Sharehub Hotlist 2017 – Week 23

The weeks are flying by and thus far we’ve had a decent mix of the usual Russian spats mixed with a little North Korea woes, French elections, some Trumptastic events (on a daily basis so get used to it) and of course the big risk event of the year – the UK Elections.And no matter what the market has thrown at it, it just keeps on climbing with major indices are at all time highs. One thing is sure, it’s going to hurt quite a bit when that bubble bursts. Meanwhile, despite OPEC’s 9 month extension, PoO continues to struggle as the Saudi’s and Russian’s remain content with a ‘slow’ rebalance. Both have big events coming up towards the end of the year/early 2018, so as the months ticks by, if PoO isn’t heading where they want it ($60pb) then I expect deeper cuts to be delivered. For the moment, it’s a bit like watching paint dry across the commod sector with many equities just drifting in a typical summer daze.

However, there are some bright spots and Gold seems to be one of them. Every risk event thus far in last 8 months has seen Gold rise to 1290 range and on each occasion it has failed to break 1300 level. Gold presents a good hedge in these uncertain times. With equities looking a bit toppy on the major indices, Gold could be the go-to safe haven if or when a market correction occurs. Hummingbird Resources (part of thesharehub top ten) presents an early position into a soon to be, low cost gold producer. Should Gold edge above 1300 towards end of 2017, Hummingbird will be a stock very much in demand. For the moment, the stock is still a little under the radar despite the sharehub’s efforts in spreading the word. That should change as the moves closer towards Q3/Q4.

The summer may not be that dull for many of thesharehub top picks and here’s what to watch out for in the coming weeks. First up is Enquest. This stock has been choppy of late and traded inline with PoO. However, first oil from the huge Kraken development will refocus the markets mind on Enquest’s ability to generate serious cashflows even with PoO in the high $40’s. A rerate to the sp should occur once Kraken begins to flow oil and continues to build those flows over the coming months. Start up of production will be phased to protect integrity of wells and an initial flow of around 10kbopd should get the market excited especially if it arrives ahead of June 30th guide timeframe. Kraken should flow 50kbopd at full capacity and I would expect this to occur gradually building throughout 2017. This should provide decent news catalysts for the stock and keep momentum flowing.

Next up is Faroe. The main event is already under way and I would expect the Brasse well to TD around this time next week. Like Enquest, the stock has pulled back from highs based on PoO but I think many investors misunderstand Faroe’s mix of oil and gas assets. The company is less sensitive to oil movements than other oil focused players. Any success with brasse well and they should pen in another appraisal for Q3 adding another catalyst for the stock to look forward to. Next is Premier Oil. This stock has been a thorn in many sides. The debt renegotiations and process has hang over the stock like a dark cloud. The warrant deal at 42.75p has not helped much either as I believe this gives some of the larger shorters an easy get out. Once the debt is finalised in the coming 3 to 4 weeks, the warrants will be awarded and I expect the share price will be subject to the usual market machinations. This means some volatility ahead but with the debt cloud lifted, PMO should begin a more positive recovery path assuming PoO remains above $47pb or better.

The big summer blockbuster comes via Providence Resources. PVR was added to thesharehub top ten last week and replaces Ithaca which was sold to Delek and delisted from AIM.

Providence is set to drill the Druid well along with partner Cairn. The Stena IceMax rig is parked in Gran Canaria and should take no more than 4 to 5 days to reach the well location in the south irish sea. Thesharehub will update on when the rig moves. If successful, the resources are huge and PVR could be the first multibagger of 2017. Finally, keep an ear and eye open for Hurricane Energy. If the company is to remain on track for first oil in 2019, then a funding package/farm out deal has to be agreed within the next few weeks. It’s likely to involve some dilution in my opinion and it’s going to be a long period ahead for investors as the company moves to EPS development. The assets are great, but the shape and type of finance package is key to ensure shareholders are not heavily debted and over exposed to risks of further PoO corrections.

Sharehub results week 23.

It’s neck and neck between the Daily Mail and Telegraph picks. It’s going to be an interesting second half to the year for all picks. The sharehub top ten is way down on lower commodity prices but should see a turn around in H2 assuming PoO rebalances. A decent result for PVR could flip the top ten picks by itself, so fingers crossed Providence deliver a billion barrel discovery.

Thesharehub has been a little quiet of late, largely due to the benign and paint drying conditions of the commodity sector. With plenty of news due in the next few weeks and months, I would expect updates to be flowing thick and fast so stay tuned. And remember, always do your risk assessments and research on every stock you plan to invest in.

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