Markets reverse after Libya worries finally unsettle investors

The FTSE 100 moved into negative territory late on in the day finishing down 16 at 5,974 as Wall Street reversed into the red. Worries that the unrest in Libya could spread to other oil producing states worried investors. If one of the Middle Eastern producers had an interruption in supply we could see oil at over $200 a barrel, with a huge negative impact on global economic growth similar to the oil shock of the 1970's following the Arab-Israeli war.

The Contrarian Investor Uk portfolio had a good day with some good timing of trades. I ditched some Rockhopper positions early on whilst still up (finished down 5%) to increase my holding in Weatherly and Solomon Gold. Both were down in the morning but SOLG finished up 7.5% and WTI finished flat. At 12p Weatherly was a great top up opportunity despite the drop in the copper price today. Good to see Xcite staying in the blue, though off its best for the day.

On another note, Sareum Holdings finished down 13% after the 30%+ rise first thing (see my post earlier in the day). MeDaVinci changed its name to Orogen gold today and fell 8% to 0.87p as the new shares were issued to complete the purchase of its Serbian gold prospect.

Mixed day for Contrarian Investor uk portfolio

Despite an RNS, stating that Bowleven (BLVN) had started on the Sapele-1 sidetrack Sapele-1ST in the Douala Basin, offshore Cameroon, the shares fell 3p to 331p. The aim of Sapele-1ST is to appraise the Deep Omicron oil discovery encountered in the Sapele-1 exploration well. The well is to be drilled to an estimated vertical depth of circa 3,682 metres (4,761 metres measured depth) approximately 2 kilometres from the Deep Omicron oil discovery in the original vertical well. Drilling is expected to take approximately 40 to 50 days. Bowleven also announced that The Vantage Sapphire jack-up rig has now been contracted and the Sapele-2 well will spud around mid March 2011.

Xcite Energy (XEL) dropped 11.5p (3.5%) to 326p after this morning's news that the reserves report would be available at the end of March rather than early in the month. See earlier post: http://contrarianinvestoruk.blogspot.com/2011/02/xcite-energy-reserves-report-delayed.html

On a more positive note, Sirius (SXX) continued its rebound, rising 5% to 13.4p as realisation returns that the stock was oversold on the fall out from last week's Libyan crisis. Copper company, Weatherly (WTI) also rose 4.4% to 12.88p on strong metal prices. Even Rockhopper (RKH) managed a small gain to finish at 233p.

Xcite Energy has further drawdown on equity drawdown agreement

RNS just released from Xcite Energy that it is getting another £5 million from the SEDA (Standby equity drawdown agreement) with Yorkville. No sign of that CPR RNS that we have all been waiting for. Incredible to think that the Xcite share price was where it is today before the December 2010 flow test, which was a break or break for the Bentley field. Mmmm...

23 February 2011

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES

TSX-V, LSE-AIM: XEL

23 February 2011

Xcite Energy Limited

("Xcite Energy" or the "Company")

Drawdown on Equity Line

Xcite Energy announces that it has drawn down on its Standby Equity Distribution Agreement ("SEDA") with YA Global Master SPV Ltd ("Yorkville") in the amount of GBP5 million (CAD$7.975 million). This draw down has been undertaken at a price of GBP3.38 (CAD$5.40) per share and will result in the issue of 1,480,754 ordinary shares of no par value in the capital of the Company (the "New Ordinary Shares") to Yorkville.

Subject to the terms of the SEDA and except in accordance with Canadian securities laws and with prior written approval of the TSX Venture Exchange, the shares issued to Yorkville under this draw down may not be sold or otherwise traded on or through the facilities of the TSX Venture Exchange or otherwise in Canada or to or for the benefit of a Canadian resident until the date that is four months and one day from the date of issue.

Application will be made for the admission to AIM ("Admission") of the New Ordinary Shares upon approval of the share issue by the TSX Venture Exchange. The New Ordinary Shares will rank pari passu with the Company's existing issued Ordinary Shares.

