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Back on the 1st March 2017 I bought a Long Spreadbet on DGOC equivalent to about 2% of my Portfolio Value. This is a recent IPO which listed about 5 weeks back on AIM and I think it is pretty unique and I am very pleased to have been able to pick it up at 64p via a Spreadbet -which is slightly less than the Float Price of 65p.
Regular Readers will know I am no fan of all this tiddly AIM Resources bile that tends to part the Inexperienced from their Money and takes some very rare and special Skills to be able to exploit successfully - a few People can do it but I find it just doesn’t suit my temperament and approach. However, I am not totally averse to Oil and Mining Stocks but I tend to stick to my usual Low Risk style and go for the Big Stuff like RDSB and GLEN. However, I do have a bit of a taste for Oil Plays that are a bit more ‘Mid Cap’ in their nature and have done very well in the past with Stocks like Venture Petroleum VPC (now part of Centrica CAN), JKX Oil & Gas, Dragon Oil (DGO) and the Oil Services plays like Petrofac PFC, Hunting HTG, Cape CIU (which I still hold but it is a bit unpleasant at the moment !!) - and I have had my eyes scanning everywhere to see if there was something interesting but up until I tripped over DGOC I hadn’t really found anything to get me excited enough to stick the WheelieMitt in the WheeliePocket.
DGOC operates in the US but according to Investors Chronicle it listed on AIM due to access to Institutional Investors, Bonds already listed in UK on NEX Exchange (just changed name from ISDX, formerly Plus Markets and OFEX) and Directors felt DGOC would be overlooked on the US Markets due to its relatively small size (Market Cap about £61m).
Anyway, I’m not in the mood for a lengthy, detailed, Blog and this is a pretty simple Company to understand, so I will just focus on the Pluses and Minuses and gives some thoughts on the Chart situation (er, extremely simple as there isn’t much Chart History to go on) and things like Valuation and Targets. To kick things off, here is a link to the Company’s Website:
And arguably the most useful document is the AIM ‘Admission Document’ which can be found as a PDF here:
There is also a useful interview here from Proactive Investors with the Top Dog, Rusty Hutson (no, he is not a Chocolate Labrador - I swear my Old Man had a Dog called Rusty many moons back):
Stuff I like about DGOC
Stuff I ain’t so keen on (The Risks)
Valuation and Targets
We already have the Mirabaud Securities’ NAV figures I mentioned earlier but I prefer to just fiddle about with what we already know (why does that remind me of Keith Moon and Uncle Ernie?) - quite simply, I think a 6% Dividend Yield at 65p is way too high and if this was to fall to merely 4%, that would imply a Target Price of around 96p - let’s call it a Quid for cash……And remember this Divvy should steadily rise over time so perhaps the Share Price could be hugely higher in a few years.
That seems easily doable to me and if we then consider the likelihood of more Wells being bought and coming into production and the possibility of a higher Gas Price and maybe something like 120p is not daft with a bit of patience. In fact, that sounds very conservative to me.
There’s not really a lot to say here as there is so little Data. So far I have just bought a reasonably sizeable Position (the Horizontal Blue Line marks the Level I bought at on a Spreadbet at just over 64p) but I am keen to add a little bit more - I would be particularly excited to move on them if we get a decent EOD (End of Day) Close up above the 68p High that has been achieved so far.
Hopefully that gives a brief overview of DGOC for Readers and my thinking behind buying in.
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