Portfolio review of the week - 5th February 2011

The Dow Jones Industrials ended the week up 2.3% after a 30 point rise on Friday to 12,092 and the FTSE 100 closed the week at 5,997, a rise of 2% for the week.

A mixed non-farm payroll jobs report yesterday gave the markets confidence that the U.S. Federal Reserve would not move quickly to raise interest rate or curtail the quantitative easing programme where it creates money to buy government bonds and other financial assets, in order to increase the supply of money in the economy. Since early 2009 the U.S. government has spent or committed $2.3 trillion dollars to this programme. The theory is that by buying bonds and taking them off the market, the Federal Reserve pushes up their prices and push down their yields which mean lower interest rates for borrowers and encourages spending. In addition, it encourages investors into stocks and corporate bonds which offer higher returns than government bonds and hence it is generally good for investors. The downside of the programme is that it creates inflationary pressure in the economy since in effect the central bank is printing money. The Bank of England has also spent £200 billion on quantitative easing.

On the Contrarian Investor UK portfolio front its been a relatively stable week with just a couple of small additional purchases in Rockhopper Exploration (RKH).

Xcite Energy (XEL) - Xcite finished at £3.62, after a 6p rise on Friday but down 8p for the week. The revised rig deadline of February 11th is now the focus with the speculation behind the delays in signing with British American offshore for the Rowan Norway Jack-up rig intensifying. I agree with the view that it is strange that that the contract signing has been delayed for the second time when the cost and specification of Rowan Norway have been known for so long.  I am sure there is something underlying this further postponement - either waiting for early visibility of the CPR (Competent persons report) which will move oil resources to official reserves which is due for publication late February or early March, or a farm in deal or even takeover with a third party. It would be very surprising if the weeks of extra delays are just due to lawyers bickering about contractual terms. t is also interesting that Xcite called on the SEDA (Standby equity drawdown agreement) for an additional £5 million this week, is this drawdown needed for the rig? With February 11th not aware, all will become clearer this week.

Bowleven (BLVN) - Cameroon oil explorer Bowleven had a better day yesterday with a 2.3% rise to £3.57 giving a flat week. No news to report on this one but the Sapele 1 drill update cannot be far away.

Rockhopper (RKH) - A 5% rise on the week but no leaks at all from the progress of the 14/10-3 North Falklands basin well. It's a case of watch and wait.

Weatherly International (WTI), Sirius Minerals, (SXX) Angel Mining (ANGM) -Again nothing to report but I am surprised that an update on gold shipping has not been forthcoming from Angel given it was expected in January. A reasonable 4% rise on WTI as we await further news on the listing of CAR (China Africa Resources) on AIM which is due in April and which WTI shareholders will get an automatic holding.

Next step should be more interesting on the RNS front, potentially we have - Xcite Energy (rig news), Angel (gold shipment update), Bowleven (Sapele 1 update) and most importantly Rockhopper (14/10-3 well update). Hopefully more to write about next week!

Imagination Tech (IMG) - Unfortunately this fell through a stop loss and position closed.

Portfolio review of the week April 10th 2010

Last night, the Dow Jones Industrials briefly pushed through the 11,000 mark for the first time since September 2008 and finished the week at a 18-month high of 10,997, up 70 points. The Nasdaq Composite Index rose 17 points to 2,454 and the S&P 500 rose 8 to 1,194. In the U.K., the FTSE 100 rose 58 points to finish at 5,771.
It has been a good week for the Contrarian Investor UK portfolio with some excellent profits made and taken in gold miner Norseman Gold (NGL) and the Falkland Islands explorers. After several days of profit taking the portfolio is relatively small and concentrated in GW Pharma but new opportunities are being explored. 

GW Pharma (GWP) - GW pharma continued to drift down this week on small volumes to finished at 109p, down around 4%. At this level it is only a few pence from where it was when the company issued the regulatory update on Sativex spray on March 18th. This update confirmed that there were no major issues outstanding and that UK launch was on track for Q2 2010. As this announcement de-risked the regulatory stage significantly, especially on the issue of efficacy which was the stumbling block at the last submission in 2007, the current share price seems surprisingly low. Less than a month ago investors still had a high risk that the licence application to launch in Europe would fail, now GW pharma are in the situation where all aspects of efficacy, safety and quality has been addressed. I topped up my holding further during the week at 107p and now have a position similar in size to pre-regulatory announcement. Though the share price may drift down further, the upside reward at these levels look good especially with news of licence approval due in May from the UK and Spain.

