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- Invictus Energy shares are being sold-off in late afternoon trades
- While the 4w average share turnover is 8.2M, 35.7M shares have been traded today
- IVZ opened at 17cps; hit 18cps around lunch; and sits at 15.8cps as close approaches
- The stock is one of the most watched microcap stocks in Australia by HotCopper users
- Despite boasting mammoth potential with a 20TCF+ potential gas deposit and 360,000 acres of land – Invictus is yet to hit payday
- The Mukuyu-2 well, the second on-site, intersected a 35 metre thick net pay zone of gas bearing geology in a 3500m+ run
Microcap watcher favourite Invictus Energy (IVZ) has seen its shares sink -23.17 per cent heading into late afternoon trades on the results of its latest gas discovery in Zimbabwe.
And the scale of today’s sell-off is significant, to say the least.
While the average 4 week daily share trading turnover volume for Invictus shares as at 2.45pm AEDT Friday 15 December reflects a read of 8.19 million shares – 35.7 million shares have been turned over today.
Clearly, the majority of those trades are sales.
The share price did jump to 18cps in late morning trades, but by mid-afternoon, profit takers and risk-off sellers appear to be compounding downward pressure.
So what’s going on?
Covering the basics
The stock is regularly one of the most watched microcap stocks pre-market on Hot Copper, and has definitely succeeded in generating buzz among the retail crowd.
The company, exploring for natural gas in Zimbabwe, Africa, boasts a potential resource of an eye-watering twenty trillion cubic feet of natural gas.
Read that again: twenty trillion cubic feet – as well as 845 million barrels of gas condensate, assuming the full potential of the resource is proven true.
This, and the size of its landholding, are the fundamental reasons why the stock attracts so much attention. And it can’t be denied that its acreage, overlying the onshore Cabora Basin, is mammoth in scope.
With some 360,000 acres of landholding, investors on Friday were treated to Invictus Energy’s claim the Mukuyu gasfield has been shown to have “a structural closure of over 200 [square kilometres.]”
And to be fair, the company has found gas downhole the first two wells its drilled over the Mukuyu gasfield – named Mukuyu-1 and Mukuyu-2 respectively. Both have been hotly watched, and both have generated significant newsflow from the company.
Isn’t that all good news?
There’s a catch.
While Invictus has found gas on-site, it’s never once hit any volume of gas that matches the expectations which naturally emerge among shareholders when a company regularly points to 20TCF+ gas potential.
After running to a total depth of 3,350 metres, the company has hit one zone of gas-bearing geology downhole Mukuyu-2, reporting a net pay zone just under 35 metres thick.
That means only 1% of the entire well’s measured length intersected gas-bearing geology. Invictus also reported on Friday the Mukuyu-2 well will now be suspended.
Mukuyu-1 was much the same.
The drill run was closely monitored by investors, and regular newsflow continued to spur excitement. The company confirmed finding evidence of gas, reporting that its results “prove up potential of the Upper Angwa formation over a 900m gross interval.”
Invictus raised $25 million to partially fund the Mukuyu-1 program and it was reported at the time the company was to drill straight down through seven different potential gas-hosting targets.
But the company ran into technical trouble in September of 2022, and so built a sidetrack well. That well discovered “multiple zones of interest.”
But then, in January of this year, the company ran into more technical troubles, realised that downhole testing couldn’t be completed, and so concluded its operations at Mukuyu-1.
Mukuyu wells in limbo
In other words, the well – despite Invictus’s best efforts – was a duster, and the market hasn’t heard much about it since.
Shareholders are now likely to be wondering what happens next for Mukuyu-2, given that the company appears to be planning to move on today.
Of course, it should go without saying, exploration is risky by nature and exploring for oil and gas is tricky at the best of times.
Sometimes you can drill right into an oil or gas deposit but the pressure dynamics don’t allow it move to surface. Sometimes the oil or gas you get back is impure, or waterlogged. A lot of things can go wrong.
And with the resource Invictus boasts and the size of its landholding, it is entirely feasible that the company is sitting on a figurative goldmine. That isn’t up for debate.
But it does appear, however, shareholders might be losing patience.
Invictus Energy’s one week returns are down -24.39 per cent; YTD performance is down -46.5 per cent, which matches one year returns.
The company has a market cap just over $200 million and isn’t covered by brokers.
IVZ shares last traded at 15.8cps.
