I may be forced to drop Northern Petroleum from the no pain, no gain portfolio. The shares, as I write, have lost around half their value since recruited in the summer of 2011. They have, on occasions, performed quite well as its interest in a field off the South American coast captured the imagination of oil followers. But in the past week or so questions have been asked about the strength and availability of the resources lurking below the sea bed, and quite suddenly the perceived riches no longer look so obtainable.
To pile on the agony Northern is in a state of transition. As I mentioned earlier this month the group is thinking of selling its Dutch and English operations, leaving it with promising assets in Italy and newly acquired leases in Canada as well as the South American stake. Although its reshaping came as something of a dampener on stock market sentiment, valuations of Northern's interests should offer some comfort. But if the share price reaction to the South American doubt is any guide, its tiny interest – a mere 1.25 per cent – is not worth the £60m or so that has been bandied around.
Even allowing for any diminishing price down South America way, Northern's shares still look, on asset grounds, invitingly cheap. Unfortunately the stock market has not warmed to the company in recent years and it seems destined to remain undervalued.
For the time being I am sticking with the shares. As Bernstein, the investment group, point out, a single misadventure does not indicate a complete failure. Indeed one sortie has already been successful giving rise to the hopes that a major and hugely lucrative oil play had been discovered. But the second drilling has been unresponsive and abandoned. Still, there must be continuing hopes that exploration in other parts of the block will be rewarding.
If I do decide to end Northern's portfolio membership, I have a ready made replacement: Amerisur, the South American oil and gas group. It has just rolled out profits of $20.1m (£13.2m) – up from $3.5m – and is increasing production. The shares are 51p, a few pence higher than when I discussed the group last month.
Should I descend on Amerisur it would represent the portfolio's third attempt to cash in on an oil stock. Nighthawk was a huge loss maker and Northern is not looking too encouraging.
Other constituents have been making waves. Mears, the support services group, embarked on another intriguing takeover, with the brewer Marston's and insurance group Brightside contributing upbeat trading bulletins.
Shares of Mears have been in retreat since it became apparent that last year's acquisition of Morrison Facilities Services would take time – and money – to integrate. The price, around 380p earlier this year, fell to 320p before the group, already the major social housing player, increased its home care side through the £22.5m takeover of ILS, a leading Scottish group. A share placing at 310p will largely fund the deal.
The stockbroker Peel Hunt is enthusiastic. It describes the move as a "logical and attractive step" and forecasts current year's adjusted group profits of £35.5m against £29m. The Scottish adventure halted the share decline and lifted the price to 345p at one time. The portfolio paid 272p.
Marston's shares benefited from the trading statement. Not surprisingly the cold weather hit turnover in the first half year to end-March, indicating an outcome "slightly below" last year's corresponding display. But trading has perked up since then, and the group remains confident about the full year's performance. The shares were 95p when the portfolio arrived. The price a few weeks ago hit 142p, but ahead of the trading update was down to 130p. Following the statement the shares were 136p.
Finally, Brightside. For the 10th successive year it has achieved record profits. The pre-tax figure came out at £17.5m, up 28.7 per cent, from a £91.2m turnover (£80.4m). The group announced a maiden interim dividend in October, and has followed with a 0.28p final payment, making 0.5p a share.
The stockbroker FinnCap has a 31p target price on the shares, and believes profits will hit £19m this year. The portfolio arrived at 18.5p in August. The price is now around 24.5p. Like FinnCap, I expect further progress.