Falklands Islands Drillers (Desire Petroleum DES, Rockhopper Exploration RKH, Falkland Oil and Gas FOGL) - A volatile week in the Falkland Islands oil stocks was exploited with some nice profits made on FOGL and RKH. Rockhopper had a large move up this week as Desire's Ocean Guardian rig now moved to its Sea Lion prospect in the North Falklands basin with spudding likely any day. I have now sold on my positions at solid profit and will wait for any pull back as a further investment opportunity.

Norseman Gold (NGL) - Australian gold miner Norseman had a very strong move up this week from under 50p to finish the week at 62p. Though fundamentals are good for this company, such a large move up in the Contrarian Investor UK portfolio holding with a buy point in the mid-40p range, profits were taken at the end of the week. Thank you Jim Slater for the tip!

BHP Billiton (BHP) - Short placed on the commodity plays BHP Billiton and Kazakhmys (KAZ) earlier in the week were closed at reasonable profits after the price of copper went over the key $8000 a tonne level. The commodity companies remain good trading opportunities given their volatility.

SSL International (SSL) - Rumours surfaced yet again this week that Reckitt Benckiser (RB.) was considering buying SSL which moved the share price up to a high of 885p. I remain unconvinced by this possibility of a Reckitt buy. By Friday these rumours were discounted and the price had dropped back to 856p. Shorts placed at 885p were closed at a good profit.


Coal of Africa (CZA) - Continue to hold CZA with no news this week.

Falklands Islands oil shares profits taken

This week speculative investors have moved money from Desire Petroleum (DES) to fellow North Falklands basin driller Rockhopper Exploration (RKH) following news from Desire's Liz well that it was non-commercial and was being plugged. After a sharp rise in RKH from the lows 40's to close to 60p on Tuesday, today it is down around 4% on the evitable profit taking.

After making some large profits on RKH and Falkland Oil and Gas (FOGL) this week I no longer hold any of the Falkland's Islands drillers. Why have taken my money off the table? 1) The results from Rockhopper Sea Lion drill site will not be available for around a month 2) The spudding of Rockhopper well is unlikely to drive a significant new inflow of investment into the stock given news flow will take some time and speculators have been badly burnt on Desire (Desire has now fallen from a peak of around 130p to today's 45p). 3) most of the rotation within the sector from DES to RKH has probably taken place on Monday/Tuesday this week. For now Contrarian Investor UK stays on the sidelines but will keep an eye on things for any potentially fruitful entry points

Rockhopper gains as much as 20%

Rockhopper Exploration (RKH) gained as much as 20% (and has now settled 16% up) this afternoon as Desire Petroleum (DES) issued another news release about the Liz well saying that the well was being plugged and abandoned as a gas discovery. DES said that 17 metres of net  "hydrocarbon pay' were encountered between 2961 and 3031 metres but the reservoir quality was poor. The Ocean Guardian rig is now moving to the Rockhopper's Sea Lion site and spudding is expected towards the end of the week. After rising as much as 20% on the news,  2/3 of the Rockhopper position and the Falklands Oil and Gas (FOGL) position were closed for solid profits as results from the Rockhopper well will not be available for around a month following the spud.

Falkland Island Oil explorers blast down through guaranteed stops

The Falkland Island drillers (Desire Petroleum, Falkland Island and Gas, Rockhopper and Borders and Southern) are sharply down this morning on Desire's Liz news. The shares were in auction (a period of time when there is no automatic execution on an order book and where Orders that are allowed during auctions may be entered during this period) but are now in full trading. Desire is down 63% at 36p, Rochopper is down 40% at 31p, Falklands Oil and Gas is down 15% at 115p. Fortunately the decision to move into CFDs with guaranteed stops ws sensible with all stops being triggered at the open. Today just shows the potential volatility of oil explorers on a "no show". Feeling a little bruised this morning. Ouch!! 

Times publishes story that Desire Petroleum's well is non-commercial

According to today's Times , The first well drilled off the Falkland Islands in 12 years has struck oil — but not enough to be commercially viable. Furthermore, "Desire is expected to say that the well drilled at its Liz prospect was “technically successful”, meaning it found oil, but that it is “non-commercial”, meaning that there was not enough oil to justify developing the field. The company declined to comment. Sources close to the situation said it had not finished drilling, but the signs were not encouraging. A source said: “It’s not a duster [a dry well], but it’s not commercially successful.” Desire has been working on the well for the past month.

