Shares of Falcon Oil & Gas Ltd (LON: FOG) rallied 8% after resuming operations at its Kyalla 117 N2-1H ST2 well located in the Beetaloo Sub-Basin within the Northern Territory of Australia.
The well is operated in conjunction with Falcon Oil’s joint venture partner Origin Energy B2 Pty Ltd., a wholly-owned subsidiary of Origin Energy Limited.
Today’s announcement provided the positive catalysts needed to stop FOG shares from falling further in the correction that followed the parabolic rally that followed the positive production test results reported earlier this month.
At the time, I warned both investors and traders from chasing the oil company’s stock higher, given that parabolic rallies are usually followed by significant selloffs that eliminate most of the gains made during the rally, which is what happened to FOG shares.
Hopefully, we have seen the end of the selloff that erased most of the gains made over the two-day rally phase.
Falcon Oil & Gas had encountered production challenges at the Kyalla 117 well, as outlined in its 20 July 2021, where the well was producing gas-rich liquids intermittently but could not sustain consistent production.
The oil company is hopeful that its current operations will resolve the production issues allowing for an extended production test run to determine its future performance.
FOg also reminded investors that the project is fully funded; hence, the firm can cover all the recent capital expenditures.
Today’s small rally shows confidence in the company, but investors would like to see more before jumping in fully and pushing prices higher.
*This is not investment advice.
Falcon Oil & Gas share price.
Falcon Oil & Gas shares rallied 8% to trade at 8.91p, rising from Monday’s closing price of 8.25p.
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Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading