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Time to consider Echo Energy at a 30% discount to its recent placing price? (ECHO)

01 Mar 2018 | by: Richard Mason

Echo Energy (LSE:ECHO) ended last year with an acquisition of interests in oil and gas assets in Argentina. The farm-in offers significant potential upside with a substantial drilling program in 2018. At the end of October the company had cash in the region of $30m and raised a further £4.7m in a placing at the time of the acquisition, meaning Echo is well funded to carry out its operations this year. Today’, Echo is 12.3p to buy, which represents a 30% discount to the last placing price, which was 17.5p.

Earlier this month, ValueTheMarkets.com highlighted the potential upside on offer should the company’s work program be successful. A glance at Echo’s chart today shows price action is narrowing into a possible ‘Falling Wedge’. The general consensus is that this pattern usually concludes with a continuation of the previous price trend, which, prior to the last placing was upward. I also note that there is an alternative downward trend formed from the last share price highs. However, I believe the company’s fundamental story and its strong cash balance, give sufficient weight to a bullish interpretation.

Author: Stuart Langelaan

Disclosure:
The author of this piece owns shares in the company written about above

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This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

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