Given this news is based on unofficial sources and the company has not commented it would be surprising if an RNS is not released tomorrow morning to clarify the situation as Desire Petroleum's share price (and the other Falkland drillers) will fall substantially on these rumours given they are published in a relatively reputable source of the Times newspaper. If true, very bad news for my Falkland's oil portfolio - I guess you win some, lose some!!

Source: http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article7078788.ece)

Reconfiguration of Falkland Islands oil holdings

With the rise back above £1 for Desire Petroleum (DES) I took the opportunity to de-risk the Falklands Islands portfolio. Unfortunately IG are not accepting controlled risk Contracts for Difference (CFD) trades on Desire which makes a "duster" on the Liz prospect risky for the portfolio. However, there are still accepting controlled risk trades on the other Falklands Oil drillers and therefore I have closed the Desire position and opened a new long positions in Falkland Oil and gas (FOGL) and Rockhopper (RKH) since the downside is protected to a 12.5% loss whilst allowing me unlimited upside "hanging on the coat tails" of a Desire positive update, should it occur. The gains in the other Falkland Islands drillers may be less marked than Desire but an unprotected trade feels foolhardy given the risks.

The RNS from Desire on the results of the Liz field drilling should be due very soon since we are nearly 30 days into drilling.

Desire Petroleum finally moves up

After several days of small, but steady falls, Desire Petroleum (DES) finally looks to be moving in the right direction with the shares currently up around 5.5%. Bulletin boards like iii.co.uk have been buzzing with around 1000 posts a day and the rumour mill surrounding the potential testing of core samples have been doing the rounds.  The results from Desire's Liz field are due any day which is increasing the volatility of this stock. Desire is not a stock "for widows or orphans" but the fact that it is so speculative makes the potential rewards so exciting. I have continued to hold as the share price has slipped over the last week and given the seismic data from the Desire field I am more than hopeful that the company's management will have chosen the Liz prospect for good reason i.e. that oil/gas shows are present.  The Falkland Islands drillers are at the high stress end of the spectrum and this week the adrenaline will be at maximum power as it could be the make or break for the stocks even though there are other drilling prospects for Ocean Guardian to drill.

Falkland Oil drillers in demand today on rumour mill

Desire Petroleum (DES) up 11.5% , Rockhopper (RKH) up 10.7% this morning with consistent buying and in the case of DES 4 million traded already. Could be rumours from Ocean Guardian rig or just the usual volatility of these shares. We will find out in the next week or so!

The Independent Small Talk has a small mention today:

Desire primed for Falklands oil announcement

It could all kick off in the Falkland Islands at the end of this week.

No, we're not talking about another military scrap over the islands' sovereignty, as in 1982, but according to sources, Thursday or Friday is the first time that the Aim-listed Desire Petroleum could announce that it has found oil in the territorial seas to the north of the Falklands.

The group's exploratory drilling has caused one huge diplomatic spat between Argentina, which claims ownership of the islands, and the UK. Desire has been unusually quiet about the drilling programme, largely because it wants to keep its head below the parapet. However, if the drilling has gone as well as the company dared to believe, we should all learn about it soon. Analysts expect that, realistically, it could take another couple of weeks for the group to tell the market how it has got on.

Desire is drilling in an area that other giants such as Shell tried to find oil in more than a decade ago and left empty-handed, and analysts put the group's chances of success at no more than about 20 per cent.

Earlier this month, the US Secretary of State, Hillary Clinton, called on the UK to open discussions with Argentina on the possibility of any future drilling.

Source: http://www.independent.co.uk/news/business/sharewatch/small-talk-lse-looks-to-tackle-problem-of-aim-investor-relations-1921542.html

Portfolio review of the week March 9th 2010

The portfolio review is a little late due to a holiday. As I noted on my previous post, Contrarian Investor UK is searching for suitable short term trading opportunities and there appear to be few obvious long only options. The volatility of the market makes me reluctant to commit to large shorts so the portfolio is on a holding pattern waiting for results from the Falkland Islands and news from GW pharma. New ideas are being assessed.

GW Pharma (GWP) - The portfolio's largest holding had a good week, with a solid move from around the 90p mark to £1.00. However, a minimum 35% upside is expected if the European approval for cannabis spray, Sativex, is announced this month. In addition to this, clinical trial results from the 336 patient phase II/III study funded by partner Otsuka are due early this year. The patients in the study have advanced cancer for which there is no curative therapy and are experiencing little relief from pain using conventional opiods. The primary goal of the study is response rate after 5 weeks. Further studies are planned to start in mid-2010 to enable the U.S. FDA registration of Sativex in 2011 and an additional European indication for cancer pain, also in 2011.

