Derek Pain: Once bitten, twice shy: why I'm not returning to Nighthawk

No Pain, No Gain

Should the no pain, no gain portfolio return to one of its past disasters – Nighthawk Energy? A reader raised such a possibility, following the US- focused oil and gas group's rejuvenation after new management assumed control.

Portfolio followers will possibly recall that I descended on the stock, floated in January 2007, at 44p in the summer of that year. My little stock-market exercise subsequently experienced a lucrative but then parlous ride. At first the shares soared to 107p; then came a long, relentless decline. Nighthawk desperately raised cash by issuing shares as exploration returns fell below expectations. After hanging on grimly and for far too long, the portfolio called it a day, selling at a mere 14p. The shares subsequently fell to around 2p.

Many energy companies, particularly explorers, suffer losses as they struggle to find what can be richly rewarding black gold. Getting the stuff out of the ground is often a problem; then such essentials as transportation come into play. Some explorers and their hopeful investors end up with absolutely nothing to show for their labours. Nighthawk found oil but not enough. Consequently it excelled itself on the losses front, suffering deficits of well over $150m (£94m) in its brief history. Although it has nearly 950,000,000 shares, as I write around their year's high of 12p, the capitalisation is only £112.4m –pretty small in stock-market terms.

Still, current management, headed by Stephen Gutteridge, is transforming the group. Although in its earlier incarnation Nighthawk had been adept at raising cash through spreading shares around, it had relied on private placings with most shareholders left in the cold. But last year came a £2.9m cash call for all, at 2.5p a share.

Latest figures, covering the first six months of this year, indicate Nighthawk could have a profitable future. There was another pre-tax loss – this time amounting to $820,000 – but that masked a $1.3m operating profit.

Floated on Aim at 25p a share, Nighthawk had high hopes that its Cisco Springs area in the US midwest would provide its jackpot. Now it concentrates on 300,000 acres embracing two areas known as Smoky Hill and Jolly Ranch. It has even made a significant discovery in land not explored for 25 years. And there must be a chance it could start to produce the sort of returns early investors anticipated. In the third quarter of the year output averaged 1,528 barrels a day, a 142 per cent increase. In addition, Nighthawk continues to hunt for additional production sites.

A dramatic turnaround, then. But I am resisting the temptation to rejoin the Nighthawk flypath. Although the group has been given a new lease of life, I feel it is, at the moment, a recruit too far.

The portfolio has a mixed record when returning to former constituents. Mears, the support-services group, was a highly successful investment in the early days of this century. Re-recruited, it is showing a reasonable gain at around 426p against a 272p buying price.

On the other hand, Myhome International, a franchise group that was revisited, hit the portfolio's coffers. The shares, acquired at 15.5p, were sold at 50p – a handsome return although the price had once been more than 100p. A meeting with the management tempted me back into the stock only for Myhome to then go belly up. Not only was the original profit sharply reduced but I had to contend with the humiliation of failing to spot looming disaster.

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

News
newsAnother week, another dress controversy on the internet
Life and Style
Scientist have developed a test which predicts whether you'll live for another ten years
health
Life and Style
Marie had fake ID, in the name of Johanna Koch, after she evaded capture by the Nazis in wartime Berlin
historyOne woman's secret life as a Jew in wartime Berlin
News
news... and what your reaction to the creatures above says about you
News
Jihadi John
newsMonikers like 'Jihadi John' make the grim sound glamorous
Arts and Entertainment
As depicted in Disney's Robin Hood, King John was cowardly, cruel, avaricious and incompetent
film
News
Bill Gates, founder of Microsoft and co-chair of the Bill and Melinda Gates Foundation
businessUber, Snapchat and Facebook founders among those on the 2015 Forbes Billionaire List
News
Homer’s equation, in an episode in 1998, comes close to the truth, as revealed 14 years later
science
News
news
News
people
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

    Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

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

    Recruitment Genius: Customer Service Advisor

    £15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...

    Ashdown Group: Trainee Consultant - Surrey / South West London

    £22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

    SThree: HR Benefits Manager

    £40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

    Day In a Page

    Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

    Climate change key in Syrian conflict

    And it will trigger more war in future
    How I outwitted the Gestapo

    How I outwitted the Gestapo

    My life as a Jew in wartime Berlin
    The nation's favourite animal revealed

    The nation's favourite animal revealed

    Women like cuddly creatures whilst men like creepy-crawlies
    Is this the way to get young people to vote?

    Getting young people to vote

    From #VOTESELFISH to Bite the Ballot
    Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

    Poldark star Heida Reed

    'I don't think a single bodice gets ripped'
    The difference between America and Israel? There isn’t one

    The difference between America and Israel? There isn’t one

    Netanyahu knows he can get away with anything in America, says Robert Fisk
    Families clubbing together to build their own affordable accommodation

    Do It Yourself approach to securing a new house

    Community land trusts marking a new trend for taking the initiative away from developers
    Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

    David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

    The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
    Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

    Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

    Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
    With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

    Money, corruption and drugs

    The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
    America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

    150 years after it was outlawed...

    ... America's first slavery museum is established in Louisiana
    Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

    Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

    The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
    Tony Oursler on exploring our uneasy relationship with technology with his new show

    You won't believe your eyes

    Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
    Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

    Moores must go. He should never have been brought back to fail again

    The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
    War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

    The battle for Mosul will unleash 'a million refugees'

    Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn