Since the fall in the oil price, contrarian investor Alex Wright has bought a number of out of favour small oil companies with Fidelity Special Values (FSV) investment trust.
His focus on low production costs and strong balance sheets led to him buying Genel Energy (GENL) which operates in northern Iraq and faces political risk but has strong net cash. His other purchases are Nostrum (NOG), which focuses on gas as well as oil and Faroe Petroleum (FPM) which operates in the North Sea. "There is every chance these will get bought by bigger companies over time," says Mr Wright.
He has also added to North Sea driller Parkmead Group (PMG). "The North Sea is a high cost place to produce oil so companies are challenged and close to break even," he says. "Unless they can get their costs down they can't engage in new projects. But I expect Parkmead to buy and consolidate smaller ones so I should get value that way."