Falkland Oil drillers (Desire Petroleum DES, Falkland Oil and Gas FOGL, Borders and Southern BOR) - The potential intervention of U.S. Secretary of State, Hillary Clinton, helped to dampen sentiment in the Falkland Island Oil drillers. Following a meeting with the Argentinian President, Cristina Fernandez de Kirchner, Clinton said she encouraged the U.K. and Argentine governments to negotiate a settlement in relation to the sovereignty of the Falkland Islands. DES, FOGL and BOR are all down 20%-30% from the point when Desire's Ocean Guardian Rig began drilling in the North Falklands basin. However, news from the Ocean Guardian should be forthcoming in the next 1-2 weeks.

ITV (ITV) - ITV's 2009 results were initially positively received by the markets with a rise on the announcement to 57p. However, the shares have now drifted back to 52p with the markets expecting the return to health of the company to take some time under Norman/Crozier's leadership. ITV seem to be stuck in a trading range in the 50's and further positive news is needed to propel them through the 60p mark.

Amgen (AMGN) - The final tranche of Amgen stock was sold today at $57.6, giving a 5% gain despite the propects for Osteoporosis drug, Prolia. I am hoping for a buyback situation around $55 given the trading range of $55-58.

Micron Technology (MU) - Micron is stubbornly stuck below the $10 mark and currently trades at $9.5 despite the positive outllook for memory chips.

Hilary Clinton offers to help on Falklands Islands oil dispute

Hillary Clinton said on Monday that she plans to meet Argentinian President, Cristina Fernandez de Kirchner, was ready to help Argentina and Britain resolve the dispute over the Falkland Islands. Clinton said "It is our position that this is a matter to be resolved between the United Kingdom and Argentina. If we can be of any help in facilitating such an effort, we stand ready to do so."

SUNDAY INDEPENDENT - Falklands offer to split oil profits

Britain will take up to half the revenues if drilling programme is successful

By Brian Brady, Sunday, 28 February 2010, Independent

Britain and the Falkland Islands have made a deal to split any proceeds from the controversial oil drilling programme in the South Atlantic.

UK ministers have revealed that the Executive Council in Port Stanley had "offered to share some of any future hydrocarbons-related revenues", which could be worth billions of pounds. If a 30-day drilling programme begun by a British firm last week strikes oil, the yield from corporation taxes and royalties in the fields north of the islands alone could be more than £100bn.

A Foreign Office source said the Government had already begun negotiations over the eventual share-out, and had reached an "understanding" that could see the Treasury taking up to half the profits. Officials have pointed to Britain's multimillion-pound programme of support to the islands over almost three decades since the war following Argentina's invasion in 1982.

Argentina, which disputes the British claim to the Falklands, last week asked the United Nations Secretary General, Ban Ki-moon, to bring the UK into talks over the islands' sovereignty. The Foreign Secretary, David Miliband, said British oil exploration in the area was "completely in accordance with international law".

Ministers have been cautious about who would benefit from the bonanza since the potential reserves were first highlighted almost 20 years ago. The Falklands Executive Council offered in 1994 to share any proceeds as a contribution towards the defence of the islands. The islands' ruling executive council later warned that the spectacle of the Treasury taking oil revenue would be "a propaganda gift to the Argentines, who would say it proved that Britain had an exploitative, colonial attitude to the Falklands".

The Liberal Democrat MP Bob Russell said: "They have been sustained since before the Falklands war to the tune of hundreds of millions of pounds from the taxpayer. It is only right that, if they are going to become instant millionaires, they should share that with the UK and with neighbouring British territories such as St Helena and Ascension Island."

Portfolio Update - February 28th 2010

A relatively benign week on the markets but a good month for equities in general. The FTSE 100 rose 76 points to 5,354 on Friday, whilst U.S. stocks finished modestly higher (DOW JONES Industrials 10,325 +4 points) to have their best month since November (DOW +2.6%, NASDAQ +4.2%, S&P 500 +1.5%, FTSE 100 +2.6% for the month)

On Friday, the U.S. Commerce Department reported that GDP grew at a 5.9% the fourth quarter of 2009, the fastest rate since the third quarter of 2003 confirming the the American economy is solidly moving out of recession. This compared with the U.K.’s revised GDP of 0.3%.

The portfolio was hit hard this week by the disappointing news from Nighthawk Energy (HAWK), highlighting the risks and rewards of investing in small cap stocks. Contrarian Investor UK is currently assessing some new ideas for the portfolio with a view to rebalancing to a more diversified portfolio.

