Companies: AGLD    CZA    LAM    RIO    TLW   

While dealers and pundits debate how much of the oil surge is due to speculation and how much to fundamentals, the price has continued to hover above $130 a barrel, encouraging companies in the sector and their backers. Gold still beguiles, while the success of bid target Rio Tinto, worth nearly £60 billion at £60.05p, in almost doubling iron ore prices to Chinese steel makers dramatically demonstrates the persistent strength of basic commodities.

Ugandan cheer for Tullow
Tullow Oil has found oil and gas in its Ngege-1 exploration well in Uganda’s Lake Albert Rift Basin. The fully listed company says Ngege-1 encountered five metres of net oil pay and nine metres of net gas pay, adding that down-hole pressure testing and sampling have confirmed the presence of dry gas and moveable ‘30 to 32 degree API oil’.

According to Tullow, the results from Ngege-1, in the Butiaba region of Uganda, have confirmed the presence of a well developed reservoir and seals, and ‘thereby upgrade several other prospects included in the current drilling campaign’. Chief executive Aidan Heavey points out that this is the 11th well in the basin to encounter hydrocarbons and says the company is ‘very encouraged’ by its potential. Tullow shares, first recommended by GCI five years ago at 72p, have now reached 989p, valuing the company at £7.1 billion, and should continue to outperform several sector peers.

Coal of Africa upgrade
South Africa-focused Coal of Africa has upgraded potential resources at Vele in Limpopo Province by 25 per cent to 441.47 million tonnes. Quoted on AIM, Down Under and Jo’burg, the company, which has recruited Anglo-American coal expert Riaan van der Merwe to head operations, says a 65-borehole drilling programme has led to the upgrade of soft coking coal resources at Vele.

The measured element in the new resource estimate is 133.84 million tonnes, most of it open-cast. Indicated, inferred and ‘reconnaissance’ resources take the total to 441.47 million tonnes.

Recommended by GCI at 14p in 2006 and again at 131p last April, Coal of Africa’s shares now trade at 217p. Partial profit-taking might be prudent, though later prospects look fair.

Lamprell wins record order
International drilling rig specialist BassDrill has awarded a £102.5 million contract to engineering group Lamprell.

Isle of Man-domiciled Lamprell, which provides engineering services to the oil and gas industry from its base in the UAE, says the $204.5 million contract is for the construction of two ‘self-erecting tender-assist drilling units’. The contract terms confirm the construction of the first unit, with the second conditional on BassDrill raising finance. Peter Whitbread, AIM-quoted Lamprell’s CEO, says this is ‘the largest single contract awarded to the company to date.’

Highlighted by GCI at 230p at the beginning of last year, Lamprell shares have now reached 563.5p, valuing the company at £1.1 billion. Hold on.

Pigiput pleases Allied
Allied Gold claims a ‘spectacular’ gold intercept at Pigiput Ridge in Papua New Guinea (PNG). Based in Western Australia and quoted Down Under and on AIM, Allied says the latest drilling at Pigiput Ridge within the Samberi area has encountered 16 metres at 15.11 grammes of gold per tonne of ore and three metres at 8.6 grammes a tonne, along with 25 metres at a more mundane 3.89 grammes a tonne. The company says it intends to hoist expected annual Simberi production to 135,000 oz.

Recommended by GCI at 14.25p in March last year, Allied Gold shares reached 46.25p last October and now trade at 31p. They have scope for a rebound.

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