Sunday, 26 July 2015

Meeting With Prospex Oil & Gas

This week I had the pleasure of meeting Ed Dawson of Prospex Oil & Gas, I found Ed to be quite an affable yet cautious man who clearly didn't want to talk out of school, so on this occasion I became a good listener. The company raised £1m and is currently capitalized at £1.02m which kind of suggests the risk has been taken out of this aim cash shell, so whats PXOG and Ed planning for the future?

I talked about the attraction to aim cash shells from my own previous decent track record with Oil & Gas shells, none more so than UK Oil & Gas or Mx Oil (formerly Astar Minerals) The catalyst to great returns are a clear and concise outline of what the company intends on doing to trigger value creation for shareholders, particularly those bonkers enough to get in early.

Rather than waffle on in a sales pitch manner I prefer to look at the facts, Dawson and Co. come from an institutional/hedge fund deal flow background, the impressive back story of creating a $100m deal with industry majors or a consistent year on year place on the hedge fund podium at RAB capital it became clear that the guys at PXOG are more than well positioned to have a fair crack at progressing Prospex Oil & Gas on.

The simple way for this to happen would be to vend in some attractive assets and bingo '' we have a result '' however Dawson wasn't to willing to let the cat out of the bag on how this would happen other than to remind me that he doesn't want to piss on the chips of people who have been prepared to back the company in its embryonic stage of the cycle. The early move advantage often comes from showing foresight which is where I am personally as a shareholder of Prospex, some can argue that this motivates me to give a one sided appraisal of the situation but to be brutally frank there isn't actually to much we know right now.

Its important to understand the strategy -
To acquire meaningful assets with high impact near term deal flow not dilly dallying with shooting seismic for the next 18 months. (Check)

It's important to understand the Boards back story -
This comes by the virtues of historical success, ED worked successfully in finance & management of Junior O&G companies whilst holding a keen analytical eye on what works against what doesn't. (Check)

Getting a sense of capability and Viability -
Does the company have the capability to make this transition in tough markets and is there enough interest to build. (Check)

The surrounding influences within the company -
The management team has a historical (combined) Billion dollar deal flow from seed to sapling sized business before well engineered moves into the junior natural resource arena. (Check)

(Note) - Whilst I hold a bullish outlook on Prospex I do however understand the need to move things along, I feel confident that a deal will be done sooner rather than later however in light of transparency I would suggest should the company not secure a deal this year then they are at risk of becoming another modest cash shell wasting space on aim.

I'll be talking more about PXOG in due course.

All the best


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(These are but opinions derived from my own experiences and thoughts and are not adopted as a statement of fact)

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