Although we dont believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.
What: Shares in Oilex (LSE: OEX) saw another +10% rise in early trade this morning, after issuing a positive update on itsCambay-77H wellin the Indian state of Gujarat.
So what: While business as normal was reported in recovering light oil and frac fluids, preliminaryanalysis of the water encountered during the flow-back operationsshowingthatitis consistent with frac water and not formation water was received warmly by the company and investors alike, as its a strong sign that the well will be a strong performer.
Furthermore, the oil that has been recovered has the appearance of other high-quality Cambay crude oils, and is being transported to a nearby refinery for sale, where it attracts a price similar to Bonny Light crude oil. Oilex managing director Ron Miller commented: It is a nice sweetener to continue production of crude oil which sells for an attractive price during flow-back and clean-up as some North American wells only flow water during early clean-up.
Now what:Trading at just shy of10p this morning, its easy to see how far the shares havecome in the last month or two,especially in comparison to its price of 4p as recent as the beginning of May this year. However, the price has been volatile recently, with peaks and troughs alike resulting from news coming from this one well alone, and Ron Miller did cite some caution in the update, stating: As the first well of this type in the Cambay Basin to flow-back and clean-up, it is not unexpected for some remedial work as part of those operations. My advice is for investors to be cautious at this stage, too.
Whether you think Oilex has further to run is down to you. But if you’re looking for a growth share with excellent prospects AND pays a dividend, then you really need to read our latest specialFREEreport, “The Motley Fool’s Top Growth Share For 2014“.
Top analyst Maynard Paton believes that this company could be set fordouble-digit returns in the next five years— so what are you waiting for?Click here nowto read up on this small cap while it’s still undervalued by the market!
Sam Robson has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
