SMALL CAP MOVERS: North Sea oil and gas shares soar after government announces new licensing proposals

It could have been worse for the AIM All-Share Index this week, given we saw an interest rate hike from the Bank of England and a surprise Fitch rating downgrade for US government debt.

The latter caused a ripple effect across global equities, with the FTSE 100 blue-chip index falling close to 2.5 per cent this week.

As an internationally weighted index, the Footsie is substantially more exposed to risk-off macroeconomic developments than the junior market.

Thus AIM came off comparatively well, falling just 0.7 per cent to 760.55 come Friday afternoon.

If only year-to-date junior market performance was as steady.

Share price: North Sea stocks in general reacted positively to Prime Minister Rishi Sunak’s and energy minister Grant Shapps’ proposals for a new round of North Sea licensing 

The London Stock Exchange Group’s first-half capital markets update underscored what, in fairness, we already knew: Fundraising in Europe’s growth engine has dried up this year, with around £831million in initial public offerings and follow-on deals executed in the first six months.

This was around a 10th of what was raised on an interim basis in 2021 and roughly on par with last year’s poor display.

Interestingly enough, venture capital trusts have raised more capital in 2023 than AIM listings, hitting £1billion in the first half, making it the second-highest on-record year of VCT fundraising already.

One stand-out name in the VCT space was Guinness VCT, which IPO’d on the premium segment, raising £3.75million in the process.

Among the AIM risers this week was Orcadian Energy, which doubled its market value to £3.8million despite the board confirming ‘that it is not aware of any specific reason for this increase’.

It may have been a vote of confidence for the micro-cap following the government’s vocal support for the UK offshore oil and gas industry, where Orcadian is attempting to carve out a name for itself.

North Sea stocks in general reacted positively to prime minister Rishi Sunak’s and energy minister Grant Shapps’ proposals for a new round of North Sea licensing.

‘Hundreds’ of new licences will be granted in the UK in future competition rounds, in a bid to ensure ‘domestic energy supply and reduce reliance on hostile states,’ the government said on Monday.

Alongside Orcadian, Deltic Energy bounced 10 per cent higher, Baron Oil 25 per cent higher and Parkmead Group 26 per cent higher.

In the wider energy sector, Europe-focused transition energy investor Scirocco Energy soared 60 per cent after progressing with the sale of its Tanzania-based assets.

In the natural resources space, Premier African Metals rallied nearly 30 per cent while Karelian Diamond Resources jumped 22 per cent following last week’s commencement of a nickel-copper-platinum group metal exploration programme in Northern Ireland.

On the downside was Wishbone Gold following a dilutive equity fundraiser. Regardless, it was a successful, oversubscribed exercise, raising £1.42million at 2.4p per share, exceeding the mining exploration group’s initial fundraising target of £1million.

Outside of the natural resources sector, another faller was indie video game publisher Devolver Digital, which dipped 33 per cent due to delays to several new game releases, a reduction in revenue from subscription deals and a softer performance in back-catalogue sales.

Spirent Communications fell 8 per cent after its interim earnings call failed to impress, while Flowtech Fluidpower dipped a little over 6 per cent after issuing a profit warning.

Back to the risers!

Some may recall Harland & Wolff Group’s stonking return to relevance at the end of last year after the Belfast-based shipyard doubled its market cap on the back of a landmark Ministry of Defence contract win.

The group, which is famous for building the Titanic and other Olympic-class ocean liners in the early 20th century, surged again this week following another solid contract win, this time in the form of a vessel refurbishment contract worth up to £70million.

Investors acted unsurprisingly well to the news, sending Harland & Wolff’s stock 13 per cent higher to 12.72p come Friday.

Lastly, it would be remiss not to mention XP Factory, the AIM-listed espace room and ‘battle bar’, where you can go to throw axes with your work colleagues, if you so wish.

XP’s shares advanced in Friday morning’s deals after reporting a jump in turnover and earnings.

July trading was significantly ahead of May and June and early indications are positive for August, despite what management called ‘the ongoing rhetoric of the cost of living crisis and rising interest rates’.

Build it and they will come, as the saying goes.

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This post first appeared on Dailymail.co.uk