Mosman Oil & Gas (MSMN) Shares Fell 14.3% on Texas Project Update

Key points:
The Mosman Oil & Gas share price fell 14.3% after its operations update.
Investors initially cheered the report before the shares fell as sentiment shifted.
So, should you buy MSMN shares? Read on to find out.

The Mosman Oil and Gas Ltd (LON: MSMN) share price fell 14.3% after releasing an update on the progress towards drilling at its Cinnabar project in East Texas. The company acquired 97% of the project’s lease in 2020 before agreeing to farm out 12% of the lease to Contour Exploration and Production LLC.

Contour will earn its farm in percentage once the well is drilled by offering contract operator services for the well. Mosman mentioned that it was using some of these services during the early stages of developing the well.

Also read: The Best Oil Stocks To Buy Right Now.

The firm further said that it had farmed out another 10% of the lease to a third party that would fund 13.3% of the well’s costs to earn a 10% stake in the project. The company expects the project costs to reach $1 million, some of which will be paid by the third party above.

Mosman expects to incur a further cost of $600,000 to complete the well if it is successful. The company had AUD2.4 million in cash at the end of June 2022. The oil and gas firm plans to release its annual production figures shortly and is working on its annual report.

The announcement initially impressed investors as Mosman shares opened higher, then quickly fell back as investors adjusted their expectations. MSMN shares are trading above the crucial 0.05p support zone, making them quite attractive to investors.

So, should you buy MSMN shares? While the current price setup looks attractive, I would like to see the support level hold over the coming days and prices reverse higher before buying the shares.

*This is not investment advice. Always do your due diligence before making investment decisions.

Mosman Oil and Gas share price.