Derek Pain: I'm not the only one mystified by the oil and gas industry

No Pain, No Gain

The stock market seems to find oil and gas companies something of a mystery. So do I. Remember Nighthawk Energy? Its shares soared to 107p, accompanied by some intriguing thoughts that it had alighted on potentially rewarding prospects. As I write the price is a miserable 4p. There are numerous other examples of resource shares that have soared, only to come down to Earth with a resounding crash.

The no pain, no gain portfolio had the misfortune to alight on Nighthawk. It paid 44p and got out at 14p. I vowed never again to entrust cash to a resources group. When I recruited Northern Petroleum at 68p, I explained that I had changed my mind and felt the group had much to offer. The shares have since topped 90p. They had a tantalising valuation of 200p a few years ago.

But whereas it could be argued that many oil groups become overvalued, there seems to be a convincing case for believing Northern is now substantially undervalued. The internet tipster Tom Winnifrith is enthusiastic about the stock. He believes the group's Dutch operations are worth £67.5m; those in Italy around £100m with Britain chipping in £10m. Northern also has interests in Spain and a 1.25 per cent stake in the highly rated Tullow Oil strike off South America. In addition it has cash of around £24m. The shares, at 82p, capitalise the group at a mere £75.7m.

Last week Northern produced quite acceptable interim figures, showing a 165 per cent increase in operating profits (before such charges as interest and depreciation) to 8.5m euros. Increased production and higher gas prices fuelled the rise. At the pre-tax level the outcome was 689,000 euros.

I suppose the huge Goldman Sachs investment house has, by reducing its target price, made the most bearish contribution to the Northern debate. Even so the US group still sees plenty of potential as its new estimate is 259p, down from 305p. Growth Equities & Company Research, part of the Tom Winnifrith's investment to software empire, has a more modest 149p target.

GE&CR's parent, the Plus traded Rivington Street Holdings, has experienced a boardroom reshuffle. Mr Winnifrith, creator and largest shareholder, has stepped down as chief executive to concentrate on running the investment side (various funds and web offerings) and the ambitious acquisitions programme. He says: "I can now spend all my time on what I enjoy most, am best at and benefit RSH most". The group, launched with a couple of share-tipping websites around a decade ago, now has 150 staff and covers 20 business units. Rivington, which says "trading is broadly in line with budgets", plans to join AIM. With its shares at 40p it is valued at £15.9m on the fringe Plus market. The portfolio arrived last November at 27.5p.

Two other constituents have come under the scrutiny of the stockbroker Arbuthnot. It has taken a shine to Mears, suggesting the shares should be purchased. And it has placed a 1,500p target price on Hargreaves Services. Mears are around 274p; Hargreaves about 970p.

Finally, two former constituents. Capital Pub Co, swallowed by the brewer Greene King, could rise again, although presumably under another name. Directors David Bruce and Clive Watson, creators of the chain that was absorbed for £70m, have invited former Capital shareholders to a "food and nourishment" meeting to discuss Capital (as the takeover killed off the scheduled AGM) and the launch of a new pub business that will follow the Capital example and qualify for tax relief under the Enterprise Investment Scheme. I don't believe the portfolio should take part in an EIS venture as it is a stock market exercise. Still, any interested reader could get in touch with Mr Bruce and Mr Watson while the portfolio waits for any flotation.

