The last few months have been something of a rollercoaster for investors in President Energy (LSE: PPC). In fact, the company’s share price has been up by as much as 120% since the start of October, but is now flat for the period after plummeting in recent weeks. With shares being up 12% today, though, could investors sentiment be on the up, thereby making now an opportune moment to buy a slice of the company?
Mixed News Flow
Recent news flow for President Energy has been rather mixed. For example, it released an encouraging drilling update in November regarding the upper section of the Santa Rosa formation, where it highlighted the potential for a series of gas/condensate sands. In addition, President Energy was also able to acquire 100% ownership of the Puesto Guardian concession for a cut-price $5.8 million as opposed to the previously agreed figure of $17.9 million, which was clearly positive news for the company.
However, neither of these items pushed the company’s share price higher, with many investors apparently taking profits after strong gains made during October and the early part of November. Since then, an update on testing of the Santa Rosa and Icla reservoirs has sent shares lower. That’s because the test on the former was ended early as a result of a serious mechanical failure in the bottom of the test string, which prevented inflow, while a test on the latter disappointingly just found gas, with no oil present. As a result of this, shares in President Energy fell by around a third.
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Looking Ahead
Clearly, the testing update has hurt sentiment in President Energy, but the company remains upbeat regarding its future prospects. For example, it still estimates a prospective reserve of around 10 million boe at the Icla reservoir, and feels there is considerable follow-on opportunity. This ties in with its belief that the overall President Energy acreage position holds between 1 and 4 billion boe in prospective resources. As such, the company appears to have considerable long-term potential and, over the medium to long term, could deliver relatively high levels of production.
In the meantime, President Energy’s share price is likely to remain highly volatile. That’s especially the case because testing and drilling updates are notoriously difficult to predict, which could move shares significantly in either direction. So, while today’s 12% rise is good news for shareholders in the company, it does not necessarily mean that further gains are around the corner. As such, its shares could move lower in the short run, despite President Energy appearing to have a bright long term future.
Of course, finding companies that could deliver long-term gains is no easy task. In fact, it’s made even more challenging by the lack of time that many private investors have to search for the best companies at the lowest prices.