Nighthawk Energy (HAWK) – On Tuesday, Nighthawk finally issued a more comprehensive report on the Jolly Ranch shale oil and gas play in the U.S.. The results were poor, with the field still producing little more than 150 barrels per day (BPD) despite promises as the Annual General Meeting (AGM) that production would be closer to 800-1000 by quarter one 2010. The horizontal drilling technique used on some of the wells to extract oil seems to have been relatively unsuccessful meaning that HAWK is looking at the economics of the field based on standard vertical drilling. The company had $18 million of cash and liquid assets left after the fund raising in 2009. Contrarian Investor UK sold his position on the news at 27p, with the stock finishing the week at 25p. A 30% loss was painful given the commitment in time to this company but I am concerned that the “proving up” of the Jolly shale oil field will take the company into late 2010 where cash resources will become stretched and a further fund raising will be necessary. It is also somewhat concerning that private partner Running Foxes, who currently fund 50% of the drilling work, may not have an appetite for continued high investment in Jolly. Although HAWK may decide to sell its Revere or Cisco Springs fields, this stock is now looking very high risk and I disappointed in the results from Jolly Ranch after the strong convictions expressed at the AGM by MD David Bramhill and Steve Tedesco (from partner Running Foxes). At 25p, HAWK may still produce a return for buyers at this level but although it may go to 40p, sub 20p may also be just round the corner for this company which seems to thrive on shareholder disappointment.

Falkland Oil drillers (Desire Petroleum, Falkland Oil and Gas, Borders and Southern) – The Falkland Oil explorers all slipped this week, as the Argentinean government continued to apply political pressure through the Rio Summit and U.N. for the British government to stop further drilling around the Islands. This political pressure has been to date unsuccessful but added to the relative risks of these shares. I continue to hold DES, FOGL and BOR on expectation of results from the Ocean Guardian rig in March despite all the volatility in these companies.

ITV (ITV) – ITV continues it’s move back up and finished at 54p, following a positive outlook from Scottish Television company STV (which was formerly known as SMG). STV chief executive, Rob Woodward, forecast that the national TV ad market was likely to be up between 4 and 8% year on year in April.

GW Pharma (GWP) – Approval for cannabis spray, Sativex, is still expected in Q1 and this remains Contrarian Investor U.K’s largest holding.

Amgen (AMGN) - A quiet week for Amgen with the stock finishing at $56. Further news on osteoporosis drug, Prolia, still awaited in quarter one 2010.

Micron Technology (MU) – The stock moved back over the $9 mark as the outlook for DRAM memory chips continue to improve in the the second half of 2010. 

Political heat rises as Falkland Oil drilling finally starts

Desire Petroleum’s Ocean Guardian Rig finally started drilling in the North Falklands basin last Monday and it only served to bolster Argentinian efforts further to use political pressure to try and disrupt the drilling campaign, but these efforts are considered by many commentators as being unlikely to succeed.

After the disastrous war with the U.K. over the sovereignty of the Falkland Island (Malvinas) in 1982 started by Argentinian president, General Galtieri, things have been relatively quiet in the South Atlantic for the last 28 years. The islands were discovered by the British in 1592, permanently occupied in 1833 and for the last 100 years Argentina has contested ownership of the Islands with the British.

Argentina’s President Cristina Fernández de Kirchner’s has undertaken an anti-corporate campaign of significant proportions, with her latest move being to try to collect more than $6.5 billion in currency reserves to pay down debt and breath live into the flagging economy, after a move to privatise private pensions in 2008. An unpopular fight with farmers over export taxes has made her and her party postions weak in elections due in 2011. Desire Petroleum’s move to drill in the Falklands has been met with much vitriole. The first step was discourage ships sailing to the Falklands by requiring them to get permits if they pass through Argentinean waters - the Falkland Oil drillers have said this will have little impact on the drilling campaign. The Argentine foreign minister, Jorge Taiana, met with Ban Ki-moon, the U.N. secretary general, last week to pressurise the U.N. to agree with the assertion that Britain should be forced to acknowledge sovereignty claims. Taiana also argued that the U.K. does not have the right to exploit resources in the Falklands without first obtaining approval from Argentina.

At the Rio, Latin America summit this week, Hugo Chávez pledged his country's military support for a Falklands war. However, a military move against the U.K. would be suicidal from a political and economic perspective and it would be surprising if the Argentine government is even close to considering this despite the rhetoric in Rio.

