SMALL CAP MOVERS: Oil explorer Rockhopper jumps after successful £160m claim against Italy; Oxford Cannabinoid Technologies falls as it delays trial
It was a good trading week for investors in Rockhopper Exploration, whose shares more than doubled at one point and levelled off around 80 per cent ahead of where they were on Monday morning.
The rocket fuel propelling the oiler was the award of £160million in compensation following a successful claim against the Italian government.
This in turn relates to the decision to block the UK exploration group from drilling in the Adriatic Sea.
Rockhopper is in line for at least £128m, as the company lawyers will receive 20% of proceeds
The share price, while up sharply over the week, still only values Rockhopper at £85million, or just over half the headline settlement number (which excludes interest payments Italy must also fork out).
The company’s lawyers took the case on a no-win-no-fee basis, so will receive 20 per cent of any eventual proceeds – but that still leaves Rockhopper in line for at least £128million.
Wednesday’s ruling ends a legal saga that has been bubbling away in the background since 2017 – so long as the Italian authorities don’t petition for annulment to the arbitration panel’s unanimous decision under the Energy Charter Treaty.
They have 120 days in which to decide their next move.
Rockhopper, meanwhile, is now focusing on its partnership with Israeli oiler Navitas Petroleum, which plans to exploit the potential of the Sea Lion Field in the waters off the Falkland Islands.
The natural resources sector continued to benefit from enhanced interest as it emerged this week the UK has effectively stopped importing Russian gas and oil.
Investors are betting that the authorities will look to British producers to make up the shortfall. Onshore developers Igas (up 10 per cent) and Egdon Resources (ahead 24 per cent) were well bid.
Igas has, it would seem, developed a very strong fan club with the stock up 136 per cent in the last month amid hedge fund interest in the stock.
There is a theory, expounded in this column several times, that a long-awaited British Geological Survey report will endorse the return of fracking in order to secure local gas supplies.
That may be one of the first decisions on the docket for the new Tory leader early next month.
Elsewhere in the sector, Union Jack Oil & Gas was up 10 per cent over the week and has advanced 35 per cent in the past month.
The driver of that movement has been the success of the Wressle onshore oil project in Lincolnshire, in which UJO holds a 40 per cent interest.
In the past year, Wressle has generated just under £8million in cash for the group – which is a significant sum for a company valued at £36million. It means it is currently sitting on £9.5million in cash.
Sticking with the risers, Westminster Group, jumped 32 per cent over the week and was up 17 per cent after the award of a security contract.
Turning to the wider market, a risk-off attitude meant that the AIM All Share dropped almost 1.9 per cent. The FTSE 100, by comparison, was static.
Life has been particularly difficult at the micro end of the junior market, where lack of enthusiasm has seen shares drift even when the news flow has been supportive.
One director of a small mining exploration company told Proactive: ‘We’ve achieved absolutely every milestone we shared with investors and continue to make good progress, yet we are down 50 per cent since the start of the year.
‘Any market communication at this stage is pointless; it’s like shouting into a vacuum. Nobody can hear or wants to listen.’
In the current market environment access to capital is becoming increasingly difficult, which is why companies are now taking sensible pre-emptive action.
A case in point is Oxford Cannabinoid Technologies, which has opted to delay one of two phase I clinical trials of its pain relief drugs in order to extend its cash runway to the end of next year.
While the move was applauded, the shares were marked down a pre-emptive 7 per cent.
Haydale Graphene Industries proved the exception to the general rule as it was able to capitalise on interest in its story and raised £5million. The shares fell 20 per cent, reflecting the discount given to investors subscribing for new shares.
Finally, it was a difficult week for OptiBiotix (off 36 per cent), which seemed to suffer an extreme reaction to what appeared to be an anodyne trading update.
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