Thursday, 14 March 2013

Global Petroleum Ltd (GBP)


Today's Buy recommendation comes in light of the Half Year results released showing a strong cash position and dynamic move into further joint venture/partnerships.

Market Cap £13.8m
Cash £14.8m
Net Assets £21.8m

In 2013, post the reporting period, the company is actively moving forward with the farm out and a data room has been opened for invited companies to review the Permit. In addition to the farm out, the focus of Global's efforts will be to map the additional play fairways in increased detail and thereby develop an expanded portfolio of prospects and leads, perform further geochemical work to better understand the timing of oil generation and migration in the area.
Northern Capital have continued to reiterate there 18.1p Buy Recommendation and whilst 18p may seem optimistic as these broker valuations often do, What is clear is the Cash covers the Market cap by £1m coupled with the total net assets the company is a safer option in small cap O&G (High risk) Exploration sector.
As we head towards stormy waters in the markets correction to record highs it perhaps time to address the high risk sector with the consideration it needs, It is all to familiar to see over inflated company valuations but you can't hide from facts and that is cash is more likely to be a decent asset in itself in the coming months rather than some high profile possibility that may never become anything other than a possible.
Global Petroleum's trajectory is to sell off assets,De-risk and farm-out and Into projects which offer a decent reward for reasonable risk. They have a bunch of cash and trade down on a real low at 7.6p which presents a opportunity to stick some risk into the portfolio from a de-risked position as the company trade at 30% discount to value.
"The board continues to review opportunities for other acquisitions, joint ventures, or investments in the resources sector, which may enhance shareholder value and the Company will continue to evaluate new opportunities as they are presented."
The dual listed E&P company offer value right now, Which should be translated into the share price of the company over the coming months with multiple pieces of news with a broad pioneering frontier in Namibia which Exxon Mobil themselves appear to be working on creating a breakthrough.

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  1. I'll get my wallet.........seems like a good bet with more cash than the mc.......plenty of upside seemingly.

    Kirk (C.Hope)

  2. Indeed, It would appear there is a cash safe haven...