If Desire do strike any significant oil during March, then the heat coming from Argentina can only get worse, even if military action is highly unlikely after the disastrous 1982 attack on the Islands. For De Kirchner’s government, added pressure on the U.N. and other organisations about sovereignity is highly popular in her country and it would be a tough sell indeed to her electorate if Desire or any other of the Falklands drillers (Rockhopper Exploration, Falklands Oil and Gas, or Borders and Southern ) “strike it rich” and Argentina was seen to be doing nothing as the U.K. collected the wealth from this "Argentine asset of right". Next year's Presidential election makes the Falklands an easy diversion to the country's own economic problems, just as Galtieri used the Islands back in the 1980's to cover similar but much more serious issues.

For shareholders such as myself, the politics have made it a nervous week on the markets for the Falklands Oil drillers. Despite the Ocean Guardian Rig spud on Monday, share prices have moved down as political risk has clouded the opportunity and talk of a military strike on the rig by Argentinian jet fighters has made investors question the risk/reward of the Falklands drillers. I for one took the opportunity to increase my holding in Desire Petroleum as the rumours rose later in the week. There is significant risk of course, but it is more of a no oil show than a pre-emptive attack by the Argentinian Navy.

No stopping stampede for Falkland Island Oil shares

The Falkland Oil drillers continued to power ahead this morning as the Ocean Guardian Rig starts drilling on the Liz field: Desire Petroleum (DES) 129p +10%, Rockhopper (RKH) 76.75p +10%, Falkland Oil and Gas (FOGL)159p +5.3%, Borders and Southern (BOR) 69p +2.2%. The North Falklands basin drillers, Desire and Rockhopper are getting the majority of the action given the relative rates of news flow from the Northern and Southern basins.

News flow from Desire Petroleum and Nighthawk Energy

Desire Petroleum (DES) began drilling on its prospect in the Falkland Islands this morning. It would be surprising not to get an RNS updating shareholders during this week. Falkland Oil and Gas (FOGL) and BHP's announcement on hiring of a deep water rig for their South Falklands prospects should also be due any week now.

The key seismic and production information from the Jolly Ranch and Revere projects is expected from Nighthawk Energy (HAWK) this week. Should either be a highly exciting or demoralising news release for HAWK shareholders!

Portfolio Update - February 21st 2010

The market’s had a good week, with most of the major indices up 3% or so. Sentiment seems to have turned positive over the last 2 weeks after the negativity early in February. One of Contrarian Investor UK’s principles to maintain adequate diversification is being broken this week as my portfolio is too heavily weighted towards GW Pharma and the Falkland Islands Oil companies.  But the “binary bet” on the success of GW’s Sativex cannabis spray for Multiple Sclerosis is far too tempting a target. The previous application for the drug was rejected because of inadequate clinical trial data. This was addressed with an additional phase III clinical and the new application made for a European licence in the summer of 2009 looks very strong.  I have used Contract’s For Difference (CFDs) to limit the downside risk to 20% or so, but approval should move GW Pharma up at least 50-60%. As for the Falklands Oil drillers, all the hype and TV/press coverage is just too tempting to exploit and again the upward move on these shares will be so significant that a guaranteed stop loss using a CFD seems a sensible trade, albeit a gamble. “Fortune favours the brave”.

Coal of Africa (CZA) – Significant upward move in this share price this week on no news from 130p range to a high of 153p. Positions closed despite long term conviction in this stock, especially as Vele mine approval was finally given this month.  This strategy appeared to have paid off on Friday with CZA falling as much as 5% at one point. I will watch for a potential re-entry point if the positive market sentiment turns for the worse.

GW Pharma (GWP) – Still no news on the Sativex European approval but given the timings of the Decentralised approval process (DCP) for drugs in Europe it would be expected that news is not far off.  Have increased position once again at 87p.

Falklands Islands Oil (Falkland Oil and Gas –FOGL, Desire Petroleum – DES, Borders and Southern Petroleum BOR) – Its been an exciting week for the Falklands Oil stocks as Argentina issued a decree that any vessel passing through its waters would need a permit to visit the Falklands which made investors somewhat nervous. On Friday, the Ocean Guardian Rig, contracted by Desire Petroleum arrived on the Liz field in the North Falklands basin and is due to spud this afternoon. I took the opportunity to top up my holding in Desire Petroleum despite some reservations about my significant exposure to the Falklands Oil sector. The risks are significant but the geology of the Falklands basin and oil finds in the previous drilling campaign by Shell/Lasmo gives more than hope that oil will be found in economic quantities. If the Ocean Guardian Rig does strike it rich then I would expectd Desire’s share price to be closer to £20 than 1 so the risk/reward ratio still looks enticing despite the strong run up in the Falkland Island Oil shares. Falkland Oil and Gas and Borders and Southern Petroleum have been relatively benign for a couple of weeks now, so a rise in these Southern Basin stocks would be expected on any news from the Northern Basin drilling campaign.
Nighthawk Energy (HAWK) - Nice move back up from 27p to just over 30p as the company announced the appointment of a new non-exec. director. News on Jolly Ranch should be imminent and therefore I am hopeful of a solid move towards 40p in the next week.

