Is the UKOG share price ridiculously low, or should you pile into this stock instead?

One-time Gatwick-gusher hopeful, UK Oil and Gas Investments (LSE: UKOG), has seen its share price plunge from a heady 9p or so in September down to today's 1.62p. Investors' hopes of striking oil in big commercial quantities onshore in Britain evaporated when the company became entangled with the difficulties of getting the stuff out of the ground.

One theory is as good as another

The recent full-year report is packed of optimistic and rallying language. But words are as effective as snake oil when it comes to overcoming operational difficulties, so I think it's worth discounting them. I rather like the theory I heard that the larger oil companies all knew decades ago that the oil under the Weald Basin was too hard to access because of the geology, so they ignored it. That may or may not be true, but one theory is as good as another before the case is proven either way. It's as good as the theory that UKOG will be a good investment because it will increase its assets by discovering commercially viable oil, for example.

During the past year, the company lost another £2.27m and raised gross proceeds of £7.46m -- via the issue of equity -- which it used to fund £8.72m of investments made into further exploration and evaluation. The story grinds on...

The share price is lower than it once was, but I think there's massive potential for it to go much lower from here, so I'm avoiding the stock. I could be wrong, but upside risk is a risk, so I'm prepared to talk in favour of other investments.

One interesting situation exists in Sportech (LSE: SPO), former owner of the Football Pools, which delivered its full-year results today. After a busy year of restructuring, the company posted revenue from continuing operations up 2.3% to just over £66m and adjusted profit from continuing operations 114% higher than the previous year, at £1.5m.

A new focus and emerging growth

New chief executive Andrew Gaughan described 2017 as a year of "material change" for the firm and said 2018 is shaping up "to be one of significant opportunity."  He pointed to the positives of recurring revenue in the firm's Racing and Digital business and additional sales opportunities and growth in the 50-50 business. He expects the firm to benefit from "a liberalisation of sports wagering in the US."

Following the sale of the Football Pools business in June 2017, 80% of Sportech's earnings are in US dollars and the firm has become a US-focused firm with UK-based directors resigning. We could be about to see a new growth phase emerge from the ashes of the old business. The firm is in good financial shape, with no debt and around £12m cash in the bank. There's also a further EUR3.25m on the way following today's announcement of the sale of the company's business in the Netherlands.

Points of major change in a firm's business, like we are seeing with Sportech today, can be opportune moments to consider the stock for investment. I think your research time could be well spent on this one.

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Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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