Headlines
• President Energy (LON:PPC) – Right Idea, Wrong Place: Today's news deserves a revaluation as is underlines the approach that management is taking, which itself generates an inherent value. It is just a shame that this will be offset to some extent by the fact that the assets are located in a country where the government is incapable of governing.
• Providence Resources (LON:PRV) – Coming Together – Slowly: We believe that the current valuation is undemanding, but recognise that until such times as a farmin partner for Barryroe is found, the shares will, by and large, come under increasing pressure. However, we believe that there will come a time where the risk outweighs the rewards and investors should start to nibble at the shares. We believe that will not be too far away, possibly accompanied by a funding round.
• Argos Resources (LON:ARG) – Hold Fast for Drilling: On the basis of the current valuation and low overheads, we believe that the performance in the share price will remain static, and as such the uplift if successful will provide a significant revaluation, sufficient to warrant investing at these levels.
News Items
President Energy (LON:PPC) – Right Idea, Wrong Place
News that the management is not just focusing on spending money on exploration, but generating cash to support its plans is a welcome reminder of the management's approach, and one which should have bigger impact on the Company's valuation that the cash that is generated actually warrants.
This, however, is undermined to some extent by the fact that the asset is located in Argentina, which we believe outside of North Korea, is one of the worst places to own, or have an economic benefit from, natural resources. This is outside of management's control, and our only hope is that the Company either remains below the radar, or the government is changed for one that the people of Argentina deserve.
Today's news deserves a revaluation as is underlines the approach that management is taking, which itself generates an inherent value. It is just a shame that this will be offset to some extent by the fact that the assets are located in a country where the government is incapable of governing.
Providence Resources (LON:PRV) – Coming Together – Slowly
The company continues to edge forwards across its portfolio, and while all of the work is solid and will ultimately bear fruit, we believe that the majority of investors are more focused on the delivery of an approved and sanctioned development plan for Barryroe, and as such any other news will pale by comparison.
This is a shame really as the technical team are undertaking some excellent work in the surrounding area, which ultimately increases the understanding of the play concepts and therefore derisks the prospects, all of which increases the intrinsic value of the portfolio.
Barryroe is the sole focus for investors, which means that the remainder of the portfolio comes in a distant second. However, we do not believe that this will remain the status quo for too long as the combination of desire to see the portfolio move forward, dwindling cash resources and increased shareholder pressure will start to force management and farminnee's expectations to start to become better aligned.
We believe that the current valuation is undemanding, but recognise that until such times as a farmin partner for Barryroe is found, the shares will, by and large, come under increasing pressure. However, we believe that there will come a time where the risk outweighs the rewards and investors should start to nibble at the shares. We believe that will not be too far away, possibly accompanied by a funding round.
Argos Resources (LON:ARG) – Hold Fast for Drilling
Today's results are largely meaningless, and all that needs to be understood (at this stage) is the dormant cash burn, to understand how much cash will be left after the Rhea well is drilled for them to move forward with.
This is an excellent position to be is as it is infinitely controllable by the Company and means that it now carries real option value in that the current valuation is undemanding in comparison to the potential value of its share of the asset base, should Rhea be proven to be a potentially commercial discovery.
On the basis of the current valuation and low overheads, we believe that the performance in the share price will remain static, and as such the uplift if successful will provide a significant revaluation, sufficient to warrant investing at these levels.