SMALL CAPS ON THE MOVE: Ambitious hydrogen storage plans in Devon boost UK oil and gas stocks

UK oil and gasThe company’s ambitious hydrogen plans have sparked a firestorm in the valuations of AIM-listed small-cap companies.

At the beginning of July, news broke of a project by UKEn, a subsidiary of UKOG, to create large hydrogen storage caverns beneath the former British naval base in the port of Portland, Dorset.

Under the plans, UKOG intends to excavate 19 caverns, each the size of St Paul’s Cathedral, to store hydrogen for emergency use during shortages of power from wind and solar sources.

The idea received a letter of support this week from one of the UK’s big five energy suppliers, Germany-based RWE.

“In support of this proposal, we have committed to working with UKEn to ensure the design and delivery of the storage facility meets the needs of RWE and other potential industry users,” wrote RWE hydrogen director Jeremy Smith.

RWE has given UKEn permission to use its name as a “supporting party” in negotiations with the government to make the plans a reality.

The project “will allow us to optimize the cost of electricity and the operating regime of the electrolyzer in response to renewable generation capacity and wholesale market price signals,” Smith said.

UKOG’s valuation tripled in the space of a week, taking the shares to 0.087p each with a market capitalisation of £9m.

The AIM All-Share Index was less dynamic, having fallen 0.25 percent over the week to Friday morning.

An inevitable market rally took place on Thursday given the Bank of England’s first interest rate cut in 16 years, which brought the base rate to a fixed level of 5 percent after remaining at 5.25 percent for the past 12 months.

It was a cautious cut, however, with a split vote of 5-4 and a warning from the BoE that “monetary policy will need to remain tight for sufficiently long” to keep inflation under control.

This, coupled with a wave of selling across the pond, sent UK markets reeling on Friday, with the FTSE 100 trading 0.6 per cent lower than its opening on Monday.

In the technological field, developer of semiconductor products IQE rose 10 percent to 31.75 pence on Wednesday after unveiling plans to float its Taiwan business.

The technology group has told shareholders it plans to list its Asian subsidiary on the Taiwan Stock Exchange, selling a minority stake through a public offering. The shares fell back below 30 pence on Friday.

Also on Wednesday, Genetic drive rose 16 percent after earning a recommendation from the UK’s National Institute for Health and Care Excellence (NICE) for its CYP2C19-ID kit.

NICE agreed that CYP2C19 should be used to guide clopidogrel use after ischaemic stroke or transient ischaemic attack and that the Genedrive CYP2C19-ID test should be used as the test of choice for point-of-care strategies.

Journalism rose more than 20 percent during the five-day trading period after the information technology group released its latest set of results.

In the first half of 2024, Journeo increased group revenue by 17 per cent to £25.6 million year-on-year, with full-year revenue estimated at approximately £50 million.

Shares in Keras Resources plc rose 45 percent during the week after the miner confirmed that fertilizer production had begun at its jointly owned site in Utah.

Eco (Atlantic) Oil & Gas shares rose more than 8% in midweek trading following a promising operational update highlighting the $8.3 million first tranche of the Block 3B/4B farm-out offshore South Africa next month. The stock retreated in the second half of the week.

Mkango Resources Ltd was well bid after confirming that the Government of Malawi had signed a mining development agreement (MDA) for its Songwe Hill rare earths project. Shares remained 7.4% higher on Friday.

Despite hosting some of the best-performing stocks of the week, the energy and mining sectors also contributed some of the biggest declines.

Cash-strapped small group Chaarat Gold fell almost 50% as it nears its AIM listing later this month; Jersey Oil & Gas fell 30% after saying it will assess its North Sea developments when the full extent of Chancellor Rachel Reeves’ proposed tax changes and allocations are published in the October budget; and European-based energy investor Prospex Energy fell by a quarter.