Analysis of Share Price and Market Efficiency: Freedom Oil and Gas Ltd

This report analyzes the share price fluctuations of Freedom Oil and Gas Ltd, focusing on the impact of various announcements and events on its stock price over a two-year period. It examines how events such as the development of new wells, securing financing, and the release of financial results affected the company's share price. The report also considers the impact of trading halts and presentations to investors. The analysis aims to determine if the market share of the company is consistent with the efficient market hypothesis, concluding that even minor events can significantly influence the share price, suggesting the market reflects information efficiently. The report highlights the importance of management's actions in maintaining and improving share value.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
Name of the Student:
Name of the University:
Author’s Note:

1
CONTEMPORARY ISSUES IN ACCOUNTING
Executive Summary
The main purpose of the assessment is to analyse the business of Freedom Oil and Gas Ltd
which is engaged in the business of distribution of power. The assessment would be showing
how major as well as minor announcement have an impact on the share prices of the business.
The share prices of the business would also be demonstrated in graphical form and it would also
be confirmed whether the market share of the company is consistent with efficient market
hypothesis. The assessment would be identifying different events or announcements which
affected the company’s share price within a two year period.

2
CONTEMPORARY ISSUES IN ACCOUNTING
Table of Contents
Introduction......................................................................................................................................3
Analysis of the Share Price Fluctuation...........................................................................................3
Last Two Years Share Price Analysis for Freedom Oil and Gas Ltd..............................................4
Conclusion.......................................................................................................................................6
Reference.........................................................................................................................................7

3
CONTEMPORARY ISSUES IN ACCOUNTING
Introduction
The share market is highly unpredictable in nature which is evident from the fluctuation
in the share prices of businesses. It is therefore for these reasons that even minor event in the
market can have an impact on the share prices of a business. The assessment mainly focuses on
analysing the impact of significant news or announcements have on the share price of a business.
The company which is selected for the assessment is Freedom Oil and Gas Ltd which is engaged
in the business of providing energy and power (Freedom Oil & Gas. 2019). The assessment
would be analysing key events which had an impact on the share price of the business
considering a period of two years for analysis. If the market price of the business fluctuates with
even minor information or announcement than it can be said that the business follows efficient
market hypothesis and the share price of Freedom Oil and Gas Ltd is showing an accurate view
(Lo 2017). The assessment would be citing the certain events during the two-year period which
could have affected the share price of the business.
Analysis of the Share Price Fluctuation
The share price of a business fluctuates and in most of the cases, it is quite difficult to
predict whether there would be an upward trend in the share price or downward trend. These
trends depend on the events which can impact the share price of the business. In most of the
cases, earnings related information or finance related information have most impact on the share
price of a business (Taghizadeh-Hesary 2015). In addition to this, there are other information as
well which have an impact on the share prices of the business (Asx.com.au. 2011). Such
information includes changes in the industry structure, regulations brought in by the government

4
CONTEMPORARY ISSUES IN ACCOUNTING
and other kind of information as well. Therefore, the investors need to consider both kind of
information before taking any investment decisions with regards to the company.
Last Two Years Share Price Analysis for Freedom Oil and Gas Ltd
Figure 1: Share price Fluctuations in 2 years period
Source: (Finance.yahoo.com. 2019)
The above curve shows that the share prices of the business had increased significantly
from the end of 2017 after which there is a sharp decline in the share price of the business which
needs to be improved by the management of the company in order to attract more shareholders to
the business (Ghazani and Araghi 2014). Some of the major events which has caused such
fluctuation in prices of the company are discussed below:
 Horizontal Eagle Ford Shale Well Update: On 13/06/2017, the management of Freedom
Oil and Gas Ltd has developed its first well which would help the business to generate

