Derek Pain: Nighthawk oil punt that left me in the dark
No Pain, No Gain
Saturday 23 February 2013
Many experts agree that shale gas and oil could revolutionise the world economy. If they are right – and, of course, there is no guarantee that they are – countries such as Britain, that are reliant on energy imports, could enjoy the luxury of self sufficiency and emerge as major exporters.
The United States has led the shale drive, at least on the gas front. It now has so much gas that prices have plummeted and it has moved from importer to exporter. It is no slouch when it comes to oil with some operators turning off gas to concentrate on the so-called black gold.
Britain is getting into the act. According to a recent report by Pricewaterhousecoopers the nation has significant shale gas resources to indicate a potential for oil. The government has given the green light to fracking, the controversial system that is used for creating shale products. The accountants believe that global shale oil output, which could force world prices much lower, could boost the British economy quite dramatically.
The sudden prominence of shale oil should come as no surprise to followers of the no pain, no gain portfolio. A former constituent, Nighthawk Energy, ranks as one of my more unhappy experiences. It has been in the shale game for some time; unfortunately with only the merest modicum of success. The portfolio arrived on the shares at 44p, watched them hit 107p and then suffered the humiliation of unloading at a mere 14p. Since then they have been around 2p and are, as I write, 4.1p.
When floated, at 25p in 2007, Nighthawk was a more traditional US-focused oil group with an exploration area called Cisco Springs its main occupation. But it has since got involved with the Jolly Ranch field, a vast stretch of often barren land in Colorado. Dreams of producing thousands of barrels of oil equivalent a day have evaporated. In January production was just 280 barrels a day. And shale production can be exceedingly expensive.
Still, with new management and a capital injection Nighthawk could still come good. There are signs that output could increase significantly but whether it will ever achieve past expectations must be doubtful. Even if the group does get its oil flow running at something like earlier hopes, the shares' disastrous history will long torment the stock market. My oil anxieties have not been helped by another constituent, Northern Petroleum, which is below the portfolio's buying price.
I have always nursed doubts about resource stocks. Many are too risky. The portfolio's lamentable experience has done nothing to offer reassurance. Still oil shares are not alone in letting the side down. SnackTime, a vending machines group, slumped to 6.5p following a dismal update. I had expected some signs of a recovery but trading has fallen "significantly short" of expectations. There is the possibility of an £800,000 convertible loan stock being issued. Stockbroker Westhouse is looking for an adjusted loss of £1.5m this year and £600,000 next. I am ashamed that the portfolio paid 119p. At one time the price approached 200p.
Other constituents making waves include G4S, the security giant, that has settled its Olympics fiasco at a cost of £88m and the much smaller Brightside insurance broker that has acquired a new major shareholder, Markerstudy, a Gibraltar insurance group that owns 9.3 per cent of its capital. G4S shares have experienced a bumpy ride since they arrived in the portfolio in the summer of 2010. They slumped when the ambitious £5.2bn acquisition of ISS, a Danish catering and security group, was blocked. Subsequently they rallied, only for the Olympics calamity to again clobber them. But, no doubt helped by the stock market's strength, the price has reached 283p with some observers looking for 320p. The portfolio paid 264p. Brightside is residing at 25.75p against an 18.5p enlistment.
And Spirit, the pubs chain, continues to enjoy stockbroking support. Two firms, Numis and Panmure Gordon, have target prices of 85p and 75p. The shares are around 67.5p against the 42p the portfolio paid in August 2011.
After my oil and vending machine experiences its nice to report on three winners.
Fuel poverty could kill 100,000 vulnerable people over the next 15 years, charity warns
Bargain Hunter: Affordable art - suddenly being a collector is just a walk in the park
Phoenix Life: Chance of a refund for overcharged policyholders has risen
Simon Read: You're guilty until proven innocent when HMRC sends in the tax credit detectives
Simon Read: That's right, BT, they'd rather pay for a free service
- 1 Michelle Rodriguez: Fast & Furious actor apologises after telling 'minorities' to stop taking on 'white' roles
- 2 The black and blue dress: Makers considering a white and gold version
- 3 This is what it's like to be dead, according to a guy who died for a bit
- 4 PornHub turns masturbation into energy in bid to save the planet
- 5 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
New theory could prove how life began and disprove God
This is what it's like to be dead, according to a guy who died for a bit
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Ukip would cut billions from Scottish budget to fund English tax cuts
Russia's roadmap for annexing eastern Ukraine 'leaked from Vladimir Putin's office'
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...
Day In a Page
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads