Many of the week’s big moves, both up and down, were in the natural resources sector, which should come as little surprise given the number of miners and oilers on AIM.
More interesting, perhaps, if you are a small-cap nerd like me, is the seeming hair-on-fire reaction to what, in any ordinary business, ranks as a modest setback.
This speaks more to the illiquid nature of this segment of the capital markets, where spreads are sometimes so wide you can drive a London bus through them, than to the news served up.
A case in point: Touchstone Exploration, down 44 per cent this week. Its quarterly update contained an assessment of its latest well in Trinidad, where it has encountered more gas than oil.
This is important, as oil sells for four times more than gas. Had this been a binary situation of a single well failing to perform, then you could understand the commotion.
However, Touchstone is producing over 5,000 barrels of oil equivalent a day.
Skittish investors’ ‘hair-on-fire reaction’ to mining updates
Add to that the fact it has managed to identify further oil-bearing geological horizons within the latest ‘gassy’ well.
That is not to say that it is entirely plain sailing for Touchstone, which is currently sitting on US$77.5 million of debt, although it recently raised new investment via a private placement of shares.
The market dynamics appeared to be the same for Buccaneer Energy, which, like Touchstone, is producing hydrocarbons (albeit on a more modest scale).
Okay, Buccaneer had to plug its latest well, which is never ideal. But the stakes do not appear so high as to justify the 32 per cent sell-off.
Indeed, the longer-term story is interesting, albeit unusual. The Texas-focused group is planning to use barely commercial gas to power generators that will then provide the electricity for a Bitcoin mining operation.
Earlier this month it completed a £500,000 investment round to bankroll this strategy.
The week’s big riser, up 128 per cent, was Empyrean Energy, which in this case was the beneficiary of an outsized reaction to a small sliver of good news. Again, the market dynamics described above were at play, namely market makers pushing up prices to avoid having to fulfil orders for a stock that is tightly held.
The propellant was a short and rather cryptic announcement about its partner and its plans to ‘farm down’ a stake in a field off the coast of Indonesia, in which Empyrean holds an 8.5 per cent share.
Turning to the wider market, the AIM All-Share fell around 0.6 per cent to 746.61 over what has been an eventful week for global equity markets haunted by the American tech sell-off. Its benchmark, the FTSE 100, was more resilient in the face of the turmoil. It looks set to end the week flat despite a Friday brain-fart.
In the pharma sector, it was another tough week for investors in Futura Medical, however, there may be light at the end of the tunnel.
It raised £2.75 million in new investment to reset its commercial strategy for Eroxon, its fast-acting erectile dysfunction gel. The 40 per cent fall in the share price reflected the cut-price nature of the sale of new stock to bring in funds.
Polarean Imaging tumbled 30 per cent after it announced plans to exit the market. It joins scores of companies in the life sciences and med-tech sector that have departed AIM complaining of limited access to growth capital. The group, which has developed a technology to assess lung function, reckons it is better placed to raise the required investment as a privately owned and run entity.
PetroTal fell 36 per cent after it suspended the dividend to ease some of the financial stress on the business.
Lords Trading, the building supplies group which also owns upmarket hardware stores, fell 26 per cent after reporting what can best be described as a mixed business update.
Finally, Blackbird shares flew 20 per cent higher after the company appointed former Adobe executive Bill Roberts as a strategic adviser to support the growth of its cloud-based video-editing platform, elevate.io.
Roberts, who previously served as senior director of product management for Adobe Premiere Pro and After Effects, helped steer the US giant’s transition to a subscription model and oversaw the integration of Frame.io following its acquisition.
His expertise in cloud collaboration and creative software is expected to play a key role in elevate.io’s commercial expansion.
Blackbird said Roberts’ background in product innovation and scaling creative technology businesses, along with his advisory work with high-growth start-ups and accelerator programmes such as TechStars, would strengthen its strategic direction.
Executive chair Ian McDonough described Roberts as ‘one of the most respected figures in the media-tech sector’, adding that his insight into collaborative workflows and digital media will be ‘invaluable as elevate.io develops and scales commercially.’
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