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New World Oil – Speculative buy at 0.55p

By Doc Holiday | Wednesday 24 July 2013


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Whilst New World Oil (NEW) shares have suffered dreadful ride in 2013, losing 94% of their value from the glory days of 10p, now may be the time for a small speculative buy at 0.55p.

 

I see New World Oil as a company that invested too much money, time and management credibility in its Belize assets with the result being a train wreck as its wells, after much hype, came up dry.

 

However the eventual cries of '' off with his head '' will subside and the CEO is now thrust back into the lime light with his recovery strategy. I admit that CEO Kelleher has shown greed in terms of pay and that his track record to date does not inspire confidence. 

 

I note articles such as this one from Tom Winnifrith which are less than complimentary.

 

However, the obvious attraction now for bottom feeders is the current net cash position which sits a fair whack higher than today’s share price of 0.55p which values New World at £4 million. I reckon cash is c£6 million.


The company is now talking up its Danish assets which it says have a NPV of $655 million. We heard the same telephone number talk about Belize before the wells were drilled and were dry suggesting those assets have, in fact, got an NPV of $0.


The danger is that all the cash is spunked away on PLC costs and Denmark. But any positive news from Denmark and the shares could fly. In my book, New World is a speculative buy with a 1.25p target price.



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