IOG Plc (LSE:IOG) is an oil and gas exploration and development company based in the United Kingdom. The recent announcement from the company’s management that the control event at its Blythe H2 well has been successfully isolated1 was well received by investors.
Also, the prediction of the first gas from the well, expected to begin by the end of the second quarter, further piqued the interest of the investors. As a result, the IOG stock price has escalated by more than 20% since the announcement.
2023 brought a huge decline in the IOG share price in January. However, the recent news has seemingly changed the course for IOG shares. Does this recent price hike mean the bull performance of the company share is about to return?
Key points
- The IOG share price recently jumped by more than 20%.
- IOG shares have been bearish since 2022 but recently began to tick upward.
- Analysts have slashed the company’s revenue estimates for the year.
What does IOG do?
Formerly known as Independent Oil and Gas Plc, the company changed its name to IOG in April 2021. The firm is a gas and infrastructure operator involved in exploring and developing energy opportunities within the Southern North Sea.
It holds 50% working interests in the Blythe gas field, Elgood, Elland, Nailsworth, Southwark, Goddard, Southsea, Abbeydale, Thornbridge, Kelham, Panther, and Grafton licenses. It also owns a 50% interest in Saturn Banks Pipeline System and Bacton Gas Terminal assets.
The bull case for the IOG share price
The IOG share price started its bullish journey in the year 2021. The stock started the year 2021 at 13.2p. The shares continued to climb high throughout the year and closed at 36p with a whopping 172% price appreciation.
Going forward in the next year, the bullish journey continued. And needless to say, Investors were overly joyed during this period to see IOG share price appreciation of more than 200% in this period.
This positive momentum stems from the back of the firm bringing three new North Sea gas fields into production. This, paired with management announcing that the first delivery will be achieved in the near future, understandably got investors excited for the future.
The bear case for the IOG share price
The bear case of IOG shares started in 2022 after the stock reached a peak of 43.5p. Since then, the firm’s valuation has been suffering. In fact, the stock has declined by roughly 87% since this peak price.
This downfall, though huge, isn’t entirely unexpected. Iog has only recently started to generate revenue, with its bottom line firmly in the red. This, paired with its relatively small size, makes volatility in its stock price almost guaranteed.
This undoubtedly introduces additional risks investors need to carefully consider on top of the risks involved in early-stage oil field exploration and development.
IOG share price prediction
The few analysts that continue to follow the business have not-been-too-positive about its potential future. Revenue estimates have been slashed sharply, which indicates a weaker outlook for the IOG share price. And while a few buy recommendations are being floated, the average consensus is to keep the stock on hold with the share price prediction set at around 5p per share.
Should I buy IOG shares today?
The past performance of the IOG share price has been extremely well, but the current progress is not up to the mark. The firm’s achievements seem to be on the low side in comparison to many of its peers. And when coupled with the downgrade in revenue guidance, more questions are being raised about the long-term potential than are being answered. At least, that’s what I think.
Therefore, for now, I’m keeping IOG shares on my watchlist.
Article sources
- Offshore. “North Sea Blythe drilling back on track“
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Saima Naveed does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies and assets mentioned in this article are those of the writer and, therefore, may differ from the opinions of analysts in The Money Cog Premium services.
