Shares digital

Peter Levine, the chairman and co-founder of Russia-based oil explorer Imperial Energy (IEC), has cashed in over £25 million worth of shares. Completed for ‘personal reasons’, the company has refused to give details on why Levine has chosen now to sell more than 1.5 million shares at £16.75. However, coming just a week before the planned publication of an operational update, one that market gossips suspect could confirm that the company has beaten 2007 production targets, is certainly curious.

Unsurprisingly, the shares have since collapsed, losing almost 25% of their value from the £18.14 closing price on the day before news of Levine’s share sale broke. Even the release of apparently promising new output targets at the start of this week failed to halt the share slide, the stock falling another 7% in spite of the company revealing that it expects to increase production from just over 10,000 barrels in 2007 to around 25,000 by the end of this year, before rising to 35,000 a year December 2009.

Beyond that, daily production is targeted to grow to 60,000 barrels by December 2010 and to 80,000 by the end of 2011. House broker ABN Amro remains upbeat on the firm’s prospects and believes that these estimates, particularly for this year and next, could prove ‘increasingly conservative’.

Imperial Energy is currently reviewing its strategic options for its growing oil services arm also. This could involve demerging the business or a trade sale, and market watchers believe the business could be worth $300 million, or roughly 20% of the firm’s current £700 million-plus market value.

Last year Imperial Energy was subject to a number of destabilisng rumours from within Russia, culminating with the decision by Russian energy giant Gazprom in November to pull the plug on the a mooted acquisition of 25% stake in the company.

Historically, Levine has a track record for buying shares in the company during times of price weakness, including pushing through share purchases in May 2005 (Shares 12 May ‘05) at 288p. This sudden change of tack does raise questions, and while Levine still owns 3.1 million shares in the company, worth over £42.5 million, his failure to fully explain his latest actions is sure to raise fears that further problems from the Russian authorities could be on the horizon. However, ABN remains supportive and has slapped a £17.00 target on the shares, almost a fifth higher than their current level.

Shares says: Levine’s sale has dented sentiment and increased fears of political uncertainty, although they may turn out to be a bargain if this fails to prove the case. SPECULATIVE BUY