publicly listed company.

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 Oilex (LSE: OEX) lifted by more than 10% in early trade this morning, following the announcement that the oil and gas exploration and production company has successfully completed plug milling operations at its Cambay-77H well in the Indian state of Gujarat.

So what: Gas was observed near the surface during milling operations, with the well exhibiting “strong flowback and clean-up characteristics”. These are very positive results according to managing director Ron Miller, who went on to say:

“Oilex is looking forward to commencing of the production testing after sufficient frac fluids have been recovered from the well. Further analysis of the fracture stimulation programme and production data will be needed to quantify the reservoir deliverability.  

“It has been a long journey back from Cambay-76H and Oilex looks forward to a bright future, focused on value for its shareholders and methodical in its delivery.”

As Mr Miller comments, the next step for Oilex is to see how the well responds before it can consider production testing. But the signs seem positive, as logs from Cambay-77H compare favourably to the company’s Cambay-73 vertical well — originally drilled in 2008, a gas-sales agreement was subsequently signed for off-spec gas, leading to cash flow from the sale of gas.

Now what: Oilex doesn’t pay a dividend, but at 7p trades at a significant discount to its high of 32.45p in 2007, a year after it became a publicly listed company.