Since being listed on the ASX, Red Emperor Resources NL [ASX:RMP] shares have been extremely volatile. Today was no exception, following an update of its completed Winx-1 drilling, the value of Red Emperor nosedived.
At time of writing, Red Emperor’s share price is trading at 2.2 cents, down 78%.
As with any commodity-based stock trading on the ASX, such announcements do make shares more sensitive to price shifts.
But knowing the difference between a stock that’s reacting accordingly to its conditions, compared to a stock that is downright volatile, can be difficult.
Sometimes the most lucrative stock lies somewhere in the middle.
That’s why Money Morning contributor and resource expert, Jason Stevenson gives you a detailed look into the top 10 mining stocks he believes are set to soar in 2019. Read more about it here, for free.
Red Emperor’s share price suffers from poor drilling results
Today, Red Emperor gave an update on its Winx-1 well in Alaska Western Blocks, via its wireline logging program.
The company recorded low oil saturations in its main Nanushuk Topset objectives. In an announcement the company said:
‘Testing and fluid sampling indicates that reservoir quality and fluid mobility at this location is insufficient to warrant production testing, despite encouragement from oil shows and logging while drilling (LWD) data.’
And this is most likely dragging down Red Emperor’s share price, but the reason for the severity of the volatility seen might be because wireline results were so estranged from the projected MDT sampling results earlier in the project.
Slightly better news for shareholders, is that its Torok channel sequence reservoir performance outdid Nanushuk in the winx-1, as indicated by the faster influx of fluid during MDT sampling.
Winx-1 program will now be plugged and abandoned, which is another sore point for the company’s share price.
But investors should take note as proven by the above Nanushuk results, good MDT sampling doesn’t guarantee production testing. As further work is needed to see whether this well has more potential.
What to come for Red Emperor?
For a company as volatile as Red Emperor, investors can expect that volatility will could continue into 2019.
This means we may see some big swings in Red Emperor’s share price.
In the meantime, Red Emperor plans to continue to evaluate its Nanushuk fairway potential and its remaining prosperity at the western block.
More to come.
For Money Morning
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