For some, the first few days of January are still a leisurely affair before the year properly kicks off. But for the stock market, it’s business as usual. In fact, some UK stocks have seen sharp price increases in the first few days of 2025, showing that there’s no time like the present to be investing.
Here’s one particular growth stock that’s caught my eye.
Fresh news on a project
Ithaca Energy (LSE:ITH) shares popped almost 13% last week. Before we get into the details, it’s important to understand what the company does. It’s an oil and gas company primarily engaged in the exploration, production and development of hydrocarbons in the North Sea.
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Unlike some other exploration companies, Ithaca actually has projects that are generating revenue for the firm.
One major reason behind the jump in the stock to start the year was the trading update from late December. It detailed the discovery of hydrocarbons in the Jocelyn South prospect it’s involved in with Harbour Energy. Recent exploration drilling had been carried out, with the results coming through that show the presence of hydrocarbons.
More work’s being carried out to assess the commercial viability of things from here, but it’s clearly good news for the company. It’s true that Ithaca only has a 33% interest in the project, with the larger holding owned by Harbour Energy. But the potential for a future uplift in production ultimately means higher revenue and profitability, hence the rally in the share price.
The direction from here
There’s only been a few trading days since the report was released, hence why the move’s continuing to happen in January. For the moment, I think the share price will trade based on speculation. After all, the trading update was very brief, with no mention of a timeline when more information would be released.
Given that the latest financial results came out in November, I’m not expecting fresh results until February. Therefore, investors could be light on new information in January.
This could help the stock to keep rallying, as investors mull over best-case scenario outcomes. However, it’s worth remembering that even with this pop, the stock’s still down 15% over the last year. Production levels from the H1 report dropped, with output falling by nearly 30% compared to the same period in 2023. Even though this can be explained by the outages at fields including Pierce, Erskine and Captain, it remains a risk going forward.
Let’s not forget that energy companies have notoriously volatile share prices, influenced by a variety of factors. Ithaca Energy has started the year with a bang, but until we get more concrete information out, I’m cautious about investing. Those with a high risk-tolerance might see this as an opportunity to consider right now, but I’m staying put.
