ShareHub Hotlist 2017 – Week 44

A good week for the commodity focused ShareHub top ten picks as Oil prices punched in new 2 year highs. You wouldn’t know it if you looked at bellwethers like Tullow and co. Most are still trading at levels last seen when PoO was in the lower $30’s. There are signs that the market is slowly (yet reluctantly) closing the gap and disconnect between PoO’s advances and some woefully cheap share prices. Part of the reluctance may rest in the ‘markets’ fears over OPEC’s reliability and countries like Iran, Libya, Nigeria and of course Russia. I suspect as each week passes with PoO in the $60’s more share price advances will be seen across the beaten up sector. As a point of reference and something to learn from last years late surge in equities, TheShareHub Top ten picks (again, commodity focused) were up a whopping 69% this time last year. By the time the bell had sounded on Dec 31st to wrap up 2016, TheShareHub top ten picks had almost doubed at 129% up for the year. An astonshing last 8 weeks. Should history repeat itself again, TheShareHub top ten picks for 2017 might still end up in the blue after spending 90% of the time in the red. History shows that when the commodity cycle turns from bearish to bullish, it tends to be fairly swift. Providing OPEC and Russia can keep the wayward countries inline (Note: upcoming meeting on Nov 30th), it’s looking good for PoO in 2018. US shale looks wobbly and the rig count is doing the opposite to what many analysts have predicted. As PoO rises, US rigs continue to drop. This perhaps reflects the nature of US shale in that many wells have a short term life. Production comes in phases and all the signs at present suggest that a lower phase is likely as previous loan / debt faciities expire or fail to get renegotiated. It’s still a period of wait-and-see but for now the market looks to be undercooking PoO’s rebalance which if true could see some sharp corrections higher as markets are clumsy and prices usually overshoot on upside as well as downside points.

Week 44 saw a changing of the guard as the Telegraph was finally toppled by the Daily Mail picks. It’s neck and neck between these two and with commodity sector looking strong both will be looking over the shoulder at the ShareHub picks which had the best weekly performance overall. HUM is still by far the best performer and with just a few weeks left now to first Gold Pour, investors and management will be getting excited about first Gold Sales. Quite an achievement (when it arrives) and I suspect the market will applaud this with a rerate higher. Still a few weeks to go before they get over-the-line. Also – note for the diary…the company are due to present at Proactive investors on Nov 16th.

Across the ‘heads up’ stocks, AMER provided a better than expected update on October production figures. The high point for the OBA production of circa 8kbopd was certainly something that should not be ignored. There are strong signs that the OBA links via Ecuador are improving and bottlenecks reducing. This certainly bodes well for AMER in the future especially with Production on the rise. News on first production (long term testing) via ONGC on Mariposa-1 well should also light up investors eyes with potential to add anywhere between 1000bopd and 1500bopd net to AMER – watch out for news next week on Marisposa-1. Elsewhere, PANR has struggled largely due to delays and lack of detail on ops. News on first gas sales around the 15th Nov will be welcome and much needed. On WRES, investors continue to await news on contracts and the all important funding/loan deal. I can’t see management leaving it to the 11th hour (self imposed deadline of year end 2017) as it won’t look too good on them. Confidence is very important amongst small cap miners and should they achieve all that they promise, the share price should take care of itself. 1p+ (current price 0.4p) is not out of the question so big 7 weeks coming up for all involved. Finally CERP concluded a successful and over-subscribed Open Offer and with PoO in the high $50’s (WTI) it’s looking very promising for the company going into higher oil production. News on being cashflow positive could or should see another rerate higher. News on plans for deeper well exploration targets in 2018 really would be the cream on the cake on what has been a terrific year in terms of business relaunch and turn-around. Just shows what a classy management team can do for a small AIM stock with great assets.

A special mention goes to SOLG. This company deserves a comment based on previous news flows. I don’t think I have seen such good resource figures such as those released by SOLG of late. The numbers really are huge. At some point, the company is going to need a partner to advance these prospects. For the moment, they are doing the right thing by proving up as much as they can in a small timeframe. The next few weeks should be interesting for investors as the company heads towards its maiden JORC statement due before the end of this year. The market could rerate the stock significantly higher once these numbers have been firmed up.

Week 44 as follows: