RE:RE:questions Hi guys, I have been a shareholder of ROZ in the past, and am thinking about getting back in, but for different reasons than are being promoted on this board:
Most of the questions you've all been asking are answered in the Q3 2013 Management Discussion and Analysis (MD&A). Check it out on sedar.com.
True ROZ has no debt. However they have a working capital DEFICIT of $84,000,000. Which means they need $84M to do the work they intend/required to do. Will they ever raise that money? I doubt it. If they were to do a capital raising effort right now by issuing new shares, they'd have to issue 8.4 BILLION new shares at current levels to fund their operations. That's crazy shareholder dilution, they won't do it.
They've valued the land at $890,000. That's it. Are they gonna try and sell it? The costs associated with selling would probably cost more than the value of the land.
Their strategic review concluded without being able to sell the land or attract a JV partner. Almost every Supermajor oil company in the world is exploring Australia right now, but none of them have interest in ROZ's land. No one's been able to prove there's oil there. Unfortunately being "close" only counts in horseshoes and hand grenades, as they say. ROZ holdings are "close" to other oil-containing basins, but that means nothing- they can't tap into those basins, and they have no proven oil on their land.
Their leases are ending, or are already done. that's probably why the land value is so low this quarter compared to previous ones:
PEL 81- 5 year lease ends June 24, 2014 and they have not fulfilled their minimum work requirements yet.
PEL 253- 5 year lease ended June 24, 2013 and they have applied to extend it another 5 years. But who knows what the minimum work requirements will be- whatever they are ROZ has no way to fulfill them right now.
ROZ has a great Board of Directors- the same as PFC with the exception of Mr. Hibbard (who used to be on BOD of Heritage Oil, now with PFC). However, all of their efforts in the last year and a half have been directed towards PFC. They've negotiated an amazing JV with Statoil, they'll be drilling wells on PFC land starting in May this year, they've got contracts with Proactive Investors to promote them in the media, and starting January 19 management is going to Vancouver, Calgary, New York, Toronto, and Montreal resource investment shows to promote PFC and attract new institutional investors. That is where they are focusing their efforts, not on ROZ unfortunately. I follow the money, and it seems all the money is going to PFC right now.
All that being said, there's a silver lining- ROZ holds about a 2% interest in PFC (about 1.5 million shares I think). That doesn't amount to much now (about $300,000), but PFC is going to have a break-out year. Share price has been climbing the last week after they announced their capital program for 2014 with Statoil as partner. Will hopefully go higher after this month's promotional roadshow is over- get some institutions buying large positions, and taking out all the lower priced shares. Will continue to climb in anticipation of the wells being drilled May-August. And then when the drilling and stimulation results come out in Q3-Q4, watch out! If they hit oil, the share price will be 5 or 6 times what it is now (or more).
So, my feeling is that ROZ will not be able to fulfill their minimum commitments on their land. And I don't think they'll get a JV partner. I might be totally wrong there, and if they do, that's amazing. But I feel that after June of this year, their only asset will be their investment in PFC, which by that time is hopefully worth $1.5-2 million, and possibly 3 or 4 million by year's end. So, if the ask goes down to a half cent I'd buy in because their PFC holdings alone can account for their market cap at this point. As the price of PFC goes up more and more, I'd consider paying more for ROZ.