Buyers chase Anglo African Oil & Gas higher

by Rajan Dhall from interactive investor |

Its shares almost tripled in the weeks after Christmas, and this news has attracted plenty of interest.

Anglo African Oil & Gas (LSE:AAOG) shares rallied after the company flagged a likely aggregate flow rate of over 1,500 barrels of oil per day (bopd) for the first 14-18 months at its TLP-103C well in the Republic of the Congo, then about 400 bopd after that.
Shares jumped in early trade but profit takers triggered a retracement, although the shares remain in positive territory.
It hasn't all been straightforward for the company at the Tilapia licence. Back in January they blamed problems with the equipment for a failure to test the Djeno reservoir. However, after waiting for improvement to be made to the rig, the patience has paid off.

Back on 24 September, I wrote about the company when its shares were trading at around 9.28p. Anglo had just experienced a topside issue that affected the rig and stopped drilling immediately. At the time, analysts were looking to see if the gap down would close at the 4 September 2018 fall, which it did in due course to use as resistance for a move lower (22 October 2018).

Source: TradingView (*) Past performance is not a guide to future performance

In more recent times, the daily chart is an interesting one, and investors are not shy when it comes to talking about AAOG on social media. 

It has been said that some of the holders are looking for more concrete numbers in the longer term for them to hold stock confidently. It has also been said by one or two sceptical analysts that this is 'just a plan' and the last time they drilled in Mengo reservoir it produced only 11 bopd. 

The good news is, the company still expects to break even, even if the oil price is $20 a barrel. 

From a charting perspective, we are seeing momentum pick up in the stock, and the MACD indicator crossed above the zero line. The stochastic indictor has also moved to produce a more positive signal.  

Of course, these indicators are just a derivative of price, and the market will be looking for momentum to confirm the move in the coming sessions. If the volume keeps tracking the move higher, it would be seen as confirmation that the market is backing the gains. 

One thing's is certain, April will be an interesting month for shareholders as we will get the actual drilling results and clear production numbers. 

Rajan Dhall is a freelance contributor and not a direct employee of interactive investor.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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