Sea of red today as fear stalks market

The FTSE 100 managed to regain some of its poise late in the session, finishing down 18 at 5,997 after being much further in the red in the morning. Worries about the Libyan crisis and poor results from retailer Walmart were offset by good consumer confidence numbers from the U.S. and encouraging news on a budget surplus in the U.K. last month. Looks like the VAT rise to 20% and the increase in capital gains tax from 18 to 28% is finally swelling the Treasury coffers!

Another dreadful day for the Contrarian Investor UK portfolio with all the stocks down and with the oil stocks feeling the pain despite the rising oil price. It was nice to see Bowleven finally rebound to finish up 2%  at 313p after falling below £3 this morning. I couldn't resist a top up at £3 with so much news to come from its Cameroon Sapele-1 well and other drilling activities. As for Rockhopper, I am gob smacked it is now at 232p after yet another 6% fall so I am well down on this. Fortunately there is no rush to sell at these levels, i'm holding firm for the results of the 14/10-4 well in mid-March. Crazy that its dropped £1.50 since the 14-10/3 well result and yet Goldman Sachs has its target price over £6. Institution selling plus private investors fearing for their lives. What's with the nonsense about a Sea Lion duster!! What next? Glad i derisked on Xcite last week with anothet 9p fall. Had far too much in Xcite until a couple of weeks ago. Shame I put some of it in Rockhopper, we're all human!!!

Sense of realism finally hits stock markets

After all the worrying developments from the Middle East, rising inflation concerns both here and in China, oil above $100 a barrel, a bloated U.S. Deficit, Eurozone debt worries and weakening consumer sentiment it was always a surprise that the FTSE was still above 6,000 and the S&P 500 hit a level double its March 2009 low last week. The Ftse 100 fell 64  points today to 6,019 with the big banks falling nearly 4% over worries about European debt. U.S. markets were closed due to President's day.

The Contrarian Investor UK portfolio got a battering with Bowleven dropping to 307p, a pound of its recent highs and Rockhopper finishing at 250p, a drop of close to 140p in the last 3 weeks. Xcite continues to drift lower as we await the CPR document to 344p, it was trading at 400p to buy less than 2 weeks ago on takeover rumours. Now the rumours are more of a 350p institutional placing. Its been a bad month, roll on March!

Bad day at the office for Contrarian portfolio

Hmmm i've had better days! Every stock is down in the Contrarian Investor UK portfolio apart from Rockhopper (after a shocker on Friday) and Angel Mining, so its a case of taking the pain for today. Xcite is recovering from a sharp dive this morning that made no sense at all but it's still down 4%. Bowleven can't stop falling and Sirius has a 10% fall after its poor RNS regarding its Chinese Adavale project partnership.

It's sometimes about courage in your convictions when the portfolio takes a tumble. I have faith that research is correct on all my holdings and that they are all worth much more than today's share price action indicates. Its about taking the rough with the smooth in this game! This is what being a true Contarian investor is about and on some days it can be uncomfortable! Sometimes it takes more than a few days for a trade to come good, but inevitably they will with patience - this game is not about luck or gambling its about "buy and research" then do even more research (and don't believe everything you read on a bulletin board or even a blog!!).

Portfolio review of the week - 12th February 2011

The FTSE 100 finished up 43 points at 6,063, a rise of 1% for the week on news that Egyptian president Hosni Mubarak had stepped down. The Dow Jones Industrial Average rose 44 points, or 0.4%, to 12,273, a rise of 1.5% on the week. It was the Dow's highest close since June 2008. WTI Oil futures dropped a dollar yesterday to $85, on the news from Egypt.

The Contrarian Investor UK Portfolio had a mixed week, with gains from Xcite Energy (XEL) tempered by a large fall in Rockhopper (RKH), though XEL represents a much larger part of the portfolio. The unexpectedly large drop in RKH, meant that my margin requirements were looking a little stretched and therefore I reluctantly had to close a couple of Xcite spread bets late on Friday, albeit at a profit, and my portfolio still has a lot of Xcite with news just around the corner.

