Rockhopper sells off hard as market uncertainty hits small caps

Rockhopper exploration (RKH) dropped 18% today to 173p despite news from the company that it will know in 10-15 days how big its discovery on the Sea Lion prospect will be after initial results indicated a substantial reserve. The well itself is being suspended for future testing. The company is now valued at only £300 million, £70 million more than fellow Falkland Islands oil explorer Desire Petroleum (DES) which seems unwarranted given RKH has struck oil and DES has to date not.

The market panic created by German Chancellor Merkel's comments about the euro is exactly the sort of negativity that Contrarian Investor UK likes and several good opportunities have been thrown up in the panic. After buying some Rockhopper today on the sell off, I will be looking to add to the position on any further weakness given the expected news in just over a week. Given the news released to date from sea lion and the heavy institutional buying since the oil discovery (for example by relatively conservative Ignis which owns 2.7 million shares and 4 million contracts for difference) Rockhopper seems very good value at these levels, particularly in comparison with the other Falkland Island drillers. The greatest profits are to be made when others are hitting the sell button!

It's GW Pharma (GWP) interims time tomorrow, which I await with great expectation. The shares finished up 1p today at 130p.