I've never posted on this forum before. I'm a US investor who has been investing in junior E&P (mainly Canada) for about 12 years or more. I often feel like the only Molopo investor in North America :).
I own Molopo, unfortunately at a much higher cost basis than the less than cash value at which we currently trade.
I also Arcan (ARN on the TSX-V) which has been pulverized because of debt. ARN has an enormous light oil base. It was the hottest play in Canada with management raising large sums of money at $4+ from big players like CPG and LTS.
They squandered the proceeds and management was replaced etc. Costs are now down and the production base is stable at 4k boed. They are trading at a ridiculous valuation compared with NAV. This is because of debt.
We are trading at a ridiculous valuation because of (lack of) management and no prospects for putting the money to work.
So I have proposed a merger. I think it's win-win for both sets of shareholders. I laid this out to both management teams and I think there is interest on both sides.
I can post my valuations and proposed plan if anyone is interested but I see a 50%+ upside for MPO shareholders. Two things have changed since my initial analysis: the lawsuit devalues MPO unfortunately, and ARN is looking to sell one of its assets (about 1-1.5k boed of production).
ARN has been on fire for the past few days, which is a sign of strong interest in their asset. We are stuck as usual near 0.21, unfortunately. That means the exchange ratio would probably need to be modified in favor of ARN.
Regardless, I see a lot of upside for Molopo shareholders with the eventual creation of either a dividend paying light oil play in Canada (with a huge light oil base), or a buy out by someone like CPG.
I hope you'll take seriously the prospect of a merger and push management to head in that direction. With 12+ years of experience in this sector, my feeling is that it will be the best exit option for us.
Best, Wiggling
MPO Price at posting:
21.5¢ Sentiment: Hold Disclosure: Held
