Tuesday, September 24, 2013
Rex Int’l: JPM has an unrated company visit note. Rex is an independent oil and gas exploration and production company having 15 concessions throughout USA, Middle East, Norway and Trinidad and Tobago through various JVs. The parent, Rex Partners, claims to own “Rex Technologies” that mitigates exploration risks and reduces cost of exploration, which Rex has access to and enjoys right to first refusal in all global territories except certain locations. Rex Technologies significantly reduces the need for exploration and appraisal drilling thus reducing risks and costs involved in the exploration process. Management claims more than 50% success rate in exploratory drilling (versus 10-15% for industry). Mgt’s strategy is to identify and then acquire new concessions, increase value- introducing Rex Technologies, develop concessions and then sell off stakes thereby unlocking capital and value, as it sees its advantage limited to exploratory drilling phase. The group will look to add 8-10 concessions (5 added since IPO) alongwith its partners North Energy (in Norway) and Hibuscus Petroleum (Malaysia listed E&P name via its JV, HiRex in Asia-Pacific).