Incremental Oil & Gas (ASX: IOG) - Straw Hats in Winter

Gavin Wendt

Incremental Oil & Gas (ASX: IOG) represents a classic 'straw hats in winter play' within the context of what has over recent times been an out-of-favour energy sector. The baby has well and truly been thrown out with the bath water as far as the energy space is concerned, with massive write-downs and underperforming heavyweight stocks severely impacting overall sentiment. The situation however provides opportunity and this US-focused junior oil stock is generating solid investor interest as a result of strong appraisal progress and efficiency drives on its key USA oilfields. With strong local management expertise, the company is deriving maximum operating efficiency and profitability from its fields. It has just embarked on a major 24-hole work-over program to boost gas production from its flagship Silvertip gasfield, situated in Wyoming. Initial results are encouraging and the timing of the program also ensures that increased production coincides with the seasonal increase in natural gas prices in the northern hemisphere winter. The US natural gas market is on an unsustainable trajectory, as consumption grows rapidly whilst domestic production is falling.


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