UK Oil & Gas heading for 5.25p?

UK Oil & Gas appears to have sprung into life as we've had more than our fair share of emails. Currently, the situation appears to be of movement above 3.025p mid-price, leading to an initial 3.5p.

Visually, it makes sense, but we ideally need the price to close above 3p [closed at 2.97p on Tuesday 23 February, and hit a high of 3.1p Wednesday] to be comfortable our secondary calculation at 5.25p is liable to come to fruition.

The gap up was, we assume, due to some sort of good news and, realistically, we regard this as a game changing gap (see chart below).

After years of preparation, the unlikely oil field lying underneath Gatwick Airport has finally pumped oil out of the ground.

Both the flow rate and quality of oil at the Horse Hill-1 discovery in the Weald Basin have beaten management forecasts, and bosses remain confident this will improve further. This round of testing is clearly a significant step toward commercial production (Interactive Investor, 16 February).

In such a situation, we tend not to expect the price to reverse to cover the manipulation.

However, if a murder is planned, the share price needs to weaken below 2.2p as this now allows a trip to 1.5p. As the chart shows, this would still not be too traumatic as the share needs to break red to instil true panic.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.