Will Pura Vida Energy NL strike it rich?

The Spanish phrase pura vida or pure life is popular slang in Costa Rica to mean ‘everything’s cool’, although investors at the eponymous company Pura Vida Energy NL (ASX: PVD) might not be feeling so cool this week after the company reported a major exploration miss.

The micro-cap oil explorer climbed 37.50% today, but is still down 37% over the last five days and around 53% year to date. The big falls after the business reported it had discovered no effective oil reservoirs at a depth of 4,653 metres at one of its ongoing exploration projects.

However, it’s all not bad news as the plan is to drill deeper and hopefully strike the black gold at two primary objective targets around 6,150 metres deep. The company expects to report the results of the renewed drilling effort shortly.

For investors though it’s worth noting that even the most experienced seismic geologists don’t know where reservoirs are at more than 6,000 metres deep into the earth’s crust. Other prospective oil explorers hoping to strike it rich include Africa-focused FAR Ltd (ASX: FAR) and more established operator Karoon Gas Australia Limited (ASX: KAR), which is exploring off the coast of Brazil.

Although it does seems likely that if Pura Vida has any future exploration hits then the share price will receive major support given the size of the prospects it’s targeting compared to its current market valuation around $18 million.

However, buying a stock like this is closer to gambling than investing and I’d prefer to go gambling at one of the casinos operated by the likes of Crown Resorts Limited (ASX: CWN).

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Motley Fool contributor Tom Richardson has no position in any stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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