Simba Essel Energy Inc SMBZF

Overview

[ktabaja]

I have beten following this stock since it was 22 cents down to 1.5 cents till now. I always believed in the company due to my background. Their assets and geography has always been my interest., Their management has the good and the bad until Essel has taken over where I believe they are of the best. The new management and team tells you a lot and Essel group success story is enough to give assurance.

This boad is a total disaster compared to others where people don't discuss professionally and talk about the value of the investment , whether positive of negative but rather just mostly opportunistic-biased words from both sides. I know many here that have been for a long time and must believe as I do. I am just going to roll some facts here as to why this holds very high potential:

• New management with high level of shareholding and track record of developing successful companies as as Mr. Gupta and his CV not mentioning his mother company. These people to create shareholder Value and wealth and are not amateurs to roll a penny over.

• Assets are in Africa and hot spot zones providing selling opportunities to different areas in domestic Africa and aborad.
  • Kenya: Lack of Oil with a highly populated region. It will be the export hub towards the indian ocean making it close to India which is the home of Essel. India is looking to become more of an industrial country going forward and will be cosuming higher fuels than China in the years to come
  • Chad: Proven reserves on Glencore block with a pipeline. CNPC/Petrochina already has a refinery in Chad and Niger with pipeline connections. Not mentioning exports from there to nearby countries
  • Guinea: Again lies in a undeveloped area with a possiblity of shallow oil extraction making it low cost
  • Liberia: again same as above
• Indian companies generally run a low cost operations making their overhead on production economically viable when other companies can't do that. Essel connections with Indian government and East Africa where good portion of the population is of indian origin will facilitate matter. Indian influence is well seen in Africa. THis is further supported by Indian government mandates to Indian companies and investor backing. 
• They have already mentioned buying Rigs. You don't buy rigs up to millions of dollars if you don't have a plan and very confident that you will get that oil out. This is key to those understand E&P amateur explorations. Name me one company that did this. Kenya is not a place where you can just rent the rig out. THat means you know that they will use for a long time. Again, indication of cutting costs down
• They don't care about being in the media all the time because they are focused on delivering value. When results come out share price will go up regardless. Leave them to work.... THey are not interested in people sitting on boards. It is not like this board owns 60% of the shares.... we probably don't add up to 2%. 

The question is why the price is not that high yet or there are delays:

• This is Africa. You need time, you need government lobbying all the time so they don't turn against you. This is not Europe or North America. you get one approval and the system run. This gold in poor countries. Politicians will kill each other to control and will not let you work independetly. Becareful than be sorry and we lose our shorts as small shareholders
• Blocks are in the middle of nowhere. This is not Nevada where you have proper highways and roads. Not to mention sabotage risks and theft that can occurr. Moving 40 Truck loads that is after you get to port and clear in time is not that easy. Again be careful than be sorry
• After 5 years of underperformance, big investing houses are not going to give you the credit and buy things up until the pin hits the ground or they have confirming data. Accummulation has been happening for months here if you have not noticed from the open market shares which is not too much. GO back and do your calculations. It is quite obvious it is not being let lose very easy. It takes very small monetary amounts to minupulate this stock down for someone that is accumulating knowing the great long term potential.
• We are listed on the TXV which a lot of high level instituation or portoflio managers are not even allowed to trade on or buy stocks less than a certain dollar amount not cents.
• There are more details that I am sure they are not allowed to disclose without government approvals and don't want to hipe things like other companies do. Indian culture says so. THey work hard with little public exposures. Did you hear of Essel before they became as a JV? I doubt. But look at their value creation to shareholders. While you probably see some ploy US company on the news daily and then bankrupt their shareholders overnight.
• Not all the infrustructure is in place. FOr some institutions, while they will like the story, they don't see an immediate divedend payments. Not all investors are looking for share appreciations only. People are looking for return on capital that is frozen. 

I can go on for days on pros and cons here. Please read between the lines and focus on what is important to assess an investment. 

I will write more in later weeks on more of the technical findings from my perspective and experience. 

Good luck to all.