SMALL CAP MOVERS: Ambitious hydrogen storage plans in Devon boost UK oil and gas shares

British oil and gasThe ambitious hydrogen plans have put the valuation of the AIM-listed small cap under fire.

In early July it was announced that UKEn, a subsidiary of UKOG, had set up a project to create large hydrogen storage facilities beneath the former British naval base at Portland Harbour, Dorset.

Under the plans, UKOG wants to dig 19 caves, each about the size of St Paul’s Cathedral, to store hydrogen for emergencies during power shortages from wind and solar power.

The idea received a vote of support this week from the UK’s five largest energy suppliers, Germany’s 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 users in the industry,” wrote Jeremy Smith, head of hydrogen at RWE.

RWE gave UKEn permission to use its brand recognition as a ‘supporting party’ in negotiations with the government to realise the plans.

According to Smith, the project will enable us to optimise electricity costs and the electrolyser’s operating regime in response to renewable energy capacity and wholesale market price signals.

UKOG’s valuation tripled in a week, sending shares up to 0.087p each on a market capitalisation of £9m.

The AIM All-Share Index was less dynamic, falling 0.25 percent on Friday morning.

There was an inevitable market rally on Thursday after the Bank of England cut interest rates for the first time in 16 years, bringing the base rate down to a fixed 5 percent, after remaining at 5.25 percent for the past 12 months.

However, it was a cautious cut, with a 5-4 majority vote and a warning from the BoE that “monetary policy will need to remain restrictive for long enough” to keep inflation under control.

This, combined with a sell-off across the pond, saw UK markets take a beating on Friday, with the FTSE 100 trading 0.6 percent lower than at its opening on Monday.

In the technology sector, developer of semiconductor products No-QE rose 10 percent to 31.75p on Wednesday after the company announced plans to list its Taiwanese operations.

The tech group informed shareholders and said it plans to list its Asian operating subsidiary on the Taiwan Stock Exchange, selling a minority stake in a public offering. Shares fell back below 30p on Friday.

Also on Wednesday, gene drive rose 16 percent after receiving 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 the use of clopidogrel 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.

Travelogue rose more than 20 percent during the five-day trading period after the information technology group reported its latest results.

In the first half of 2024, Journeo saw group revenues grow 17% to £25.6m year-on-year, with full-year revenues expected to be around £50m.

Shares in Keras Resources plc rose 45 percent over the week after the miner confirmed fertilizer production had started at the joint Utah site.

Eco (Atlantic) Oil & Gas jumped more than 8% in midweek trades after a promising operational update highlighted the first tranche of US$8.3 million from the Block 3B/4B offshore South Africa farm-out next month. Shares fell in the second half of the week.

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

While the energy and mining sectors were home to some of the week’s best performers, they were also the sectors that saw the biggest declines.

Cash-strapped Chaarat Gold fell almost 50% as its AIM flotation approaches later this month; Jersey Oil & Gas fell 30% after it said it would review North Sea developments once the full extent of Treasury Secretary Rachel Reeves’ proposed tax changes and surcharges in the October Budget are announced; and European-based energy investor Prospex Energy fell by a quarter.