a sad week but there are positives

The following positives remain despite a lackluster week:

1)Longtom Sale opportunity

Hartleys recent report used an NPV valuation for Longtom of $500m, from memory. Assuming this is reasonable, the recent $150m odd deal was not a great deal for NXS. Let’s be + and assume that when a farm-out does occur that it will be for 20-25% more $’s than the failed AED deal. The potential farm-out deal has been flagged as being below 50% so that will mean more future cash flow in addition to a higher upfront cash injection.

2)Cash position solid

After a Longtom farm-out there should not be any cash crisis at NXS in view on of the recent funds that we have injected.

3)TOL Liability

The fact that no claim has been lodged to date is positive. The more time that passes, the less likely a claim will be filed.

4)Crux farm-out

Although I would like to have more info, the company has been burned in the past by making unrealistic comments about executing a deal by x/y/z, and then eating their words. In a strategic sense, this has suited the vultures waiting for a cheap deal.

The company has always maintained that Crux is the Jewell in the Crown and the cash generation numbers quoted are very impressive. I have always assumed that Osaka Gas is a large enough player to have made a well researched and informed decision when buying into Crux 2 years ago. Realizing value may just end up being due to patience being exercised. With a stronger balance sheet, the smell of blood will be removed from current negotiations.

5)ES drilling

Cash coming in will allow progression of development of this asset.