12 May 2014 15:27
The Shareholders
Wessex Exploration Plc.
May 12 2014
Milroy Capital notes the following with respect to the Wessex Petroleum PLC's board announcement today of the proposed transaction in the Philippines.
· To shareholder's knowledge the company has not advised of an independent analysis of the proposed Philippine assets- SC54 A, especially in relation to the quality of the asset, any partner dynamics and the ability of the non operator partners to fund the project (a known concern).
· The board's proposal creates no clear differentiation over the existing Wessex asset base or strategy and a total lack of transparency with respect to upsides that may be realisable to all shareholders. Due diligence appears to be lacking.
· While the proposed new directors undoubtedly could bring considerable experience and expertise in Exploration and Production this transaction amply proves the logic of the Milroy Capital approach in that the existing board has lost its way & direction.
· The operator of block SC54A which Wessex proposes to farm- in to has been unsuccessful in selling or farming-down their interest for several years, hardly an endorsement of its early production potential plus the permit may expire in August of 2014.
· There is no basis for Wessex to issue 241,000,000 additional shares for these proposed assets.
· This proposed transaction does not bring the cash to the Company which it requires.
· The company needs to acquire lower risk producing assets, not another interest where capital expenditure is required to reach commercial production in 5-10 years.
· Milroy Capital remains committed to bringing positive change to the company in line with its earlier statements through its involvement as an active long term shareholder.
Robert Milroy
Chairman
Milroy Capital Ltd.