Gamble of the week: an oil firm in Ukraine

By Author Charlie Gibson Feb 20, 2006

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Ukraine “has a history of being a volatile place to operate”, says the Investors Chronicle. Note, for example, its recent spat with Russia regarding gas imports and the subsequent “upward negotiation” in prices.

But what’s one man’s poison is another man’s meat: one of the side-effects of all this is the absence of the oil majors from Ukraine, which leaves the way open for the industry’s smaller, braver operators.

One of these is Cardinal Resources (CDL:AIM, 30p), which produces more than 1,000 barrels of oil equivalent (boe) per day from two oil and gas fields in Ukraine, and is “working hard” to get that to 6,000 boe/d by 2010.

Cardinal is currently loss-making, with a market capitalisation of £34m and net assets of £14.4m. But it is expected to make 6.3p per share in earnings in 2005 (according to Yahoo), followed by 9.3p in 2006 in the wake of a deal with Ukraneft, Ukraine’s largest state-controlled producer, which should double its resource base. A speculative buy, says Investors Chronicle.

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Published in Tips & advice | More articles by Charlie Gibson

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