explanation ...4 Oct 2012 14:18
In modern strategic supply chain management terms what AGTA have basically done is decided to focus on 'core business'. Hence the sale of the oil exploration interest which, I suspect, AGTA must know is unlikley to yeild oil (and if it does then they've provided for this by negotiating a further USD10m payment upon discovery).
Stock markets are fickle - we all know that - and the share price has taken a knocking because of the announcement. Stock markets are often short sighted - we all know that too (eg: stop loss orders) - people often run for cover and sell up without taking the long term view.
So ... let's take a moment and think long term. AGTA have decided to sell off the their oil exploration interests which, thus far, have yet to yeild oil. They will realise a significant boost to their balance sheet as a result and have provided for the post sale evantuality of oil being found by negotiating an additional cash payment. They have been open about how they plan to use the money to focus on core business and, possibly, on aquistions. AGTA are operating in an emerging market which looks set to provide excellent growth potential in the future.
This is, quite simply, very astute strategic supply chain management thinking which the markets have completely mis-judged. I believe AGTA is an excellent long term investment and, at these prices, I will definately be topping up my holding significantly.
As usual do your own research and, of course. Africa will be the next Asia. Best of luck.