I noticed EOG in Shares Magazine last week, and having done some research, think they may be a decent producer / exploration play.



Europa Oil & Gas (Holdings) plc, is involved in the exploration and production of hydrocarbons in Europe. The Company has a balanced portfolio of 12 European oil and gas exploration and production assets in the UK, Ukraine, Romania and Poland. The portfolio contains proven plus probable and development reserves of 7 million barrels oil equivalent (mmboe) net to Europa and exploration potential of a further 28 mmboe. Wellhead revenues are currently in excess of 200,000 per month from a volume of 340 barrels of oil equivalent per day (boepd). These figures are set to rise substantially by the year 2007 when projected production will be above 7000 boepd.


The Company has an active near term drilling programme with three wells scheduled to spud in the first quarter 2005. The drilling programme mimics the balanced portfolio with one appraisal well on the recent Bilca Gas discovery in Romania, one development well on the West Firsby Oilfield in the UK and one exploration well in Romania.



Europa is set to become a significant producer of hydrocarbons in the near future and intends to develop a substantial independent upstream oil & gas business. The management has a strong mainstream oil and gas background, which enables Europa to continue to identify, acquire and develop profit-making oil and gas assets.



Europa Oil & Gas (Holdings) plc was admitted to the London Stock Exchanges Alternative Investment Market on November 11, 2004 and trades under the symbol EOG.





Corporate website : Click HERE

ST, i have done a bit more research and found out that most warrants are never exercised, but traded instead. This warrant has 400% gearing. All being equal every 10% rise in the shares should make the warrant go up 40%.

This gearing in theory should converge to 1 as the sp goes higher.

When warrants are exercised, the company shares are diluted (although this will already be factored in prior by the market) but also funds are raised from the exchange of your warrants for shares. This raises money for the company.
You have to make sure if you are going to exercise them you have the money in your account available to purchase the shares along with handing in your warrant.

What is the benefit of exercising them rather than trading them?

Barclay

Barclay,

Many thanks for another interesting post.

I have had a quick dig myself and found the following free online course in warrants. EDIT: I have now skim-read the whole course (didn't take long) and found it very useful.

Free Online Warrants Course

There is also a course in covered warrants:

Online Covered Warrants Course

You should be aware that these products are different and indeed the Covered Warrants course draws attention to the fact that stamp duty is payable on traditional company warrants but not on covered warrants.

You may wish to ensure that the rest of the info you posted/learned pertains to company warrants and not covered warrants.

I would recommend anybody else having questions to take a look at these courses as they are very comprehensive and well thought-out.

Anyone with any thoughts about EOG/W?

Just that the EOAG share price only needs to rise by 50% and the warrant should rise 150%
in price. example: share price 50% of 32p = 48p - exercise price 30p = 18p intrinsic value, warrant price=7p + 30p exercise=37p. If the warrant doesnt increase to at least 17p a 10p increase, people buying the shares will buy the warrants instead and exercise them at 37p to buy 48p shares.

It is also likely there will be a premium on the warrant with so much time value left
raising the 150% gain to maybe 200% or more which is round about what the gearing on the warrant is at the moment.


There are two shares which I class as rare gems

Europa Oil and Gas/warrants and Mediterranean oil and gas
Both are producing oil and gas which puts a floor on the share price.
Both are increasing output, in eoags case a few thousand fold.

the last company i saw with similar attributes was dana petroleum
It was priced at ten pence with oil production and exploration upside.
I didnt act and get in, even though i knew it was going to be big, with hardly any risk due to its production. That was 3 years ago, the shares now trade at 1104.00p(yes i cant forgive myself!).

Med oil can be as big, but eoag is better played on the warrants for the massive gearing.

Northern petroleum is also good but it needs to start production to enjoy gem status. The reason being oil and gas in the ground are valued at absurd prices
But they can't do this to assets in production and making lots of cash, which are valued at spot prices at least for the year to estimate its eps.

pd1000, please read previous posts - this BB has been alight for a week or more with talking about the warrants (most of it posted by me, as it happens, but PDYOR, etc).

Jumped on board with the warrants yesterday, at 8p, having seen the way the wind was blowing with incremental price rises (on very low volume) every day since the end of last week.

