Investors Chronicle13 Dec 2019 22:27
From John Rosier's Private Investors Diary Portfolio section in today's IC magazine -
"I was able to have a complete break from the markets and, more importantly, the general election. The only trade was to add to RockRose Energy (RRE) on 28 November at 1,731p. At the end of July, just after RockRose Energy came back from suspension, the share price was 1,950p, and it was 9.0 per cent of the JIC Portfolio. The share price had fallen 12 per cent, including it going ex-dividend 60p, or around 3 per cent of the share price. Due to the drop in the share price, the holding had fallen to 7.9 per cent of the portfolio. Since the end of July, the company has steadily added to its cash pile. Unrestricted cash, ie cash that does not have to be put aside for future decommissioning costs, is now estimated at around 1,950p a share, or 114 per cent of the current share price.
"I expect it to do further deals. There were reports in November that it had bid $1.2bn for Siccar Point’s North Sea assets. Given there were bids up to $2bn, it is unlikely to win, but it does demonstrate the scale of ambition. There are plenty of other deals to be done, and I’m sure before long there will be an announcement. In the unlikely event that another value-enhancing deal evades it, there is likely to be further substantial dividend payments to shareholders. If it only pays this year’s 85p to shareholders again next year, that is a 5.0 per cent dividend yield; not bad while one waits.
"There is also the prospect of news from its existing assets. For instance, it is currently drilling two infill wells on West Brae, which hopefully will lead to increased production and/or field life extension.
"In short, I think the current share price, standing at a discount to cash on the balance sheet, represents tremendous value. I rate it as low-risk/high-return and have increased the position to 9.1 per cent of the JIC Portfolio."
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