I have noticed that shares of local oil exploration firms seem to have been attracting some attention.
The chart of Philodrill [OV] suggests of an accumulation phase, where so far have only resulted to modest price advances.
In the past, bouts of large scale accumulation have led to a huge price spikes for OV, as shown by the red circles and the upward price trend.
And this hasn’t been a phenomenon limited to OV. We seem to be seeing the same dynamics in the price-volume actions of Oriental Petroleum [OPM].
Lately there has been a spike in OPM’s volume yet its share price has yet to breakout. In the previous episode of volume surges, like OV, has coincided with price surges.
Though this volume accumulation pattern hasn’t been true for other firms engaged in oil exploration such as Basic Petroleum [BSC], Alcorn Gold [APM], Trans Asia [TA] or PetroEnegy [PERC].
I would suspect that signs of accumulation could be part of the upcoming drilling projects.
Currently there have been some oil drilling activities such as Duhat 1A (Visayas Basin) Service Contract 51 and the Gindara-1 (Northern Palawan) Service Contract 54B.
Duhat 1 is operated by Otto Energy, parent firm of NorAsian Energy Ltd., whose partners are Trans-Asia Oil and Energy Development Corp., Alcorn Gold Resources Corp. and PetroEnergy Resources Corp[1].
Meanwhile Gindara-1 is operated by Australia’s Nido Petroleum which owns 33 percent with partners Kairiki Energy Ltd. (formerly Yilgarn Petroleum), 22 percent and Shell Philippines Exploration B.V. (Spex), 45 percent[2].
In other words, OPM and OV by the above reports have not been included in the above projects.
So far those included in the current exploration projects has shown mixed results
APM’s chart shows of a bullish cup and handle.
PetroEnergy Resources Corp
And so has PERC’s chart
Trans-Asia Oil
The distortion of Trans Asia Oil prices may have been the result of the recent 7:10 stock rights offering.
And finally...
Basic Energy Corporation [BSC]
BSC has not been a part of the recent consortium and has seen little price actions.
Bottom line:
Current activities in OV and OPM could be signaling a resurgence of interests on oil issues as it has been with APM and PERC.
This is going to be part of the inflation based rotational process which I have long been talking about.
Since no trend moves in a straight line and where price actions are always relative, eventually part of such money flows that has lifted other issues will spillover to non-performing or laggard issues.
The reason for such dynamic will always be rationalized. As for its causal relevance would signify more of happenstance. People are entranced by superficialities and by social conformity rather than theories based on logical rigor.
At the end of the day, this means that in bullmarkets almost all issues will be higher; this essentially represents a rising tide lifts all boats syndrome. While on bear markets almost every issue will decline.
It’s part of the process known as the boom-bust cycle.
[Disclosure: I have been a long term shareholder of OPM and PERC. And I plan to add more as the opportunities arise]
[1] USnewslasvegas.com Otto starts Duhat-1 well drilling April 20, 2011
[2] Philstar.com Nido Petroleum set to drill Gindara prospect in May, March 22, 2011
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