Clarity Commerce Solutions has collected a takeover bid at 23p a share. The portfolio, disappointed that the software group, largely supplying the leisure and retail sectors, plunged into losses, sold at 16p a pop. The private equity supremo Jon Moulton is behind the £9.5m offer, which has been rejected, through Enigmatic Investments. Just before Clarity's AGM last week and a day after the bid appeared, it was announced that the chief executive Ken Smith had resigned. I gather his departure and the offer are not related.

yourmoney@independent.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Life and Style
Powdered colors are displayed for sale at a market ahead of the Holi festival in Bhopal, India
techHere's what you need to know about the riotous occasion
Arts and Entertainment
Larry David and Rosie Perez in ‘Fish in the Dark’
theatreReview: Had Fish in the Dark been penned by a civilian it would have barely got a reading, let alone £10m advance sales
News
Details of the self-cleaning coating were published last night in the journal Science
science
News
Approved Food sell products past their sell-by dates at discounted prices
i100
News
Life-changing: Simone de Beauvoir in 1947, two years before she wrote 'The Second Sex', credited as the starting point of second wave feminism
peopleHer seminal feminist polemic, The Second Sex, has been published in short-form to mark International Women's Day
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Evening Administrator

    £8 per hour: Recruitment Genius: This Pension Specialist was established early...

    Guru Careers: Executive Assistant / PA

    £30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...

    Ashdown Group: Graduate Application Support Analyst

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Reach Volunteering: External Finance Trustee Needed!

    Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

    Day In a Page

    Homeless Veterans campaign: Donations hit record-breaking £1m target after £300,000 gift from Lloyds Bank

    Homeless Veterans campaign

    Donations hit record-breaking £1m target after huge gift from Lloyds Bank
    Flight MH370 a year on: Lost without a trace – but the search goes on

    Lost without a trace

    But, a year on, the search continues for Flight MH370
    Germany's spymasters left red-faced after thieves break into brand new secret service HQ and steal taps

    Germany's spy HQ springs a leak

    Thieves break into new €1.5bn complex... to steal taps
    International Women's Day 2015: Celebrating the whirlwind wit of Simone de Beauvoir

    Whirlwind wit of Simone de Beauvoir

    Simone de Beauvoir's seminal feminist polemic, 'The Second Sex', has been published in short-form for International Women's Day
    Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

    Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

    Why would I want to employ someone I’d be happy to have as my boss, asks Simon Kelner
    Confessions of a planespotter: With three Britons under arrest in the UAE, the perils have never been more apparent

    Confessions of a planespotter

    With three Britons under arrest in the UAE, the perils have never been more apparent. Sam Masters explains the appeal
    Russia's gulag museum 'makes no mention' of Stalin's atrocities

    Russia's gulag museum

    Ministry of Culture-run site 'makes no mention' of Stalin's atrocities
    The big fresh food con: Alarming truth behind the chocolate muffin that won't decay

    The big fresh food con

    Joanna Blythman reveals the alarming truth behind the chocolate muffin that won't decay
    Virginia Ironside was my landlady: What is it like to live with an agony aunt on call 24/7?

    Virginia Ironside was my landlady

    Tim Willis reveals what it's like to live with an agony aunt on call 24/7
    Paris Fashion Week 2015: The wit and wisdom of Manish Arora's exercise in high camp

    Paris Fashion Week 2015

    The wit and wisdom of Manish Arora's exercise in high camp
    8 best workout DVDs

    8 best workout DVDs

    If your 'New Year new you' regime hasn’t lasted beyond February, why not try working out from home?
    Paul Scholes column: I don't believe Jonny Evans was spitting at Papiss Cissé. It was a reflex. But what the Newcastle striker did next was horrible

    Paul Scholes column

    I don't believe Evans was spitting at Cissé. It was a reflex. But what the Newcastle striker did next was horrible
    Miguel Layun interview: From the Azteca to Vicarage Road with a million followers

    From the Azteca to Vicarage Road with a million followers

    Miguel Layun is a star in Mexico where he was criticised for leaving to join Watford. But he says he sees the bigger picture
    Frank Warren column: Amir Khan ready to meet winner of Floyd Mayweather v Manny Pacquiao

    Khan ready to meet winner of Mayweather v Pacquiao

    The Bolton fighter is unlikely to take on Kell Brook with two superstar opponents on the horizon, says Frank Warren
    War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

    Baghdad fights to win back Tikrit from Isis – but then what?

    Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable