The Chartist's Portfolio: Hardman well oiled Geoffrey Hill 29jun05 THE oil price rises are still unnerving investors with new highs being established.
The common truism in technical analysis, or charting, is that typically a new high follows a new high. From a fundamental point of view, it does not look as though there is much of a chance for the oil price to moderate over the next year.
There is not a problem with getting enough oil out of the ground. The real supply constraint is the lack of enough refining capacity to turn oil into petrol and diesel.
It is quite common to observe commodity-related company price charts mirror the underlying commodity price. Hardman Resources is zeroing in on its record high resistance.
Hardman (HDR) is an international oil and gas exploration and production company. It was an initial player in what is now a major presence in the emerging petroleum province offshore Mauritania, West Africa. HDR is also listed on the Alternative Investment Market of the London Stock Exchange.
The company is not paying dividends as it attempts to have production and reserves established. It cannot be considered for The Chartist's Portfolio as we have a self-imposed minimum 3.5 per cent dividend yield as one of our requirements. If companies have low or no dividends their share prices are more volatile than companies that pay steady dividends.
Hardman owns 19 per cent of the Chinguetti oil field development and this is the company's core focus. The oil field is expected to produce 75,000 barrels of oil a day.
The size of the oil field is large with 87 million barrels proven reserves. Further production testing could expand this figure to 120 million to 130 million barrels. Production is not due to start until early next year.
The chart shows a stable long-term uptrend at Point 1. The breakout from the downtrend resistance at Point 2 coincided with the commitment to commercialise the Chinguetti discoveries.
The resistance pattern and minor double top at $2.40 (Point 4) is where the action will be centred on if the oil price remains at current levels.
There is an ideal support region around $1.90, which is a good entry or accumulation point for investors
HDR Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
