9Dec 2015

A blog on LGO Energy Plc by @TheRumTraderLSE

LGO Energy

Much can be said about LGO Energy in the recent weeks since the misfortune it experienced with their last well. In the essence of its last CEO, they have become the marmite share of AIM. A legion of faithful followers who have averaged down over the recent weeks, picking up bargain prices against another camp that has benefited from its sharp decline.

There have of course been a lot of factors that have played their part in the making of the current share price. The price of oil has not helped and with the recent OPEC meeting it cannot be seen as a way out of their problems short term.

Since Wellford and Height have been brought on-board, the calculator has been wrestled from Ritson’s hand by the Americans to try and resolve many of the financial hurdles faced by the company. With the recent announcement of more shares entering the market, this Quantum of Easing approach with more shares to resolve their problems will only work for a while. Further dilution will be met with dismay from many of those invested and it will only be so long before creditors will not be happy to accept this form of payment.

There is a positive to be seen from this. Their spreadsheets are being tidied to present a company with exceptional assets that can be approached following the announcement of the strategic review. With the possibility of another company grabbing a bargain leading up to the Christmas period, there could be more options available to Ritson that will provide comfort for some. Partnerships could also provide the much needed cash they are after. But they will need to act fast is this is to be the case. The longer the share price is left to dwindle, the less attractive any offer will seem. The temporary delay in payments back to BNP Paribas has started the clock ticking and if they plan on providing Easter Eggs for the employees, there is no time to waste.

While the current events have provided a day traders playground with the share price, eyes should be focused on the board to see what card they play next. It seems that silence may not be golden if they continue down this route. If there are any deals on the table it would be to their benefit to show the ace and prove many wrong.

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