SMALL CAP MOVERS: PM’s fracking thumbs-up propels oil and gas stocks

After weeks of rumour and speculation, one of Liz Truss’ first acts as Prime Minister was to give the go ahead to fracking in the UK after a three-year moratorium.

Unsurprisingly, this lit the blue touch paper under stocks in those junior companies with onshore projects that might contribute to gas self-sufficiency.

Union Jack, up 38 per cent, was the week’s biggest mover, followed by Egdon Resources (+31 per cent), UK Oil & Gas (+28 per cent) Reabold Resources (+27 per cent) and IGas (+27 per cent).

Speculation about a potential return of fracking prompted a stampede into selected stocks ahead of Thursday’s announcement.

So, Egdon, for example, has advanced 540 per cent in the year to date, while IGas has soared 666 per cent, meaning a decent payback for the hedge fund owned by the multi-millionaire investor Crispin Odey.

The end of the fracking ban comes with a caveat that the controversial technique that uses long horizontal bore holes will only be allowed where there is local community support.

Reports suggests the protest groups are ready to reform in a bid to kibosh plans. However, IGas chief executive Stephen Bowler believes the mood in towns and villages close to these onshore gas projects may be changing.

‘Recent polling by YouGov has shown that, as the cost-of-living crisis bites, local people support shale development where it can bring real benefit to their community in reducing bills,’ he said.

‘We will work together with local communities to deliver this much needed resource in the near term and demonstrate that it can be done safely.’

Turning to the wider market, if the City was in mourning for the passing of Queen Elizabeth II it wasn’t immediately apparent.

It was more a case of business as usual as the AIM All Share rose 0.8 per cent Friday, capping a solid performance for the small-cap tracker, which was up 1.3 per cent over the week.

Discussed last week in the column was the rapid devaluation of stocks on the junior market, which are down a collective 27 per cent in the year to date.

Cenkos Securities, which raises money for London’s growth companies, has its ear to the ground.

In an interview with Proactive this week after the group’s interim results, boss Julian Morse said he thought the sell-off had been overdone.

‘I think small-cap equities are incredibly oversold,’ he said. ‘But sentiment is a powerful thing. Once the market can get through and digest how long it thinks any recession will last sentiment will start to improve.’

It was back to earth with a bump for investors in Clontarf Energy (down 37 per cent) after the lithium, oil and gas explorer said there was no new news to support last week’s spike in the share price (it jumped from 0.5p to 1.2p).

It did, however, disclose it is in discussions with lithium extraction processing experts and has agreed in joint venture in-principle to test the brines at its Bolivian salt-lakes project.

It was a rough week for investors in Inland Homes (down 19 per cent) as it launched a strategic review after saying it was on track to lose £37.7million in the year to September 30.

It is hoping to push through a sale of land that should bring down the full-year deficit to a marginally more palatable £12.1million at the pre-tax level.

Chief executive Stephen Wicks will retire at the end of the month.

Finally, had you invested in Wishbone Gold six months ago, you would have been sitting on a 66 per cent profit on the back of exploration success in Australia.

This week the group did what any small-cap does when its making progress and adding value – it tapped the market for more funds to bankroll further work on its projects.

It owns the Red Setter gold-copper project in Western Australia and Halo asset in Queensland.

Issuing modestly discounted stock it raised just a shade under £2.4million. The shares fell around 18 per cent over the week – though this was a technical adjustment rather than being sentiment driven.