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The Gatwick gusher #investments

This week I’ve been following the progress of the oil well at Horse Hill near Gatwick which has been flow-tested with good results. It’s producing about 450 barrels a day which is good for all the small companies involved. For Solo Oil, this is another investment to bring in revenue.

Assets

In fact that will be two sources of revenue for Solo Oil, the other one being the gas they are producing in Tanzania. Solo is basically an investment company with expertise in oil and gas, so revenues will be reinvested to develop those assets and other assets both in Tanzania and in the UK. It looks like both governments will support the development of oil and gas production.

The market

The market was more optimistic this week with the all-share index up over 3.5%. There was an agreement between Russia and the Saudis to hold oil production at current levels, but other producers are increasing production such as Iran. I’m watching the oil price and the share price of Premier Oil. Premier’s share price went up sharply this week, starting the week around 34 and ending the week up 9 at 43 pence.  Premier is in a good position and has recently taken over assets in the north sea from Eon.

Premier Foods

Premier foods had been as high as 185 when I should have sold! Today, they are at 31.75, which seems too low. The directors paid an average of 81 for their shares. Premier Foods is now trying to export to the US and looking at overseas markets for growth. The general image of products like Mr Kipling has taken a battering. It’s not just the fact they have had to sell to discounters, the product has been copied by discounters right down to the packaging colours. They are developing new premium products and so the future looks good.

The rest of the market seems subdued and I think investors and traders are nervous. The FTSE 100 did drop from over 7000 to 5600 which was predicted by some pundits and a 20% drop does wipe billions off the value of pension funds. However, the market does appear to be recovering as confidence grows again. The FTSE 100 is 5977 as I write and has been climbing this week. The commodity prices are still falling and miners and oil shares still look risky. It could be a good time to buy oil shares when the oil price starts to climb.

In the meantime, I hope the so called Gatwick Gusher will help me recover from recently falls in the market. Solo Oil is up again today. If traders scramble to snap up shares in the companies involved in Horse Hill next week, I won’t be surprised and Solo seems to be more diverse than the rest, with gas about to bring revenue in Tanzania. It’s looking good.

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