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Sovereign and Senex unearth profits

Sovereign Metals Limited (ASX: SVM) and Senex Energy Limited (ASX: SXY) both have reason to smile today.

Senex Energy is involved in production and exploration of oil and gas in South Australia’s Cooper Basin and coal seam gas in the Surat basin. Closing yesterday at $0.675, Senex’s share price in is need of some good news after dropping from over $1.10 since May last year. Today it released a report saying that its Hornet-1 unconventional gas exploration well flows at over two million cubic feet per day. The well is 80% owned by Senex and the remainder by Orca Energy Limited (ASX: OGY).

In the report, Managing Director Ian Davies said “our exploration work to date confirms that the southern Cooper Basin could hold a massive new gas resource” and the company “are moving quickly to capitalise on new potential”.

Likewise, Sovereign Metals has also received good grades. Involved in copper, gold and uranium exploration Sovereign announced this morning that it’s pleased with results stemming from the Central Malawi Graphite Project in Africa. With a total of eight trenches tested, six have been received, showing excellent grade consistency, substantial widths and good geological continuity along strike.

The company is happy with the good news as it continues on an already great 12-month period. Since August last year, where the share price was sitting at $0.15, the company has rallied on good news, with investors boosting its share price 120%. However, with the shares showing some signs of weakness in the past two months, this is the news investors needed.

Foolish takeaway

Only time will tell whether or not either company will be able to capitalise on their results. As in any quality portfolio, it’s important to balance your stock holdings to get the most out of the risk-return relationship that exists for any investment. Speculative stocks can make you want to jump in head first, but it’s important to check the water before diving in, or your portfolio could end up getting hurt.

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More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Owen Raszkiewicz does not own shares in any of the mentioned companies.

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