Those following the AXP thread might be interested in this...

Those following the AXP thread might be interested in this commentary from Sunday's Oil & Gas Weekly:

AXPEnergy was up on the OTC market in New York while in a trading halt locally. InNew York AXP trades as AUNXF.

AUNXF finishedat U$0.0134 up from US$0.006 at the beginning of the week. That equates to amove of A$0.0082 to A$0.0183. AXP shares last closed on the ASXat $0.007. The shares had traded as high as US$0.019 (A$0.026) mid-week in NewYork so by rights AXP should trade higher on the ASX when itresumes trading.

US focused gas producer AXPEnergy is theformer Fremont Petroleum the name change occurring in June this year. Three years previously Fremont was known as AustinExploration. Both AustinExploration and the rebadged Fremont had focused on theirPathfinder assets in Colorado until last year when, with changes in the Fremont Board and management,the company changed its business strategy

Over the past twelvemonths Fremont added producing assets in Kentucky and Virginia toits portfolio with the acquisition of 100% of Magnum Hunter Production. For US$425,000, througha successful competitive bid, Fremont gained control of 1,253 long life, low declineconventional gas wells spread across three US States and across both theIllinois and Appalachian Basins.

No significant investmenthad been made in the Magnum leases since 2014 as the assets were considered non-coreby previous owners, as a result 80% of current production, 8 MMscf/day gas,16,000 gallons of NGLs and 100 barrels of oil a day, comes from only 25% of thewells.

It added another 119wells with a second acquisition, the Trey Exploration assets (oil focus)bringing total wells in the portfolio, including legacy wells in Colorado (Pathfinder) and Kentucky, to 1,460. Of those 1009 or 69% are in production, 75 or 12% were temporarily offline, 111 or 8% under review, 165 plugged and abandoned.

AXP’s strategy for now is toextract what they can from the existing wells with workovers and otherproduction enhancements including tying in wells that had been offline. Thedays of spending all the company’s efforts (and money) drilling wells on thePathfinder field in Colorado with not much to show for it are over.

For AXP there won’t be anyimmediate exploration or infill drilling though the potential exists to findnew resources on the MHP and Trey acreage. The company is more likely toacquire additional neglected, low cost, long life producing assets with existing offtake arrangement amenable for low cost workovers and enhancements.

The new team at AXP led by Chairman SimonJohnson and including Director Sam Jervis is focused on the bottom line and hasfound a way to make money, possibility lots of it, by acquiring other company’s neglected non-core assets. The Magnum Hunter asset have already paid for themselves in the 12 months since acquisition

On 28 July the companyreleased its June quarter activities report. Quarterly net revenue of$4,386,654 was more than double the March quarter’s $1,730,518 as revenue fromthe MHP and Trey acquisitions began contributing to the cash flow. And theincrease was despite several frustrating production interruptions due toexternal issues outside the company’s control. Those are now no longer aproblem.

The company had negativenet operating cash flow in the June quarter of $537,000. And with the addition of other insurance, audit fees and unpaid royalties together with tenement acquisition costs amounting to a further $2,514,000 the bank balance fell from $4,515,000 at the end of March to $1,392,000 at the end of June plus some A$2.0 million worth of oil in unsold inventory.

But it looks like AXP will better its Junequarter results in the current quarter. What recently caught our eye was thecompany’s media release advising it had A$1.8 million in revenues in the monthof July. And many of the June quarter payments were one offs.

The company earns 50% ofits revenue from gas and has 50% of its gas sales hedged at US$3.55 an Mcf.Between 10% and 15% of revenue comes from a rich, liquids mix and some 30% to40% of revenue comes from oil sales. The liquids and oil production areunhedged.

AXP has 4.68 billion shareson issue a reflection of the many past equity raisings, the last in December2020 when it raised $1.8 million with a placement at $0.003.

It does not expect toneed to raise equity again in the short term nor does a share consolidationappeal. That’s for now. With its shares ending the week at $0.007 on 13 August AXP has a market cap of $33million.

The low priced sharesmake the company an attractive entity to trade given small share pricemovements result in large percentage gains.

The July operationalupdate on 9 August saw the share price open at $0.005 trade as high as $0.007and as low as $0.004 before ending the day at the $0.007 high. Some 385 millionshares traded worth over $2.0 million, a big day out for AXP.

The company’s newnon-Executive Chairman Simon Johnson is an industry professional with animpressive track record of achievement. This comes after several disruptiveBoard changes over the years. The company has a current payment spat with theimmediate former Chairman Peter Crown whose Resilient Investment Group was/is asubstantial shareholder.

HopefullyAXP will resume trading this week which could provide some interesting action giventhe reason for the suspension.