Doc Holiday feature article
(I hold no material position in this company)
After the recent remarkable rise in Leni Gas & Oil Plc, I was asked to run the rule over the company. There is no doubt that a sudden surge in popularity has helped plump up the forgotten darlings of AIM, Range Resources has made more comebacks than Mike Tyson with each appearance getting a little more dubious. The CEO was not afraid to drop out the phrase “World class assets” like confetti in the most recent conference call. If Range had world class assets then they have employed a very poor management team based on its performance!!! They have shown a fisherman’s tail approach which in turn would like us to believe they might land Moby Dick. (”Maybe Ron Dicksons Moby Dick”)
So what’s causing the stir? Well conveniently Range Resources restructured its board along with its financial future, securing funds at a premium to its share price. Needless to say the vast amount of cash previously held appears to have evaporated into thin air leaving slight residue to work from. On the other hand Leni Gas & Oil has helped create the wake for Range to surf as the share price erupted from 0.7p to nearly 4p, rising in excess of 400%. The market sentiment is red hot and with a raft of regulatory news releases over the past five weeks, this has helped fuel the desire to hold LGO shares.
I accept you can never rule out the value of sentiment as a driving force in taking oil & gas companies to unimaginable highs, however Friday’s volume really smacked of the start of a starship journey or a last hurrah in this climb. For now we wait with baited breath although anticipate the foundations of LGO currently are not strong enough to hold the short term weight gain of expectation.
The RSI looks to be exhausted leaving a significant decline to find further traction. The 5yr chart would suggest 5p potential, although the technical’s look to be screaming SELL. The 50d crossed the 200d SMA which has been confirmed by the recent 400% increase.
Fundamentally I question the operation’s pace (drilling, testing and production). One slight setback would almost certainly cause the share price to become fodder for shareholders. For now the company has been exceeding historical expectations however relentless growth in retail expectations leaves us to believe that Leni Gas & Oil is setting itself up for a fall.
Speculative Short traders may posture at this level 4p however the more cautious will look for the failed coup attempt on 5p however the bias is now swinging against further short term upside.
Sell/Short LGO at 4p
For those of you pondering over RRL “I wouldn’t do it for too long” the Caribbean twist is coming “Let the land lie for now.”
Keep your pecker up!