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Advance Energy (ADV) Share Price Rose 18.5% in October. Will the Rally Continue?

Updated: 27 Oct 2021

Advance Energy PLC (LON: ADV) share price rose by 18.5% in October after investors started paying attention to the UK oil company.

The oil and gas company is relatively young, having been founded in February 2020. However, the firm is headed by oil industry veteran Leslie Peterkin, the CEO, and Chairman Mark Rollins, another oil veteran.

My last article on the oil company highlighted the reasons behind its latest rally due to a positive news report in the Finacial Mail. According to the publication, the firm has excellent prospects associated with its Buffalo-10 flagship property in Australia.

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Advance Energy shares have increased since my last article, driven by the positive investor sentiment given the lack of significant announcements from the company.

The company currently expects its Buffalo-10 property to rhea production stages in 2023, an impressive timeline. However, investors still have to wait for a year before the firm can start generating revenues.

Advance Energy’s Buffalo-10 well is expected to produce 30,000 barrels of oil equivalent in its first year, with the number rising to 40,000 boepd from the second year going forward, which is quite impressive.

The total estimated oil reserves at Buffalo-10 are 34 million barrels of oil. The company also expects to incur minimal production costs at the well, which will leave it with significant operating margins once production starts.

Still, given that the company expects to start production activities in 2023, the current demand for crude oil might have abated by then, which could lead to lower crude oil prices by that time, given that it is a year away.

Meanwhile, long-term investors will have to wait and see how Advance Energy shares perform leading up to production in 2023. On the other hand, short-term traders may look to profit from price swings at critical support and resistance zones.

*This is not investment advice.

Advance Energy share price.

IG chart of Advance Energy share price 27-10-2021
Source: IG

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Should you invest in Advance Energy shares?

Advance Energy shares are traded on the London stock exchange's AIM market (the alternative investment market), which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are Advance Energy shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies

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