It's not the first time Josh Young has been excited about Molopo. Lets hope he gets it right this time. Also, not too sure whether he's right in saying a Buy-Back would solve the problem.
BTW: TG did say results for Barnhart would be out first week of July. Not long!
High-Growth Oil and Gas Juniors The Energy Report (6/26/12)
JY: I like companies that are cash rich. Neither Gastar, AusTex nor Gale Force have a lot of cash on hand. They have sufficient liquidity to execute their plans, but they don't have a ton of excess cash.
I follow two companies that have more than 50% of their market cap in cash and no debt. Sonde Resources Corp. (SOQ:NYSE) and Molopo Energy Ltd. (MPO:ASX). Both happen to be selling international assets. Molopo is selling a natural gas field in Australia that could be used for liquefied natural gas transport. Sonde is selling a North African oil field. Both companies could have negative enterprise values if their sales happen at the management-guided prices. They're special-situation investments, and they theoretically shouldn't be very high beta. Oddly, they have traded in line with the market over the last few months. As their asset sales proceed, the stocks should diverge from trading with the market. Both should be able to create value through stock buybacks and maybe even distress acquisitions.
TER: Molopo has a large portfolio of different types of projects all over the world. Would it make sense to focus on its best prospects?
JY: Yes. It has a lot of valuable assets, but the company is hard to value because not all its projects are generating cash. Molopo needs to focus. Ironically, even if it gave away some assets, it could go up in value because it would be easier to understand. Its South African holdings are an example. It has hundreds of thousands of acres there that may have shale gas or other assets. How do you value that? My estimate is that it could be worth $10–20M or more in the future. For now, Molopo is not selling the South African holdings, but the asset has value. Molopo is selling an Australian asset, but it's also hard to value. Hopefully, proceeds will be used to buy back stock because the market is having trouble valuing the company. Buybacks would help to resolve the issue.
http://www.theenergyreport.com/pub/na/13722
MPO Price at posting:
55.0¢ Sentiment: LT Buy Disclosure: Held
