As the Energean share price collapses, is it safe to buy the dip?

Energean (LON: ENOG) share price has been in a strong freefall as investors react to the ongoing war in Ukraine. The stock plunged to a low of 827p on Thursday, the lowest level since February 2022. It has crashed by more than 30% from its highest level in September and by 44.2% from its 2022 high.

Energean is a FTSE 250 company that produces oil in the Mediterranean. The company has operations in countries like Israel, Egypt, Italy, Greece, the UK, and Croatia. Israel is the biggest field for the company. 

Energean’s business has been doing well for a while. The most recent results showed that the company’s production for the first half of the year was 105.9 kboed, near triple what it produced in the same period in 2022.

Its revenue jumped by 73% to $587.6 million while its EBITDAX rose by 74% to $345 million. The cost of production dropped by 37% to $12.1/boe while its cash stood at over $357 million.

Energean share price was in a strong downward trend after the company’s financial results in July. This happened after the firm revised its 2023 guidance from 125-140 to 120-130 kboed. It attributed this downgrade to the ‘start-up issues that have now been substantially overcome.’

Energean stock price sell-off has accelerated as the Israel-Hamas war continues. Investors believe that the company’s business will be disrupted, which will see it slashing its output. I believe that these fears are correct. 

However, in most periods, geopolitical effects tend to have minimal impact on companies. For example, Russian stocks have surged since the war in Ukraine started in 2022. Also, at some point, the stock will become too cheap, forcing investors to buy the dip. Most importantly, Energean share price will benefit as the price of crude oil jumps. 

The daily chart shows that the Energean stock price has been in a strong sell-off in the past few months. It made a big down-gap on Monday as the war in Israel continued. As it dropped below the crucial support level at 936p, the lowest level on July 3rd. 

The shares crashed below the key support at 841p (July 2022 low). The Relative Strength Index (RSI) has moved below the oversold level. Therefore, there is a likelihood that the stock will bounce back in the coming weeks as buyers target 1000p.

The post As the Energean share price collapses, is it safe to buy the dip? appeared first on Invezz.