Why Are Shares In President Energy PLC Sinking Today?

Despite a positive update from President Energy PLC (LON: PPC), its shares have fallen heavily today

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Today’s update from President Energy (LSE: PPC) could provide the company and its investors with further encouragement with regard to its future potential, despite shares falling by more than 20% in early trade.

That’s because, having previously announced that a light oil/condensate discovery has been made at its Lapacho well prospect in Chaco Region, Paraguay, President Energy has now drilled the upper section of the Santa Rosa formation and considers it to be a series of gas/condensate sands. While the company has stated that it is too soon to announce that a discovery has been made prior to a full evaluation, evidence points to the potential for this to be the case.

Indeed, today’s update includes information that provides encouragement in this regard, including constant background gas ranging from 3% to over 12% in the circulated drilling mud to surface throughout the drilling of the hole. As a result, drilling will continue to a depth of 4,600 metres (from the current 4,490 metres) in order to fully evaluate the target section.

Share Price Movements

Despite the encouraging update, shares in President Energy have fallen by 19% at the time of writing. A potential reason for this is profit-taking, since shares in the company have risen by a whopping 69% over the last month — a figure that includes a 19% fall today. So, it’s of little surprise for many traders to apparently be selling on the upbeat news flow released, with the potential for a further discovery still being relatively uncertain.

Looking Ahead

Having already made an initial discovery at the Lapacho well in Paraguay (which was the major reason for such strong share price performance over the last month), President Energy seems to be making excellent progress with regard to meeting market expectations of profitability in FY 2016. Certainly, today’s update could mean that it reaches its target a little sooner, but it remains a potential discovery as opposed to an actual discovery, so it could be beneficial to remain pragmatic regarding the company’s future prospects in this space.

Still, with production in Louisiana also making encouraging progress and President Energy engaging in M&A activity through the purchase of the remaining half of its Argentine subsidiary, Puesto Guardian, the company is putting itself in a strong position to meet market expectations. Clearly, further positive news flow from the Lapacho well could send shares higher in the short term, with President Energy’s future being a little brighter thanks to today’s upbeat update.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

3 reasons the Rolls-Royce share price could soar over the next decade

Sustainable aviation fuel, narrow-body aircraft, and small nuclear reactors could all keep the Rolls-Royce share price climbing over the next…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

Here’s how much income I’d get if I invested my entire £20k ISA in cheap BT shares

BT shares are on the up but still cheap, while the FTSE 100 telecoms stock offers a good yield too.…

Read more »

Investing Articles

2 FTSE dividend shares yielding more than 6% with P/Es of less than 9!

Harvey Jones picks out two brilliant FTSE 100 dividend shares that yield more than 6% but are selling at strangely…

Read more »

Investing Articles

Up 105% in a year! Is this rocketing FTSE bank the perfect pick for my Stocks and Shares ISA?

Harvey Jones is drawing up a shortlist of stocks to purchase inside his Stocks and Shares ISA allowance. This FTSE…

Read more »

Investing Articles

Down 78%, is this once-hot AI growth stock set to explode like the Rolls-Royce share price?

Our writer asks if he should invest in Super Micro Computer (NASDAQ:SMCI) following the growth stock's massive recent decline.

Read more »

Investing Articles

Is it madness to buy Palantir shares after Q3 earnings?

Palantir stock's surging again after the firm's Q3 earnings report. But after a 150% gain, is it too late to…

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

£6,000 in savings? Here’s how I’d aim to turn that into £1,032 a month of passive income!

A small investment in high-dividend-paying stocks with the returns used to buy more shares can generate big passive income over…

Read more »

Chalkboard representation of risk versus reward on a pair of scales
Investing Articles

As Lloyds’ share price tumbles 14%, is this an unmissable opportunity for me to buy at a bargain-basement price?

The Lloyds share price is substantially below its year high, but decent earnings prospects should drive its price and dividend…

Read more »