5
CONTEMPORARY ISSUES IN ACCOUNTING
significant revenue in the long run. In addition to this, the business has also developed a
drilling system. This would boast the share price of the business and therefore the hike in
the share price which is demonstrated in the chart above is due to the success of the Eagle
Ford Shale Well.
 Securing Financing for the Business: On 19/09/2017, the management of the company
announced that the business has secured a sum of 20 million for meeting the expansion
requirements of the business if certain performance standards are met. In such a situation,
the company partners with Ramos Capitals for commencing the 2nd Phase of Eagle Ford
Shale Well Plan (Asx.com.au. 2019). This announcement would further attract more
customers to the business and thereby also increase the share prices of the business for
the period.
 Publishing the financial Results of the Business: The management of the company has
revealed the performance of the business in the annual reports which is published by the
business. The publication of the financial results often leads to hike in the share prices of
the business which is evident from the chart which is shown in figure 1.
The news or announcement which might have affected the share prices of the business of
Freedom Oil and Gas Ltd in 2018 are listed below in details:
 Signing of Four Well Contract: On 19/01/2019, the management of Freedom Oil and
Gas Ltd has signed four well contract which means that the business of the company and
its revenue stream is expanding. However, the same also means that the cost of
operations of the business would also increase. The chart in figure 1 shows decline in the
share price after this point onwards.

6
CONTEMPORARY ISSUES IN ACCOUNTING
 Trading Halt: On 2/08/2018, the business of Freedom Oil and Gas Ltd exercised trading
halt which means that no shares of securities of the company would be traded in the open
market. This can be regarded as one of the major reasons for the downfall of the share
price of the business. The trading halt would be removed as per the decision of the
management of the company.
 Presentation of US investors: The company has made presentation to the investors to
highlight the performance of the business during the half year period. The numerous well
project and the hike in the valuation of the share prices is shown. Therefore, after such an
event, the share price of the business is likely to increase if the performance of the
business is positive (Hamid et al. 2017). However, the chart which is shown in figure 1
shows that the share price of the business is continuously falling which is a matter of
concern for the business.
Conclusion
The above discussion shows that the any minor event or announcement also has an
impact on the share price of Freedom Oil and Gas Ltd which shows that the value of shares for
the company is fairly represented in the market. It also means that the market share of the
company is in compliance with the efficient market hypothesis theory. The management of
Freedom Oil and Gas Ltd needs to take appropriate steps in order to improve the value of shares
of the business which is continuously falling.

7
CONTEMPORARY ISSUES IN ACCOUNTING
Reference
Asx.com.au. (2011). Announcements Search Results. [online] Available at:
https://www.asx.com.au/asx/statistics/announcements.do?
by=asxCode&asxCode=FDM&timeframe=Y&year=2018 [Accessed 15 Aug. 2019].
Asx.com.au. (2019). [online] Available at:
https://www.asx.com.au/asxpdf/20180802/pdf/43x0z54k8c1m2b.pdf [Accessed 15 Aug. 2019].
Finance.yahoo.com. (2019). Yahoo is now part of Oath. [online] Available at:
https://finance.yahoo.com/quote/FDMQF/chart? [Accessed 15 Aug. 2019].
Freedom Oil & Gas. (2019). Home - Freedom Oil & Gas. [online] Available at:
https://www.freedomog.com/ [Accessed 15 Aug. 2019].
Ghazani, M.M. and Araghi, M.K., 2014. Evaluation of the adaptive market hypothesis as an
evolutionary perspective on market efficiency: Evidence from the Tehran stock
exchange. Research in International Business and Finance, 32, pp.50-59.
Hamid, K., Suleman, M.T., Ali Shah, S.Z., Akash, I. and Shahid, R., 2017. Testing the weak
form of efficient market hypothesis: Empirical evidence from Asia-Pacific markets. Available at
SSRN 2912908.
Lo, A.W., 2017. Efficient markets hypothesis. The New Palgrave Dictionary of Economics, pp.1-
17.
Taghizadeh-Hesary, F.F., 2015. Macroeconomic effects of oil price fluctuations on emerging and
developed economies in a model incorporating monetary variables. Economics and Policy of
Energy and the Environment.