The Evil Diaries: “Take your choice”

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The Evil Diaries: “Take your choice”
I caught up with Andrew Monk of VSA Capital this morning. VSA are brokers to Madagascar Oil (MOIL) and Andrew is, to put it mildly, bullish.

I started by pointing out that Madagascar is hardly the safest territory politically speaking. However, he countered that the World Bank is in there and the new president of this last fifteen months seems to be delivering a sensible regime. Andrew may be right; I simply do not know.

However, MOIL’s acreage is vast and could hold 10bn barrels of “heavy” oil. This guess is a long way ahead of the publicly floated figure of 1.8bn barrels and, apparently, there are widely encountered oil seeps at surface. You can make what you will of the significance of that claim. I found myself wondering what David Lenigas would make by way of presentation of this set of facts.

This field will take serious cash to develop and the sums required are probably way beyond MOIL’s capacity to raise. But the likes of Exxon and Mobil are taking a close look since the potential of MOIL’s acreage is strategically significant.

It is very hard to put a valuation on MOIL right now but at 6p or £35m odd it seems ridiculously low. Some think it should be 30p or more and others think that, long term, this is a 200p/300p possibility. It is clearly a strong buy even though it can be argued that it is premature to get excited. Take your choice.

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