Has this been posted before6 Jul 2018 13:53
Has the UKOG share price finally turned the corner?
THE MOTLEY FOOL
Jul 6th 2018 5:59AM
Having fallen from 9p in September 2017 to just 1p in May 2018, the performance of the UKOG(LSE: UKOG) share price has clearly been disappointing. Challenges regarding flow testing have hurt investor sentiment in the stock, while the cost of funding its operations has put its financial standing under a degree of pressure.
In the last month, though, the company's stock price has risen from 1p to 2p. Although it is clearly a long way behind its previous highs, could this be the start of a recovery? And could it be worth buying alongside another resources sector stock that has also delivered disappointing share price performance in the recent past?
IMPROVING OUTLOOK?
Recent weeks have seen an improvement in the financial standing of UKOG. It has raised around £12.5m in the last month (with £2m raised just a couple of days ago), and this is expected to be sufficient to fund its operational activity over the next 18 months. This may cause investor sentiment to improve to some degree, since any immediate risk of running out of cash seems to have been overcome. As such, investors may now be able to focus on the medium-term potential of the business.
In the near term, the results of flow testing operations could have a significant impact on its share price. They are focused on longer-term flow testing after the company has reported mixed results in the past. For example, in 2016 aggregate oil flow was 1,688 barrels of oil per day, but this was undertaken over relatively short time periods.
Clearly, UKOG is a relatively risky stock, given the nature of its business and its volatile share price. But with an improving financial position and the company targeting first stable oil production in 2019, it could offer turnaround potential.
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