RH Petrogas

RH Petrogas: OSK-DMG says "be greedy when others are fearful". During last week’s selldown on small-cap stocks, RHP pulled back sharply to "clearly takeover levels". The stock is now trading at a 35% discount to its liquidation value, pricing all its exploration assets at zero and discounting part of its 2C resources. OSK-DMG believes RHP’s latest wells have struck oil, as RHP is currently conducting flow tests in its latest wells. No E&P company would move to the flow-test stage unless there is clear evidence of oil and gas. RHP's recent share placement to long-term investors and management buy-in are signs of confidence. A Malaysian fund took up 25m of the 56m new shares, followed by a large U.K. fund with around 10-20m shares, while other smaller funds bought a few million shares each. Meanwhile, the CEO’s recent exercise of 2m options at $0.59 each as a clear sign of his confidence in the company for the long term. The house maintains BUY, with TP $1.33