Xcite Energy(XEL) -  Xcite finished down 3p on Friday, but a gain of 25p on Wednesday meant that it finished the week at £3.82, a rise of 20p on the week. The rig signing deadline with British American Offshore for the Rowan Norway rig passed yesterday (this was the second extension) with no news. Given the company normally issue an RNS the day after a signing deadline, it is pretty much certain an RNS will be forthcoming on Monday. Wednesday's rise was partly related to a FT.com story that there was "vague talk of a takeover" (see previous post http://contrarianinvestoruk.blogspot.com/2011/02/xcite-energy-ftcom-quotes-vague-bid.html). As I stated earlier it was frustrating to have to close some spread bets on Friday, but there is still plenty there to benefit from upside from a good RNS. The key document, the CPR reserves report is expected anytime in the next month, and you never know, it might be sooner than we were all led to believe.

Rockhopper (RKH) - Unfortunately buys on Thursday and Friday were poorly timed with a subsequent 17% fall on Friday afternoon, but my previous post (http://contrarianinvestoruk.blogspot.com/2011/02/rockhopper-1410-3-disappoints-market.html) illustrates why I wasn't panicked into selling like many others on the drop.

ARM Holdings (ARM) - A short on chip designer, ARM holdings, was closed for a profit after the shares hit all time highs this week.

Bowleven (BLVN) - An update from the Sapele 1 well in Cameroon didn't do much to help the shares this week. They finished down 2.5% at £3.29. Several failures in the AIM oil sector this week (Rockhopper, Nautical, Encore) plus perhaps the changes at CMC holdings seems to have contributed to a lot of volatility. Bowleven remains a core holding for medium term gains particularly with a second rig being mobilised in February to accelerate appraisals.

Weatherly International (WTI) - The RNS from 8th February was good news. "mining activities have resumed at both the Otjihase and Matchless mines with ore being blasted and stockpiled awaiting commissioning of the concentrator. The commissioning of the concentrator is progressing well and the plant will resume normal operation in accordance with the programme. Weatherly expects to have sufficient quantities of concentrate to commence transport to Walvis Bay in March with the first revenues to be realised from concentrate sales shortly thereafter." This remains a very promising share with Copper prices at all time highs and production ramping up.

Sirius (SXX) and Angel (ANGM) - Nothing to report. Where is that gold shipment report Elias Jones?(Chief Exec. Angel) - what's all this talk you've been on holiday!!??

Xcite looking good on Level 2

Steady buying of Xcite Energy this morning, just ticked up to +7p, despite the wide spread with good depth on the buy side and offer slowing rising. Seems the Market Makers don't know which way this is going - up? Volume rubbish so far.

Xcite's Lucas-Clements talking at Offshore summit on 1st February

This would be an interesting presentation to see Charles Lucas-Clements in action.

http://www.offshore-summit.com/programme.asp

Offshore Production Technology Summit 2011
31st January - 1st February 2011
Lancaster London Hotel, London, UK
Maximising growth through innovation

Case Study: Xcite Energy - Pre-production planning and development of an offshore heavy oil field
Understanding the unique nature of the venture
Assessing the technologies involved:
Horizontal well technology
Separation technology
Charles Lucas-Clements, Director of Strategy and Business Development, Xcite Energy ResourcesUnited Kingdom

Bad week continues so its case of waiting for the turn

Late December and early January seemed to be days of endless gains on the portfolio. Bowleven (BLVN) and Xcite Energy (XEL) both showed strong moves up on positive news. Now things have come to a grinding halt and I'm seeing day after day of steady (and not so steady) declines. Every stock in the portfolio was negative again today (Sirius, Bowleven, Xcite, Sirius, Rockhopper) bar one (Imagination tech). Bowleven was looking particularly sick this morning with a 5% fall soon after the market open, but reason prevailed and it recovered to close down 3p, at 348p. Yesterday the fall in the oil stocks was precipitated by the falling oil price and there is certainly a sector rotation out of oil at the moment with prospects of rising inventories and OPEC threatening to increase production. Today, market sentiment just seemed to be against AIM and the small cap sector.

It's a case of just sitting it out when you have weeks like this. The stocks are solid, the research has been done, the news flow has been checked now buyers need to come back. Earnings out of the U.S. continue to be strong which should support the markets.

Still patiently waiting for the anticipated news flow from most of the stocks in the portfolio.