ITV (ITV) – A move up from below 50p to 53p as news on potential government approval of Product Placement on UK TV came through. Position still in deficit but given TV market revenue rebound in both January and February, outlook looks positive.

Amgen (AMGN) – News was received this week that an opinion on the FDA application for Prolia (denosumab) would be received by end July. I have trimmed by position a little this week because of a shift in the portfolio to GWP and the Falkland’s shares but will look to top up in the next few weeks.

Intel (INTC) - Position closed at $21.7, following a good rise in the semiconductor stocks this week. I like Intel long term but it trades within a range of $19-$22 so a move to the upper end triggered a sale.

Micron (MU) – The worst performing stock in the portfolio but Micron continues to rebound from its lows close to $8 to finish Friday at $8.9. Holding

Markets recover strongly as positive sentiment returns

The Dow Jones Industrial Average ended with a 169 point gain, up 1.7%, at 10,268, the Nasdaq Composite Index rose 1.4% to 2,214 whilst the FTSE 100 gained 76 points to 5,244.

The Dow's strongest component by far was Bank of America Corp.(BAC ) whose shares rose nearly 5% after it reported "significant gains" in the number of modified mortgages it handles through the government's Home Affordable Modification Program. Also, it reported better payment performance on its credit card loans last month.Sentiment was further helped in the financial sector by better than expected earnings from Barclays (BARC) which drove a 6.8% to £2.94 in the U.K., whilst its American depositary shares soared 13.7%.

The dollar fell as investors took on risk as fears about the impact of the potential default of Greece on the wider European economy ebbed. That helped the prices of commodity related stocks. Gold ended $29.80 an ounce higher at $1,119.80 an ounce whilst oil rose $3 to $77 a barrel after going below $70 less than 2 weeks ago.

Tensions escalate over Falkland Islands oil

Falkland Battle Lines Form Over Jurassic Oil Search  

Tuesday, 16 February 2010 14:14 - "Falkland Battle Lines Form Over Jurassic Oil Search"

Argentina is driving up exploration costs for U.K. oil companies seeking to drill near the disputed Falkland Islands, escalating tensions over the remote South Atlantic archipelago that led the two countries to war in 1982.

Argentina is forbidding vessels that stop at the Falklands to load cargoes at its ports for the 8,000-mile return journey to Europe. That’s likely to increase costs, Mark Jenkins, a director at shipbroker Simpson Spence & Young Ltd. said in an interview. Voyages “will be more expensive,” he said.

Argentina summoned U.K. embassy officials to issue its “most energetic protest against the imminent start of drilling” near the Falklands, known in Argentina as Las Malvinas, on Feb. 2. London-based Desire Petroleum Plc, which plans to start drilling offshore the islands this month, fell 4.68 percent in two days after Argentina said Feb. 11 it had refused to let the Thor Leader cargo ship leave a river port.

“The government wants to signal that anyone who is collaborating with the Malvinas on any projects won’t be welcome to Argentina,” Federico Thomsen, 53, who heads political and economic researcher E.F. Thomsen in Buenos Aires, said in a Feb. 15 telephone interview. “It would be better for Argentina to try to integrate and participate more in global trade.”

First Exploration
Desire will start the first exploratory drilling in Falkland Island waters since 1998, when companies including Royal Dutch Shell Plc abandoned the search because they didn’t discover enough oil. Companies including Melbourne-based BHP Billiton Ltd. and Falkland Oil & Gas Ltd., based in London, also plan to start drilling, using the Ocean Guardian rig.

The Ocean Guardian is scheduled to arrive at the Falklands on Feb. 17 at 2p.m., according to Bloomberg ship-tracking data. The rig is being towed by the 73-meter long Maersk Traveller, a tug ship owned by Copenhagen-based AP Moller Maersk - A/S.

“The oil price in ‘98 was $10 a barrel and is now $70-75 a barrel,” Sam Moody, managing director of London-based Rockhopper Exploration Plc, which is leasing the Ocean Guardian after Desire, said in an interview. “We believe we need about 50 million barrels at an oil price of $50 to break even.”