Cumulative production from existing sources plus the forthcoming Bilca/Romania production could see the SP around 50p ?? All IMO, DYOR, etc.

Europa Oil & Gas (Holdings) PLC - Holding in Company

Europa Oil & Gas (Holdings) plc (the 'Company')

Holding in Company

The Company was informed today that UBS Global Asset Management Life Limited is interested in 3,295,667 ordinary shares of the Company, representing 5.40% of the issued share capital.

ST, have you got any more info on the 50p price target, i want to get in tomorrow
and i'm just deciding how much to buy.

I looked at the 3 month chart , and the warrants have risen to 9.25p over that period, a 30% gain, so these warrants do move, and will fly if the sp reaches 50p,
and travel at the speed of light if they go even higher.

If the 50p target is met, the warrants would have to rise to 20p in order to stop
arbitrage oppotunities, a 300% gain, in theory.

zipped in for a quick 25000 warrants at under 8p this am. good price imho and when imminent good news breaks they should be in the money pretty quickly!!

Good morning Barclay,

The 50p share price "target" is my back-of-an-envelope calculation of how much I think the Bilca production plus existing production could be worth, using a P/E suitable for a growing oil co. I also came out with a similar figure using EOG's end-2006 production target of 1,000 boepd. It's purely conjecture on my part, although hopefully conservative enough to be realistic.

The bottom line for me is that I can see very little potential downside on this stock at present. All the indicators are pointing in the right direction, and the fact that one can get warrants on an underlying stock which in itself looks like a relatively safe bet is for me a stunning bonus.

I'm prepared to punt on these because I think that over the 18 months for which the warrants are still valid, they offer significant opportunity for growth with a comparatively low chance of losing out.

You're right about the potential, but I would be wary about reliance on charts to predict the warrant price at this early stage due to volatility issues. The share chart may offer some indication that the SP's floor is set around 30p - of which I have a fair degree of confidence given how close we are to seeing Bilca come on-stream - but again it's early days. However, I'm not a chart expert . . .

Anyway, WDIK, best of luck if you're thinking of climbing on board.

PS I took a look at Dana after reading your post - I infer from the chart that at some point the stock consolidated at least 10 for 1? You didn't miss a 100-bagger, surely??

Pommy, welcome aboard! Good to hear from you and am pleased for your sake that you managed to get under 8p (clearly I'm using the wrong broker!).

they still havent published my trade yet!!

Not sure where you might be looking, but MoneyAM's feed for these warrants seems to have stopped working after I looked at it last week. My own broker doesn't publish the movements and FT.com doesn't update them until the end of the day.

Sorry you won't be getting your name in lights but anonymity somehow seems to go with the secretive world of warrants!

surely a trades a trade tho, it should be reported like any trade of the underlying stock!

I agree, but trades of these warrants at least seem to have fallen between the cracks. I can also understand that possibly for reasons of cost there are fewer live feeds for warrants, which are in any case low-volume issues.

A quiet day for the shares - no trades so far. Seems everyone's buying the warrants :o)

Roll on, the end of July!

There it it ...nice price!!!!


12/05/06 08:06 7.5375 25,000 O 7.0 8.0 Buy 25,000 0 0

Morning all.

EOG getting hit a bit heavily right now. Barclay, I only hope you didn't jump on board with that share purchase yesterday. I'd be inclined to wait out some of the choppiness right now, maybe wait until a bit nearer the time of the production news. Anyway, WDIK.

Warrants are down too - wish I'd see that one coming as I could have had more for less money :o(

Best of luck everyone, am certain that this will come right in the end, but would certainly understand anyone who's feeling nervous right now.

ST, good news TD Waterhouse will let me buy by just signing a form saying i know the risks, i have to wait afew days to get my account open, hope the warrants are still down a bit by then, but it doesn't matter as long as i can get in around 8p.

ST, good news TD Waterhouse will let me buy by just signing a form saying i know the risks, i have to wait afew days to get my account open, hope the warrants are still down a bit by then, but it doesn't matter as long as i can get in around 8p.

Sorry guys my message has been repeated and i can't delete it.