Utilitywise (LSE: UTW), Roxi Petroleum (LSE: RXP) and Leni Gas & Oil (LSE: LGO) are all falling today, although none of the companies have issued any trading updates.
Indeed, it would appear that today’s declines have nothing to do with underlying company performance. Instead it seems as if the declines are being fuelled by panicked selling by short-term traders.
However, for long-term holders there’s no reason to panic. You see, despite today’s declines, Leni, Roxi and Utilitywise all have bright futures and look attractive as long-term investments at present levels.
Rapid progress
Leni Gas & Oil has made rapid progress during the past five years and the company is only just getting started.
For example, Leni reported at the end of September that its production had reached a record level of 1,080 barrels of oil per day. Additionally, the company is currently in the middle of drilling four new wells, from the same pad, and expects production from these asset to be on stream by the end of 2014.
The four wells currently in the process of being drilled should give Leni’s production a significant boost, sending production to yet another all-time high. This production boost means that Leni could be set to report its maiden profit next year.
Growth at a reasonable price
Utilitywise’s shares have collapsed by around 16% today, a decline that would make even the most seasoned investor wince. Nevertheless, these declines have only made the utility services provider more attractive on a valuation basis.
For example, at current levels Utilitywise is trading at a forward P/E of 20.3, which makes the company appear expensive at first glance. However, City analysts expect the company’s earnings per share to jump 45% this year, followed by growth of 40% during 2015.
With earnings growth of 45% expected this year, Utilitywise is trading at a PEG ratio of 0.5, implying that the company offers growth at a reasonable price.
Management has already confirmed that the group’s full-year results will be in line with City expectations, so there shouldn’t be any nasty surprises for investors.
New discovery
Roxi’s shares have been falling for much of the past week, despite positive news flow. In particular, on Wednesday the company issued a trading update stating that it had discovered oil at the BNG contract area in the west of Kazakhstan. Unfortunately, due to pressures encountered, the oil only flowed from the test well for a short period of time, which did not give engineers enough time to measure the quantity of recoverable oil.
Still, from the oil that was produced Roxi was able to conclude that the reservoir is oil bearing and the quality of the oil is good. What’s more, the company strongly believes that the wells drilled have commercial production potential.
Management intends to install new equipment and conduct a 30-day flow test of the well to assess the quantity of oil in the reservoir as soon as possible.
