Oil stock analysis: Potentially transformational for Sound Energy
16th October 2018 10:16
by Rajan Dhall from interactive investor
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Financial markets analyst Rajan Dhall picks out the day's key industry news and runs the numbers to see what this share price might do next.
Oil markets are in a state of limbo as geopolitical noise dictates price action at present. Price rises have been attributed to the strained relationship between the US and Saudi Arabia.
Tensions have been heighted by the disappearance in Turkey of journalist Jamal Khashoggi. It is believed that Khashoggi, a vocal critic of the Saudi government, went missing on 2 October after visiting the Saudi consulate in Istanbul, where it is suspected he may have been executed.
The UK and US have put pressure on the Saudi's who have since said they will launch a formal investigation into the disappearance. As a result, WTI and Brent crude both backed away from highs seen on the market open Sunday night.
Away from politics, last week we received the latest OPEC monthly report. One of the main points was the increase in OPEC oil output of 132,000 barrels per day in September to nearly 32.8 million barrels per day. This is important as supply hikes from Saudi Arabia, Libya, the UAE, Nigeria and Angola offset a decline in production from Iran and Venezuela.
Sound Energy
Sound Energy today announced the receipt of Moroccan ministerial approval of the new eight-year Greater Tendrara Petroleum Agreement (GTPA). The company now holds an operated 47.5% position in the GTPA, with the remaining 52.5% held by Schlumberger (27.5%) and ONHYM (25%).
James Parsons, Sound Energy's CEO, commented:
"I am delighted to announce receipt of approval from the Moroccan Energy and Finance Ministries for the Greater Tendrara petroleum agreement and that, as a result, the Greater Tendrara petroleum agreement has now become effective - securing Sound Energy's rights to this potentially transformational acreage up to 2026. We look forward to commencement of our exploration drilling programme in the near future."
Chart analysis
In the daily chart for Sound Energy below, we see a recent pattern of lower highs and lower lows. To turn things round, we wold need to see a break of 43p.
Today's news is certainly positive for share price the momentum, but we would need a corrective wave lower and a push through the aforementioned 43p level backed by higher volume to confirm bullish sentiment.
The 43p level has been a sticking point in the past, having provided support through March, then resistance three times between May and Sept 2018.
In terms of support, 28.80p looks strong and, if we see a corrective wave down, the 34.32p level used as support in May could provide adequate strength to hold unless, of course, the fundamental data turns sour.
Past performance is not a guide to future performance
Rajan Dhall is a freelance contributor and not a direct employee of interactive investor.
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