Exciting Week Ahead

Over the last couple of weeks I have made considerable changes to the portfolio and now hold about 1/3 of it in two shares Aminex (AEX) and Soco International (SIA).

Both of these shares are oil explorers and should have drilling results that should be announced in the next week which should translate into considerable upside potential.

From a defensive point of view both of these companies share prices should be backed by their assets, so in the event of a failure I hope that the downside should be limited.

Recently I have been reading a lot about the growth of China and also about Peak Oil.

China is consuming resources at an ever increasing rate and it is snapping up oil companies,metal companies all over the world to satisfy its needs. Peak Oil is the term given to the fact that oil is expected to reach a maximum production at some stage in the next few years after which it is anticipated that there will be a sharp decline.

I hope to benefit from this anticipated lack of supply and increase in demand, a double whammy which should be favourable for oil explorer and producers.

IT should be noted that companies such as BP and Shell are fully hedged against oil prices, meaning that they don’t make any extra money if the oil price takes off. However, smaller companies which are trying to find more oil should benefit greatly from an increase in price and have the potential to substanitally increase their reserves.

Aminex

This company is quoted on London but is in fact an Irish company. Its price is supported by its assets it has in USA (assuming $60 oil) but it also has a busy drilling program which is fully funded meaning significant potential. IT also has exploratio rights for North Korea which is speculative, but should international relations improve could provide further opporutnities.

Soco International

Again, another company that is currently valued at or below its current assets. The attraction here is that the company is awaiting drilling results from Vietnam which could see a 50% rise in its share price. The sounds coming from the company in the last 6 moths have been positive so I’m hopeful of a positive result.

For the record my entry prices are AEX circa 24p and SIA circa £19. Fingers crossed…..