Tuesday, 14 June 2011
Descent and Ascent
Take the case of Ascent Resources, an AIM tiddler that has been promising good things out of Eastern Europe for a long time - long enough for everyone to get bored and give up hope of anything actually happening.
A number of exploration projects did not work out last year and the company's shareprice hit a low of 3p last summer. Then they raised some money via a placing later in the year and again this year to help with a new set of drilling in Petisovski, Slovenia. Hey presto, they seem to have finally found a large resource of onshore gas to exploit, as announced yesterday.
Now, no word yet on whether it is definitively commercial, but with a large amount of gas in place and the current wells being tested in several zones, some of which are producing gas already and others that will need fraccing, the company is in much better place than it has been for years. The placing at 5p recently shows the faith (or gullibility) of institutional investors in the Company.
So this news of success, was met with a big jump in the share price yesterday - but being AIM in 2011 - a nice big fall today too. I guess the RNS on actual commercial rates is awaited and that may be another few weeks in coming.
The share price today sits at 3.4p and a market cap of about £30 million - given opportunities this seems a harsh reflection on the Company's prospects. I rarely average down (in here with an average of 5.5p), but this may become an exception. The shareprice is only just above it annual low at a time when there is considerable developments afoot and a much better prospect of success than in its recent past. The 20p price target some brokers have looks a way away from here, but 9p - the high for resistance historically, is potentially within reach this year if Petovski proves commercial