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Oil be damned?

A newly listed oil investment vehicle plans to benefit from the sector’s woes.
March 25, 2015

With an initial valuation of £1m, this week’s flotation of Highlands Natural Resources (HNR) won’t cause tremors in the battered oil market. But the investment vehicle’s listing on the Main Market is noteworthy for its stated business strategy: namely, now is a brilliant time to invest in oil and gas assets.

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Highlands’ chief executive Robert Price, a US-based industry veteran who is investing £600,000 of his own money in the venture, believes the fall in the price of Brent Crude to $55 has created a number of opportunities. Many heavily-indebted oil companies are starting to breach loan and bond covenants and are desperate to sell assets, says Price, even assets which remain hugely profitable.

“No man is greater than the markets, and it would be arrogant for me to predict the oil price,” he adds. “What I can do is buy at the current prices, and we can have stable income.” Price believes he can find investments which return 20 per cent a year at $55 a barrel, and is already looking at several assets worth $20m-$100m which he hopes will lead to an acquisition within six months.

Highlands is confident it is one of the early movers in this space, though a number of private equity groups, including Apollo and Blackstone’s credit arm GSO Capital, are known to be raising funds to pursue similar strategies, and will likely provide competition.