Well, yeah, I do have "issues" where I see management driven buyouts that occur well below real value, the more given the nature of my prior experience.
Years ago, I bought a junior oil and gas stock for $0.25 that then, within a year or two, had management do a deal for us with another company that meant being forced into selling my holding, lock, stock and barrel, to the other company, for only $5 a share...
That seriously ticked me off, and to no end, when it didn't bother a lot of other holders. I was ticked because the value sold was quite clearly worth a whole lot more than it was sold for... and the new owners, using the value in the resources they bought on the cheap from me, eventually ran up over $100 a share on the NYSE...
A lot of other holders were thrilled to have made $5 off a sale of shares they paid more than $0.25 each to buy...
I saw it as a loss of many times more value than I "won" in being forced to make that "good" deal...
How relevant is that experience here ?
I think perhaps not quite as relevant as some appear to assume it must be...
I think you need to consider the context in which events are occurring... including the reorg in Philex Petroleum... and the focus, needs and interests of the various groups who are participants. Bottom line, here, is that the groups and companies we see with cross ownership interests or otherwise see working together... do not appear overly challenged in their ability to generate new opportunities.
Read through the pages here http://pitkinpetroleum.com/ and consider whether it is more relevant for "the group of companies" in what it shows of their focus and ability... or if it suggests instead that the guys that are behind FECOF are so constrained in their ability to generate additional opportunities, just now, that they have more of a need to pirate the few prospects they do have access to, more than they have a need to develop a larger capacity to accelerate the effort to bring in and develop additional opportunities ?
The timing is an issue... and, IMO at least, now is the right time for them to be working on extending their opportunities, including those limits in the extent of their market reach... more than it is time to be harvesting risk by bringing more and more concentrated risks in single holdings in house.
I might be missing some things, I guess... but, I think they (Philex) have far more of a need to add something to the base in current production, and more of a need to expand long term access to capital markets, more than they have a need to add % interests in particular prospects.
Perhaps we're seeing divisions in management focus and itnerest between First Pacific companies and Philex ?
I think there likely is a fairly strong parallel in terms of the nature of the value that is in play... given as much as 40 TCF of natural gas located in the heart of SE Asia, in a country where the infrastructure development required to enable production from new discoveries is already underway, with a strong push from government...??? Still doesn't mean there is more benefit in aggregating the ownership than there is in sustaining current market access, while expanding future access to capital and future liquidity. I think it would make a lot more sense to expect they'd be looking for ways to improve their listings... than looking for ways to eliminate them.
If I have a quibble or two with the approach management has applied to development of their opportunities thus far... those quibbles would be far more tied to the fact of inflexibility given the current stage of the effort in the development than much else...
I think it is likely that success in the development efforts will mean that we can expect changes will take place... and we see that is happening in Philex P... as well as in the FECOF management...
I tend to disagree with others here about the probable form those changes are most likely to take as we move forward from here...
Perhaps my prior experience is more relevant here in terms of the path that was followed, more than for the pattern in the steps taken to get there ?
Whatever the value that is being developed proves to be... you might expect there will continue to be an ongoing awareness and interest within the group of companies, re the potential for creating and sustaining greater financial flexibility and liquidity. It still makes sense for FECOF and Forum to trade on the exchanges where they do, now, but, with continued success... as Forum develops a stronger base of production, and as FECOF adds to their project portfolio, it would make a lot more sense to expect there would be more interest in and a larger benefit available from participation in larger markets... where the benefits would include improved access to external capital and the ability to sustain higher multiples.
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