Desire’s Liz prospect has estimated resources of between 45 million and 783 million barrels, according to a report by Senergy Ltd., which specializes in appraisal for oil explorers, released in September 2009 and commissioned by Desire.

Thor Leader
Argentina blocked the Thor Leader from leaving a Techint Group plant after it traveled to the Falkland Islands without Argentine government permission. The company said the ship contained steel pipe that was destined for ports in the Mediterranean, without giving more precise information on the final destination.

A discovery of commercial quantities of oil may cause the share price of Desire to surge as much as 90 percent, Nick Copeman, 39, an analyst with London-based Oriel Securities, said in a Feb. 9 telephone interview.

Desire shares rose 2.25 to 107.5 pounds at 12:38 p.m. in London trading while Rockhopper rose 2 percent to 64.5 pounds and Falkland Oil & Gas shares rose 2.1 percent 156 pounds.

Argentina has repeatedly protested efforts to explore for energy deposits off the islands. In 2007, then President Nestor Kirchner voided a 1995 oil and gas exploration agreement with the U.K. that had been suspended for five years.

‘Sovereign Rights’
“The Foreign Ministry reiterates its sovereign rights over the Malvinas Islands, South Georgia and the South Sandwich Islands and the sea surrounding them, which form a part of its national territory,” Argentina’s Foreign Ministry said Feb. 2. Argentina’s objections won’t affect the islands’ oil licensing or any other policies, said Emma Edwards, a member of the archipelago’s eight-member assembly. “Argentina can continue protesting, but it doesn’t matter,” Edwards, 38, said in a Feb. 4 telephone interview from Port Stanley, the capital. “They’ve been doing this forever.”

There’s no point in Argentina continuing to call on international bodies such as the United Nations and the Organization of American States to press its claims, said Carlos Escude, 61, a foreign policy advisor to Argentina’s Foreign Ministry in 1991 and 1992. Neither has the power to make the U.K. change its stance.

“There is no future in pursuing those options,” Escude said in a Feb. 9 interview from Buenos Aires.

The U.K. government reiterated the Falkland Islands’ right to pursue oil and gas exploration. “We are absolutely clear this is a legitimate business in Falkland Islands waters,” a Foreign and Commonwealth Office spokesman said by e-mail. “Argentine reaction is a matter for the Argentine government. Argentina is an important partner for the U.K.”

Windswept Islands
The development of an oil industry would enable the windswept islands, which now depend on sheep farming and fishing, to diversify its economy, according to Edwards. Some 4,200 people live there, with about 1,700 of them based at the Mount Pleasant military complex.

Oil around the Falklands lies within Jurassic or Triassic layers under the seabed, dating back more than 145 million years. These are deeper than most of the world’s offshore discoveries, according to New York-based Bernstein Research, an investment research company.

Crude oil futures traded at $74.94 a barrel on the New York Mercantile Exchange at 9:31 a.m. London time today. Prices have doubled in the past year.

The price of oil is not the main reason for the lack of success in 1998, Moody said. “The world is a different place and there’s been a huge leap forward in seismic technologies.”

BHP Partnership
A partnership between BHP Billiton and Falkland Oil & Gas is seeking a second rig to drill in another offshore area, Tim Bushell, 50, chief executive of Falklands Oil & Gas, said in a Jan. 29 interview from London. Ruben Yogarajah, a BHP spokesperson in London, declined to comment. BHP and Falkland O&G’s Toroa prospect has estimated prospective resources from 380 million to 2.9 billion barrels, Falkland said Nov. 26.

Drilling and exploration in Argentine-controlled waters near the islands is due to start in the second half of the year, according to a Buenos Aires-based spokesman for the Argentine unit of Repsol-YPF SA, who declined to be named because of company policy.

The search will be conducted by a partnership between YPF, as the Argentine arm of Repsol is called, Petroleo Brasileiro SA and Argentina-based Pan American Energy LLC, which is 60 percent owned by BP PLC, while the remaining shares are owned by Argentina’s Bridas Group.

By Rodrigo Orihuela, Morwenna Coniam and Eliana Raszewski. Source: Bloomberg

Bloomberg story on Falklands Oil

Bloomberg television are running a story this morning on Falkland Oil. With the Ocean Guardian rig due to arrive in the next day or so in the Falklands, the publicity machine for stocks such as Desire Petroleum is gathering steam. Will be an interesting week for holdings, Desire, Falkland Oil and Gas and Borders and Southern Petroleum.