My 2006 pick is FPM (Faroe petroleum) 136.25p(up 15p on the week)
With a pedigree of major share holders behind it, FPM is an oil/gas explorer in the making with its focus in the N. Sea, where it has a number of licences, some of which(already financed) will be drilled in 2006. In Addition it has recently bought into a farm-in deal, which, if nothing else will give it access to valuable seismic data,
In the last 6 months the sp has dipped twice, the first time to circa 109p before rising to 160p+, the second to circa 112p before rising to its current price. In H2 this year, Goldman Sachs bought a 14% holding(the largest todate) for circa £7m, rumoured to be on behalf of a client. If true, that kind of investment will have not been made on a whim and undoubtedly will be expecting a handsome return. Last week over 1% of shares in issue (55.2m) were traded in two purchases of 290k lots. The sp is seemingly very sensitive to even modest purchases. Despite G. Brown's increased tax level on oil companies, I do not expect FPM to be affected before and if it gets to be a producer.
As evidenced by takeovers of companies operating in the N, Sea(a secure region with a nearby insatiable market place), a tiddler like FPM with its valuable licences may not even get to see its first well into production before being snapped up by a bigger fish with enough cash to explore all of its most promising of licenced areas. Alternatively, if FPM should strike lucky early in its scheduled drilling programme, the rise in sp should be dramatic. I hold. No advice intended. DYOR.
