PXOG18 Mar 2019 16:06
Thanks for getting in touch. You clearly have read the announcements but I will try and add some colour.
We know the additional acreage well but it was outside our concession. We had sight of the seismic for sometime. Raffles and we had the chance to pick it up before others if we moved quickly and Raffles as operator were asked to approach NAMR.
The prospect is further along the same line that crosses the Bainet fields with similar responses, whilst there is always a risk, we think it is at the low end of the spectrum.
We believe it creates value for long term shareholder because, depending on flow rates, I would like to think we recover costs after taxes in a short time frame and we then have a another producing asset putting base revenue into the company for several years. A couple of import considerations: 1)The operator is really cost conscious. 2) the time frame to get it on production and a believe that he can deliver in the Bainet time frames. Arguably the decision was positively influenced by strong confidence in these two points.
Romania is not going to make us into BP overnight but I do believe supporting there as is it worthwhile on a standalone basis and in the context of the portfolio, low risk low capital costs, Italy has Selva moving forward keen at the appropriate time to push on the other prospects, and we have the massive potential in Spain. We see value across the whole portfolio. I cant say when the market will reflect that or whether it reflects certain bits before others.
We discussed more loan notes but felt, as is the view generally in the industry, for an exploration well equity more appropriate.
With the benefit of hindsight if the opportunity was there earlier it would have been less dilutive. The view of the board and it has been consistent for over 12 months is that we must continue to be proactive, work hard and value will out for the long term shareholders. The Peterhouse research note is a solid piece of work and good for people to hang numbers off. As you recognised there is a discount between the two. Even with the dilution todays share price represent a fraction of that. Will another source of revenue help to narrow that? Will the market pay more attention? These may or may not a fillip to the stand alone reason that the return on the long risk makes sense.
I don't know if you are based in the UK, the time of the email may suggest your overseas. I and some of the team will be at the UK investor show on the 30th of March. It may be a good opportunity to meet in person.
Kind regards
Edward
I wanted to share this email from Ed as I found it informative and a prescriptive explanation for the recent placement. My reply highlighted the lack of director “skin in the game” and the disadvatage I feel that the placement price has placed longterm shareholders.
PXOG will likely attract new investment from these lows and Im optimistic that the news flow will see the Sp rise. We can live
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