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.
New World Oil & Gas (NEW) has announced interim results – noting “as a result of the Placing and Open Offer that concluded in July 2015, the company's cash position (as at closing of business on 28 August 2015), stands at approximately US$4,479,266”. This equates to a current £2.93 million.
This followed a first half of 2015 which saw a $0.85 million net cash outflow, with the company noting “challenges of finding new partners for our exploration projects” though that it “continues to consider opportunities, including entering into non-binding letters of intent to permit the company to evaluate projects in the oil field enhancement space. Having completed the placing and open offer, we are now in a strong position to take these discussions further”.
Fortunately for shareholders, as noted on our recommending of the shares at 0.06p last week the opportunity for this discredited management team to undoubtedly piss the new money away on such ventures will hopefully soon be gone.
With forces pressing for a clear-out gathering, an upcoming AGM should see members of the existing board given the order of the boot and, assuming the oil assets are junked, a clean cash shell with at all credible management and nearly £3 million committed to investing in a sector other than oil (which is toxic right now) should be valued at £4 million+. With the shares at a current 0.07p offer price, the market cap is £3.21 million.
So either the current board somehow clings on, in which case there may be a small loss to take after the AGM, or there is management change which could spark the shares materially higher still. We continue to like this reward/risk trade-off. Kick out the losers on the current board and install someone credible and this will be 0.1p to sell.
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