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

Property
pets
Arts and Entertainment
tvThe C-Word, TV review
Arts and Entertainment
The Ridiculous Six has been produced by Adam Sandler, who also stars in it
filmNew controversy after nine Native American actors walked off set
Sport
Danny Jones was in the Wales squad for the 2013 World Cup
rugby leagueKeighley Cougars half-back was taken off after just four minutes
Life and Style
The original ZX Spectrum was simple to plug into your TV and get playing on
techThirty years on, the ZX Spectrum is back, after a fashion
News
Tiger Woods and Lindsey Vonn are breaking up after nearly three years together
peopleFormer couple announce separation in posts on their websites
Sport
football
Life and Style
Google celebrates Bartolomeo Cristofori's 360th birthday
techGoogle Doodle to the rescue
Arts and Entertainment
Haunted looks: Matthew Macfadyen and Timothy Spall star in ‘The Enfield Haunting’
tvThe Enfield Haunting, TV review
News
news
News
The Mattehorn stands reflected in Leisee lake near Sunnegga station on June 30, 2013 near Zermatt, Switzerland
news
Finacial products from our partners
Property search
  • Get to the point
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: Claims Administrator

    £16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

    Recruitment Genius: Senior SEO Executive

    £24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

    Recruitment Genius: Online Customer Service Administrator

    £16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

    Recruitment Genius: Digital Marketing Executive

    £18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

    Day In a Page

    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

    Everyone is talking about The Trews

    Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living