Protalix Biotherapeutics Inc V.PLX.H

Q4

[ohbehave]

I believe investors need to look past Q1 numbers for PLX given capex was high on the new HZ well expenditures, differentials blew out "pre" pipeline restrictions and nat gas prices were weak ... it was an ugly quarter for most. It would have been nice to get the new well online in Q1 but realisitically operational delays happen and based on gas pricing alone Q1 should be much improved. In Q2 nat gas will soften but oil production from the new well should provide a material boost to PLX production and cash flow.

Its been a long drought and the junior sector has not had any love from investors for >4 years but the politics of Alberta have taken a turn for the better and following the SNC and Mark Norman scandals people in eastern Canada seem to be waking up so if you believe the polls there could also be a positive change at the Federal level that would be a huge lift for this beaten down sector come October. Meanwhile juniors are living out of their cash flow ... period and in the case of PLX, cash flow has been mostly gas which explains their paper acquisitions and cash dispositions (cash + cash flow) and they've also done a good job to date of managing their debt. The space is not for the faint of heart but considering that PLX has a focused use of proceeds in their now tested Rex play and multiple additional plays including an interesting Duvernay land position, it would seem that investors have excellent upside potential in PLX but it's just going to take some time to translate that into free cash flow and some patience is warranted. PLX should continue to be focused on the REX oil discovery and increased cash flow in the near to mid term and while that may require more patience than some are used to in the junior O&G sector any junior with an exiting new discovery, multiple additional core area development plays, a saleable land base in the Duverney and minimal debt should be what investors look for in any market ... no?