ProfessorZ, i don't think the sp is held back more due the price of oil. If that was the case we would be trading 5p plus. The oil price has increased by approx 27% in the past month from $45.16 to $57.22 per barrell. I'd say is more to do with the general russian economy as a result of the sanctions imposed. Any thoughts welcome.
I honestly hope that the cease-fire holds and I look forward to reading what the agreement is. My feelings are for the people in Ukraine, and I hope that the efforts that Hollande and Merkel have clearly put in to this make more of a difference.
My honest assessment is that the share price is being held back more due to the price of oil. The Russian fiscal system has been around for years, yet I believe is the cause of woe for commercial operators in the country. Even with low extraction costs, the additional costs that this brings make it difficult for operators when the price of oil falls.
But, the low oil price does make companies like this cheaper to take over. If a move is to be made, it would be clearly sensible to buy the operation at lower prices. However, if the company cannot produce oil commercially, there will be a need for borrowing or dilution whilst the oil prices recover. I do not believe that either of these solutions are ultimately in the interest of a prospective buyer, unless they are part of the agreement or could see it as a means of further reducing the relative price.
Given the strength of the company's balance sheet, there appears little chance of it failing entirely, at least in the short or medium term. I will be very interested to see what happens over the next few months, but unless the oil price recovers, I am not expecting anything particularly healthy in the results department.
I am positive about this company, do not get me wrong, I am simply trying to understand why there is a gulf between the reserves valuation and the market capitalisation.
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