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Here’s Why Mosman Oil and Gas (MSMN) Shares Surged 20% Today. What’s Next?

Simon Mugo trader
Updated 23 Feb 2022

Trade Mosman Oil Shares Your capital is at risk

Key points:

  • After building a new gas network, Mosman Oil and Gas shares surged 20%.
  • The company collaborated with Arcadia LLC on the project and split costs.
  • The network will allow Mosman to sell gas from two of its Texas wells.

The Mosman Oil and Gas Ltd (LON: MSMN) share price rallied 20% after revealing that it had completed the construction of a gas network in East Texas that will allow it to sell the natural gas from two of its prime wells.

The company said that the now complete network would enable it to sell the gas from its Stanley-4 well (45% Working Interest)and Winters-2 well (23% Working Interest).

Also Read: Best Oil Stocks to Buy Right Now.

The gas network connects multiple lease areas, including one operated and owned by Arcadia Operating LLC (‘Arcadia’). The network will be owned by Arcadia and Mosman’s subsidiary, known as Nadsoilco.

Investors cheered the news, as evidenced by Mosman Oil’s share price rally. Investors are counting on the new pipeline network generating significant revenues for Mosman over the long term.

Another crucial highlight of the announcement was that the two companies split the costs of building the new network and split operating costs based on the volume of gas transported and sold.

John W Barr, Mosman Oil’s Chairman, commented: “Mosman is pleased to complete the construction of the gas network to further build on our production profile. The gas network in place enables gas production from Winters-2 and Stanley-4 and other wells in the area. I am pleased to see increasing production volumes and cash flow, especially while the gas price is strong.”

Mosman has been making smart moves to grow its production capacity in the Texas basin, including acquiring the Falcon 1 well and Nadsoilco last year.

The company recorded a 77% surge in oil production in the third quarter of 2021, where its average daily production rose to 110 barrels per day compared to Q3 2020.

The oil company also won a one-year extension of its work permit for the EP145 license area in the Northern Territory of Australia to complete the year three work programme. These events have placed Mosman in a strategic position to do much better in 2022 than in 2021.

Mosman shares have risen 62.14% in 2022 but could head much higher if crude oil prices keep rising. However, the shares have fallen 31.2% lower over the last 12 months. I would buy the shares on a decent pullback.

*This is not investment advice. Always do your due diligence before making investment decisions.

Mosman Oil and Gas share price.

IG chart of Mosman Oil and Gas share price 23-02-2022
Source: IG

Mosman Oil and Gas shares rallied 20% to trade at 0.12p, rising from Tuesday’s closing price of 0.10p.

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