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Buy Global Petroleum Limited at 7.625p says Doc Holiday

Thursday 14 March 2013

Today’s free share tip on onefreesharetip.com comes in light of the Half Year results for the six months to December 31st  released this morning showing a strong cash position and dynamic move into further joint venture/partnership for this Aussie and AIM listed oil junior. Global Petroleum (*LSE:GBP) is a buy at 7.625p

The market capitalistion is £14 million. Net cash is £14.8 million. That is a key point to remember as you look at this as a risk reward play.

In 2013, post the reporting period, the company is actively moving forward with the farm out and a data room has been opened for invited companies to review its key permit, exploration acreage in Namibia. In addition to the farm out, the focus of Global’s efforts will be to map the additional play fairways in increased detail and thereby develop an expanded portfolio of prospects and leads, perform further geochemical work to better understand the timing of oil generation and migration in the area.

Broker Northland Capital has continued to reiterate its 18.1p target and buy stance in the wake of the results. Whilst 18p may seem optimistic as these broker valuations often do, net cash covers the Market cap by almost £1m  and this therefore looks like a safer bet in a high risk sector.

Global Petroleum’s plan is to sell off assets, de-risk by farming out its projects and thus drive shareholder value. But Global will also use its cash to farm into other projects currently owned by cash strapped peers. Today’s statement includes the phrase:

“The board continues to review opportunities for other acquisitions, joint ventures, or investments in the resources sector, which may enhance shareholder value and the Company will continue to evaluate new opportunities as they are presented.”

Nothing in life is utterly safe but on a risk reward basis Global looks to be worth a flutter at 7.625p.

Doc Holiday is a seeker of value among small caps. You can follow him on twitter at https://twitter.com/DDS_Doc_Holiday or see more of his work on his own blog at http://docslaymanschatter.blogspot.com/

 

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