Oil and Gas Eye

Oil and Gas Eye

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Market stability is returning: new entrants have a foundation to build on and IPO activity has increased

  • The Oil and Gas Eye index rose 1% in Q1 2013, compared with a 7% drop in Q4 2012. This performance was slightly weaker than the 4% growth in the FTSE 350 oil and gas universe and the wider AIM market’s 3% growth.

  • Market volatility for many junior oil and gas companies has meant that, since 2009, there hasn’t been more than two consecutive quarters of growth for the index. In economic terms, it has already achieved a triple dip recession.

  • A stable quarter was welcomed by many market participants, and secondary fundraising activity recovered, with the £173.9m raised more than 48% higher than Q4’s total.

  • Nonetheless, the index’s performance masks a continued underlying divergence between the haves and have-nots. In Q1 the best performing stock rose 46% and the worst fell 55%. We expect this trend to continue, with investor selectivity between stocks they will continue to support, and a universe of companies seeking alternative financing.

  • We also expect investor focus to increasingly shift towards IPOs, a trend reflected by Q1’s two successful IPOs (Falcon Oil & Gas and Northcote Energy) and two readmissions (Gold Oil and Trinity Exploration & Production). A growing number of potential IPO candidates are preparing for the public market.

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