The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
There's plenty to move forward with at both Pine Mills and the Permian Basin. Assuming that approximately 15 of the 21 drill ready locations at the Permian Basin produce circa 30 BOPD net to NTOG that will be an additional 450 BOPD added to the 30 already produced. Pine Mills currently produces 100 BOPD with current reserves of 1/2 Million barrels. Production at Pine Mills should increase to circa 200- 250 BOPD. Just taking into account the two current producing assets NTOG could potentially be producing 600-750 BOPD within 12 to 18 months. These numbers are huge for a company with a current Market Cap of less than 6 million. Note they do not include Eqypt which if resolved sooner rather than later will add another 500 BOPD and considerably over 1 Million barrels in additional reserves. No doubt that other assets will also be considered. The potential upside here is mouth watering. Do the maths, the revenue and profit potential is very very impressive.
With the senior lending facility likely to be uplifted shortly together with existing revenue increasing month on month and Matt's recent assurances on the Podcast presentation that there would be no need for dilution for the foreseeable future. By the time the need for funds to facilitate further acquisitions arises the SP will have corrected itself to a far higher level.
The timeframe for releasing the flow rates for well G6 when they are eventually released will probably not be too dissimilar to the timeframe taken for the twin wells where the flow rates exceeded expectation. The nagging concern is on the back of well C8 the SP had lost over 30% of its value and more importantly the positive momentum surrounding NTOG at that time which was only 4 weeks ago. Perhaps if news had been released immediately concerning the next drill for which we have a permit in place this may have helped sooth investors concerns.
A little surprised it's taken this long to get the production flow rates out and date for the next drill bearing in mind the permit is in place. Also expecting positive news on our credit facility which should be significantly increased with Washington Federal Reserve Bank.
It will have been 4 weeks tomorrow since well G6 was drilled. News is due anytime on this as well as dates for the next drill and permit applications for future drills. Positive news as expected will get the SP moving towards that 5p mark and beyond.
Let's not run before we can walk. Develop what we have and increase Shareholder value with existing assets. MAGP are in trouble due to poor mismanagement/ mountain of debt that could not be serviced. Having numerous/63 wells appears to have compounded their problems. If some of these wells are dirt cheap what proven reserves come with them.
Without that one negative RNS the SP would have been trading comfortably in the 6p + range today. Over the next couple of weeks the positive news to come should see the SP heading back in that direction and this time staying there. 8p would be very rewarding when it arrives.
The exercise price of 5p which can only vest once the SP reaches and maintains a price of 8p for ten consecutive days surely aligns the directors incentive to increase the Share Price with the aspirations of shareholders.
I can't recollect too many prior investments where a company has issued so many positive RNS's concerning increasing production,revenue,profit,reserves,credit facilities,future drills which are all fully justified and yet seen so little market reaction. Can't fault the NTOG management for delivering exactly what they've promised. What's needed as the yanks would say " Is that money shot " which will rerate this to a fair price circa the 8-10p range.
With this morning excellent news adding to NTOG's already impressive fundamentals that have been put in place over the past 6 months and imminent positive news to come on production flow rates,new drills and permits. Positive sentiment is returning to where it was 2 to 3 weeks ago. Our market cap of 6 Million is ridiculously undervalued and should be nearer to 12-15 Million. I do not see anything stopping NTOG achieving this milestone over the coming weeks.