Metgasco Ltd (ASX: MEL)

MEL is an oil and gas exploration company based out in Australia. It operates four tenements - ATP2020, ATP2021, PRL211, and PRL237. MEL holds a market capitalization of $25.52 million as of April 21, 2022.

Recent Operational Highlights: On April 19, 2022, MEL’S 25% owned Vintage Energy Ltd. announced that the gas sales agreement between the ATP 2021 JV parties and AGL Wholesale Gas Limited becomes unconditional following the execution of a Vali Field Gas Processing Services term sheet by the JV with the South Australian Copper Basin JV. On April 7, 2022, MEL announced that the Cervantes-1 oil exploration well in the Perth Basin would be abandoned following the disappointing drilling results.  

MEL is targeting to reach the commercialization of its Vali gas field by mid of 2022. It commenced the fracture simulation campaign at the Vali gas field (Vali-2) on April 3, 2022. On March 29, 2022, MEL acquired a 15% interest in the Copper Basin License PRL211 from Beach Energy Ltd.

H1FY22 Financial Update: In H1FY22, MEL posted a net loss of $1.15 million as compared to a net profit of $314.2k in the prior year. It had sizeable expenses towards share-based payments totalling $491.8k. The cash balance surged from $553.7k as of June 30, 2021, to $3.05 million as of December 31, 2021. On February 2022, MEL raised over $5.0 million through the placement of new shares allotted to institutional and professional investors.  

Technical Analysis: On the daily chart, MEL stock prices are sustaining below the upward sloping trend line resistance level and facing the resistance of the same. Moreover, the momentum oscillator RSI (14-period) is trading at (~36.14 level), indicating a negative sign. Further, the prices are trading below the trend-following indicator 21-period SMA, which may act as a resistance level. An important support level for the stock is placed at AUD 0.024, while the key resistance level is placed at AUD 0.030.

Considering the focus on commercialisation of Vali gas field by 2022-mid, recent fundraising, decent cash balance, current trading levels, and key associated business risks, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $0.0270 as on 21 April 2022, down by ~3.57%. Investors with a high-risk appetite may consider entering the stock given the downside risks such as project delays, funding risks, etc. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

MEL Daily Technical Chart, Data Source: REFINITIV  

Pure Hydrogen Corporation Limited (ASX: PH2)

PH2 is engaged in the development of Hydrogen and Fuel Cell technology in Australia. The company holds a JV with Liberty Hydrogen to develop four large scale hydrogen hubs covering Queensland, New South Wales, and Victoria.

Operational Highlights: On April 13, 2022, PH2 forged an agreement with Bucher Municipal for the supply of waste collection truck bodies and compactors on garbage trucks to PH2. PH2 will in turn, sell these trucks integrated with Hydrogen Fuel Cell Electric Vehicle to customers in Australia. On March 22, 2022, PH2 executed a term sheet with waste collection provider, JJ’s Waste, to build hydrogen-fuelled garbage trucks.

H1FY22 Result Update: In H1FY22, PH2 realized revenue of $206k as compared to nil revenues in the prior year. Due to expenses towards employee benefits and consulting services, it had incurred a net loss of $808k in H1FY22 as against a net loss of $514k in the prior year. It had closed the period with a cash balance of $12.2 million as of December 31, 2021.  

Technical Analysis: On the daily chart, PH2 stock prices are facing the resistance of the downward sloping trend line and trading below the trendline resistance level. Moreover, the momentum oscillator RSI (14-period) is trading at (~44.64 level), indicating negative momentum in the stock. Further, the prices are trading below the trend-following indicator 21-period SMA, which may act as a resistance level. An important support level for the stock is placed at AUD 0.370, while the key resistance level is placed at AUD 0.510.

Considering the negligible revenues, net loss in H1FY22, and current trading levels, a ‘Watch’ stance is suggested. The stock was analyzed as per the closing price of AUD 0.440 per share, as of April 21, 2022, down ~3.29%.

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

PH2 Daily Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and is subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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