Unfortunately, nothing logical about share prices, I have been investing for 35 years and sometimes I still scratch my head in dismay.
Of course the sp will dip if a dry hole. I do not believe that if the Golden Eagle were to be a dry hole (no one knows yet so just hypothetical) that the sp will dip to below 20p. I dont know where that figure comes from. I firmly believe that the sp will be far greater than we would hope for realistically by the time the well reaches target depth. So, hopefully if a negative result is obtained then the damage should be limited somewhat.
In my opinion I do not believe that EnCore should be judged as a one trick pony.
If you look at the sum of the parts including their enviable cash pile then even if the result from Golden were negative then the sum of the parts would be far in excess of 20p from my back of a fag packet calculation.
The Petro Canada deal which includes discoveries has not been mentioned since the merger and I believe that it is only a matter of time before something positive manifests itself from this. Unfortumately it does take an age to appraise these things, however in time we are almost bound to hear something on this. In addition the two onshore discoveries are very good and there should still be alot of excellent news from these. The acquisition of Virgo and Grove has brought in excellent acreage and again in my opinion it is only a matter of time before a major will be introduced here. The £18,000,000 cash pile gives a value of I think around 14p a share giving a valuation of just 11p per share for the portfolio of assets which are good, incluing the Petro Canada assets,onshore discoveries UK and possibly the dark horse Island Irish licences which do contain a very serious discovery which could be brought onstream following feasibility, not forgetting the Star deal and the possibility that they may be offered new licences in the new dti licensing round.
If one compares the valuation of 11p for these assets compared to the EnCore peer group which includes Granby, Wham,OilExco and Faroe Oil all of which are far higher than EnCore ( I know that there has to be some thought behind the number of shares in issue) then this group appears to be seriously undervalued. I know that if a neco were to come to the market with these assets then the institutions would be paying a far higher price than 11p for these assets. What is worrying is that should Golden Eagle fail for whatever reasons the group may well be vunerable as one does not have to be a rocket scientist to attribute a true value.
That withstanding, make no mistake the board of EnCore are clever, trust me on this. They all have a desire to make a success of the company in due course and if there were to be a takeover it would be done on their terms, no one elses. It takes a while to get all the ducks in row with any business and I just believe that the share price will look after itself regardless of any dissapointments with drilling. That is the nature of the beast here and there will be many other wells drilled in the future so I really would not worry too much about any short term fluctuations in share price. For example NOP had a shakey time with it following a couple of drill dissapointments, however they have recovered nicely with some excellent projexts in their portfolio.
I apologise for the long post but I feel it is very importent to analise the whole entity rather than just one aspect of a company.
As always do your own research and as Del quite rightly says if you worry about the price of a share put it somewhere else. I personally do not think that there is any cause for worry you hold shares in a very well run company with some above avarage assets.
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