The living market. Learning from #FOGL

I thought I would put a bit of a blog together about this fine racehorse. I’ve been investing in FOGL for a few years on and off and it’s interesting how it has developed and how as an investor we need to realise that the market has developed at the same time.

The first time round back in 2012 when we had the first round of drilling for FOGL we saw the share price rise massively to £1, this was reached around the time of first spud, optimism was a high and it wasn’t until the September well results came in that the SP dropped from the 90p mark down to the low 60’s. The following Scotia well was a failure and the price then stagnated around the 30p mark.

This time round the market learnt and developed. Buyers saw a low risk opportunity, they brought in the mid 20’s sold pre spud or on spud news and the SP has pulled back to a lower level (equivalent back in 2012 to the SP falling back to the 60’s during the drill…..)

For people not yet invested it gives us quite a few possibilities. We can take advantage of this learning market, sit back and take a lower risk position by buying in now that the Share price has fallen due to the sell on spud crew. My recommendation would be to invest a portion of it now, if drill 1 fails, you have the ability to average down on what would most likely be a massive over re-action if the drill isn’t a success, (maybe 20p). With plenty of upside on the potential of future drills. If the drill succeeds you can ride the wave and pocket some very nice profit, leaving a portion in to ride the rest of the drills.

I hear from Macy’s blog that FOGL will need to raise money and this is very correct. However the targets have been chosen in my opinion to allow a window of opportunity for this probably between the results of drill 2 and the spud of drill 4. It makes no sense to fund pre potential and likely good resource news before the results of drill 2 but equally makes lots of sense not to risk waiting before the more risky wildcat drills in the southern license area.

The risk of dilution then at this time, must be pretty minimal. A window of opportunity has developed for more canny investors…. Live and Learn and have a bit of fun along the way.