A Good Month for Iraqi Oil Shares

By John Lee.

Like good comedy, the secret of good investment is often said to be timing.

Someone buying shares at the end of June in Heritage Oil, which has interests in Iraqi Kurdistan, may have had reason to be concerned if they planned to sell shortly afterwards, as the shares were suspended in early July pending the publication of a prospectus.

However, their patience was amply rewarded when trading resumed on Tuesday and the shares gained 21% on the day. Those who held on were up another 19%, compounded, on Wednesday, giving them a total gain of 44%.

But while Iraq-focused oil shares have had a bumpy ride over the years, the past five weeks have been particularly fruitful. Just look at these returns from a selection of the players:

  • Genel Energy, up 11.3%
  • DNO, up 22.7%
  • Afren, up 22.9%
  • Gulf Keystone, up 36.7%
  • Heritage Oil, up 43.9%
  • WesternZagros, up 48.4%

And despite these significant gains, all of these except WesternZagros are still well below their peaks. Momentum traders may have on opinion on whether the upward trend will continue; fundamental investors will ignore these factors and consider such metrics as asset valuations and cash flows.

However the shares will ultimately be valued, Iraq is floating on a lake of oil, and the whole country should reap the benefits of its development.

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