Bought: week ending 14 August 2015

Monday, 17th August 2015 09:04 - by Moosh

Here will feature any companies I have bought and reasons as to why. These are not for daytrading since I am not a daytrader (my nerves can’t cope with it!).

I generally buy on low interest/volume and often when no news is around or forthcoming but keeping in mind recent news events so it would be best not to follow me if you prefer safety in numbers.

Empyrean Energy (EME)

Following the passing of resolutions at the recent General Meeting, which secured the latest chunk of financing from Macquarie Bank in order to allow EME to continue to prove up their flagship Sugarloaf asset in Texas, targeting both Eagle Ford and Austin Chalk formations, I was keen to pick up more EME on weakness. I also noted the recent quarterly update from Marathon Oil which had a snippet of operations included in it relating to the stack-and-frac pilot wells which are ongoing but which have had some good early production flows. Being a profitable company as of the half year results released back in December 2014, the earnings per share of ~0.8p per share suggests a PE ratio of ~7 at 5.75p mid-price (as of market close on 14 August 2015) and that doesn’t even include the second half results – final results are pending and are theoretically due before 30 September 2015). Despite the crude oil price situation I am a buyer of EME below its P2 reserves value (adjusted according to crude oil price). Even if full year results still only produced earnings per share of 0.8p, fair value still remains at 8p for a PE ratio of 10. I also remember that EME was also able to hedge some of their production from April 2015 onwards as part of the new financing arrangement with Macquarie with the WTI (Western Texas Intermediate) oil hedge price set at around $51 so at least some of the recent moves from WTI crude oil below the hedge price has provided a little cushion to any impact on EME revenues in the current financial year. In short, profitable – good, financed – good, hedged – good; all works for me!

Do your own research as always.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.