Rough day today on bad U.K. GDP news

Its been a big red day across the board for the portfolio for the second day. The main reason was the unexpected news that the U.K.’s GDP (Gross Domestic Product) shrank in the final quarter of 2010 by 0.5%, compared with growth expectations of at least 0.2%. This was caused by weak services and construction, though manufacturing continued to be strong.

So we have a heady cocktail of rising inflation (4.8% RPI) and weakening growth which makes life very interesting for the Bank Of England (BOE). If they increase interest rates above 0.5% they risk curtailing growth even more especially with the raft of austerity measures and tax increases (e.g. VAT recently increased to 20%). BOE Governor, Mervyn King, said tonight that families faced the biggest squeeze on household income for 90 years. The government blamed the bad weather in December for the fall in economic output. The news probably puts the brakes on interest rate increases for the foreseeable future which should be good news for the U.K. stock market in 2011, unless a double dip recession does rear it's ugly head ahead. This will happen if quarter one GDP falls (a recession is technically two quarters of economic contraction).

On a stock specific note, Sirius Minerals (SXX) continued its downward trajectory, falling below 16p during the morning but it has now stabilised at 16.5p (down 3.5%). It is unclear for the reason for the big fall this morning.It may have been shorters or just an excess of sellers. I’m sure market makers also had a role to play to “panic the weak”.

Bowleven (BLVN) is suffering with a 5% fall to 352p. As for the reason for this big drop, no idea! Perhaps it’s a leak from Cameroon that the extended drilling has come to nothing, but nothing to confirm either way. Looking at level 2, certainly a big seller in the background and not enough buyers to mop up the excess supply. Not a market maker tree shake since not a dramatic fall, a gradual tick down as selling pressure built through the day.

Imagination Tech (IMG) has like Bowleven had a bad day, but has now recovered to 11p down 3.2% despite a story on Apple insider (http://www.appleinsider.com/articles/11/01/24/production_of_apples_ipad_2_to_begin_in_february_iphone_5_in_may_report.html) that production for IPAD 2 will start in February for an April launch
with Iphone 5 due in June both with the persistant rumour that these devices both will have IMG chips.

At least Xcite (XEL) has held nicely firm despite the overall market weakness, currently down 0.5p to 363-367p.

Portfolio getting a pasting this morning

After some nice gains on Friday driven by Xcite, Bowleven and Sirius, all are down this morning. Sirius is down around 11 percent today after the North Dakota results were no more than in line with expectations and profit takers have moved in selling on the news. Profit now gone on Sirius but I've promised myself I'll avoid trading this one too much since it's more of a medium term play i.e. turn off the computer and check the price in 6 months rather than buying in and out on RNS releases. Angel Mining is up at least. At last! Still waiting on Xcite which has drifted down a couple of pence. Patience will be rewarded .

I couldn't resist buying into Rockhopper (RKH) in a small way this morning. Drilling news due in next week or so in the North Falklands basin. Was hoping for 350p, but at 360p a reasonable entry point. A gamble but only a bit on the table and nothing wrong with a bit of adrenaline!

Is the Rowan Stavanger the reason for Xcite rig signing delay?

I believe there is a strong chance that Xcite are currently negotiating to take the Rowan Stavanger which is built and ready to be deployed rather than the Rowan Norway rig which was due for completion in October 2011. This would then be potential reason for the Letter of Intent being pushed back another 2 weeks and for the comments from the Xcite management at the oilbarrel conference, "don't worry about the rig". Seems to make much more sense than the company being in takeover negotiations. Would be fantastic news - faster production or further well testing. The jigsaw puzzle looks to be coming together. Looking forward to tomorrow's share price action.

http://www.offshore.no/sak/Rowan_Stavanger_mister_jobb

Rowan Stavanger loses job

Published 12.27.2010 12:25:28 by John Økland

0

The customer withdrew from the letter of intent.

Rowan Stavanger is now without a contract after an unnamed customer has chosen not to make use of a letter of intent. The reason given to be well-engineering problems.

Rowan Stavanger is one of three rigs Rowan gained control of the acquisition of Skeie Drilling, which had ordered three identical jack-up is.

The rig is ready for delivery in January and is listed as vacant in Rowan Companies fleet update.

The other two rigs, Rowan and Rowan Norway Viking, both have appointments in the UK respectively Xcite Energy and Total.