Anybody who bothered to read last Thursday’s RNS from New World Oil (LSE: NEW) would surely have run a mile from management’s attempt to remain on life support by way of a placing and an open offer.
This is desperate and unsurprising given the dire state of New World Oil’s business operations:
The past two year period has been a difficult time for the Company. The unsuccessful drilling program in Belize was a major disappointment for the Company and the Shareholders, as was the failure by Niel Petroleum to complete its equity investment and the failure to complete the Al Maraam SPA.
From the same RNS:
In early 2015, a London broker, with a plan to raise £3 million to finance the drilling of a third well in Belize to fulfill work program requirements, approached the Company. After a lengthy road show, the financing effort fell short and there appeared little appetite for the Company’s Ordinary Shares.
Okay so investors took a look at New world Oil’s proposals and returned a big fat no.
But NEW’s management is desperate for cash to remain in their jobs and so they hit upon a brilliant idea, which failed:
Cornhill Capital (The London Broker) met with the Company’s management and proposed to raise £1.5 million from its existing client base. As a result, on 29 April 2015, the Company announced a placing (the “Original Placing”) to raise £1.5 million (before expenses), through the issue of 2,727,272,727 Original Placing Shares at a price of 0.055p per Original Placing Share. Issuance of the Original Placing Shares was conditional upon the necessary shareholder resolutions being passed at the EGM held on 19 May 2015. These resolutions were not passed at the EGM and, accordingly, the Original Placing did not proceed…
Last Thursday’s announcement of a placing and open offer is management’s latest desperate attempt to remain in their jobs.
Let’s put the frankly savage value destruction by management to one side and take a look at the balance sheet from interims dated 30 September 2014 for the six months ended 30 June 2014:
Note 3 to the accounts state that intangible assets relate to exploration assets and as a result of the failure of the drilling program in Belize we can safely discount intangibles to zero. This together with the massive jump in trade payables makes for a very weak balance sheet indeed.
The cash flow statement is not much better with eye watering amounts of operating losses over the years:
New World Oil and Gas is zombie company kept alive by the infusion of easy money from unsuspecting punters. Once they find some.