Catcher North Sea failure hits AIM oil stock sentiment

AIM oil stocks have been taking a beating this morning after Nautical Petreoleum (NPE) and Encore Oil (EO) announced a poor result from their Catcher North Sea field (majority owned by Premier Oil). Encore is currently down 17% and Nautical is down14.5% on the news that the well had encountered gas rather than oil with a poor reservoir quality making it borderline economic. Nautical and Encore both own 15% of the Catcher field.

The bad news in the North Sea was accompanied by a disappointing update fromNighthawk Energy (HAWK) ( a previous holding from 2010 which was fortunately dumped early on as poor data began to be announced) from their Jolly Ranch project in the U.S.where oil recovery had been weaker than expected due to maintenance and well optimisation work. HAWK is currently down 8% today.

So my holdings in Bowleven, Xcite and Rockhopper are all suffering as a result of this negative sentiment. The difference with all these holdings is that they have substantial proven resources, and with the exception of Rockhopper, are derisked (though it still has £200 million in the bank for further appraisal wells and proven reserves of 200 million barrels at Sea Lion). Xcite encountered a larger than expected oil column and top end flow rates in December and reserves are likely to be confirmed of 160-250 mm barrels when the full CPR is published in late February or early March. As they say, there are AIM stocks, and there are AIM stocks!! - not for Widows and Orphans.