PXOG - Investor Show31 Mar 2019 14:27
Attended the UK Investor Show yesterday and was able to meet with Ed and have a very friendly, helpful and positive discussion. Have to say that Ed did seem to be extremely knowledgeable about the industry – on both technical and commercial fronts. Rather than too many specifics – I see some posted already by others who attended, a brief summary of the overall takeaways.
Reiterated the strategy focus of progressing to be a mid-size European O&G co. Discussed the ‘positioning’ issues here with (for example) not being operational licence holder in Romania, different perspective on this in Italy (with PVE, UOG) and the different situation again in Spain with Tarba (WGO). Also, in the updated presentation, the somewhat greater emphasis on Ed’s and other NED’s track record of growing co.’s / assets for sale – demonstrates capability and not necessarily intent.
Romania. Raffles are very capable, focused and low key, hence only release information into the public domain as required. That apart we should expect the usual progress updates on Bainet West and Granicesti. As already reported, Bainet West should have a very high CoS and Ed explained some details of geology and pipeline connections etc. Regarding Granicesti, subject to land access, would hope to drill this year. The Bainet-1 well is performing well and maintaining pressure at current flow rate.
Italy. Progressing per plan. Will require some further funding to bring into production in 2020. Further exploration should be targeted on East Selva and Fondo Pierino within the current concession. The objective being to further delineate the resource and improve the CoS – these are substantial resources @ 35 BCF and 15BCF gross respectively. (Note – PVE currently progressing placing, 60% funds for Selva).
Spain. Tarba have very good relationships with the local community, their web site is evidence of this in terms of demonstrating the benefits of the Tesorillo project both locally and in the wider ‘Energy Transition’ context. The team are working on the detailed structural geology of the area around Almarchal. Ed is saying he wants PXOG to drill, though I got the impression a range of funding options will be considered, no doubt influenced by the updated CPR. Ed seemed to have some background on the (new) WGO (post PRL RTO) guys, and saw the change of management as a positive. (I will be updating my own research on WGO as dust settles there).
Overall, very strong technical (G&G) team, focused on developing assets to achieve cash flow and shareholder value, good working relationships with partners and now have a few more shareholders with significant (if not notifiable) holdings – who are expected to hold. SP disconnect with asset value understood (1.8p Peterhouse valuation reiterated in Ed’s presentation), not liked, resolution is to continue to deliver on basis that value will be demonstrated. Very encouraging visit, as a LTH I will continue to hold. IMHO / DYO
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