Special Feature
At Trendwatch Asset Management (TAM) we’ve been fans of the oil producers’ sector for as long as I can remember. It’s hardly rocket science. A finite supply; exponentially growing demand from newly emergent economies such as China and India; the escalating cost of getting the black stuff out of the ground (or these days, out of the sea bed); the ever-present threat of supply disruption in the Middle East (notably Iran)… Frankly, when the oil price takes a breather, as it is currently, we just rub our hands and treat it as a buying opportunity. The problem is not the lack of decent oil shares to buy; it’s the state of the equity market. TAM’s whole investment strategy is founded upon buying into shares in the early stages of an uptrend. On fundamentals, an oil company may be the most brilliant in the world. But why would you want to buy its shares if they’re falling? Surely the time to buy is when they stabilise and start to trend upwards again? TAM is uniquely placed to know about trends. Our proprietary trend analysis software scans every share on the market, identifying exactly where each is in its own particular trend cycle. Our software currently tells us that there are currently… wait for it… just two oil shares that meet our stringent definition of an uptrend. Fortunately, one of them is what looks to me to be a cracker: Ophir Energy (OPHR), Established in 2004, it floated on the Official List in London just three weeks before last August’s stockmarket crash. Its founders comprise a strong technical team with over 160 years of combined regional experience.
30 | www.financial-spread-betting.com | July 2012
One of its largest shareholders, Mvelaphanda, a South African industrial and resources conglomerate, was founded by Ophir’s non-executive chairman, non-other than controversial Gauteng politician Mr Tokyo Sexwale. This successful relationship has helped the company build strong connections with key governments and oil and gas participants throughout Africa. Ophir’s achievements to date can be summarised thus: • The largest net acreage holder in the offshore East Africa • Fifth largest deepwater acreage holder in Africa. • At least five potential world scale oil and gas plays. • 4 billion barrels of oil equivalent of net unrisked resources. • Interest in 17 projects in 9 different African jurisdictions. • Commercial discoveries in 5 out of 8 operated wells to date.. • Clear monetisation plans for gas discoveries. • Active drilling campaign over next 18 months • Targeting 1.8 barrels of oil equivalent of net unrisked resources. There’s a global shortage of deepwater drilling rigs at present, but Ophir had the clout to secure three of them, West Polaris, West Aquarius and Deep Venture, via rig-sharing agreements with ExxonMobil Inc. These agreements give Ophir more than 500 days of deepwater rig time, divided into three slots over a three-year period. So Ophir is able to make firm plans to evaluate and test its exploration portfolio.