RH Petrogas (SGX: T13) shares are up 14% today to a 12 month high. There’s no particular news to explain this price move so we must assume that it’s a change of sentiment concerning the company. We can’t even use global gas prices as the reason for of course gas prices are not global, they are regional. The last accounts were 6 weeks back, so it’s not even that. Just that change in sentiment to blame here therefore.
It’s possible to look at what RH Petrogas does: “One company that has been listed on the Singapore Exchange (SGX) since June 1993 and benefits from the higher oil prices is RH Petrogas (SGX Code: T13). The independent upstream oil and gas company has undergone asset rationalisation over the past five years to currently operate two oil onshore producing assets in Indonesia: Kepala Burung PSC and the Salawati PSC.” The implication there is that the gas produced goes into Singapore, therefore changes in the prices paid in Singapore will affect the company.
We might also thing that this is a pretty small company exposed to technical problems. Will only two producing platforms it would be easy enough for there to be a considerable drop in production for purely technical reasons.
RH Petrogas share price from Google Finance
It’s also true that those fields are mature:” Currently, crude oil sales make up over 80% of the revenue. In the longer term, we expect gas will make up an increasingly larger share if its exploration efforts pay off.” That also indicates that it’s not, in fact, the gas price which is changing the share price. The gas is used largely locally in Indonesia, the oil is sold onto the global market. Which might explain that recent surge in the share price, the oil market is stronger on the back of Opec constraints on production.
It’s fair to say that opinion is divided. From a month back, the share performance is disappointing, or equally it’s doing well.
The real difficulty is that given the size of RH Petrogas there’s no substantial analyst coverage of it. So we’re really trying to trade a little in the dark here. We can observe external factors - the oil price say - and that’s about it. That makes it more of a speculation than an investment.