Elk Petroleum announced today that it was looking to sell its Wyoming oil and gas assets, expected to generate $10-20 million a year after 2016, because this...

John Robertson

PortfolioDirect

Elk Petroleum announced today that it was looking to sell its Wyoming oil and gas assets, expected to generate $10-20 million a year after 2016, because this value was not being reflected in the company's $15 million market cap. Coincidentally, PortfolioDirect contains a report this week on Elk Petroleum pointing out why investors may struggle to get the benefit from these developments before 2017. The report inadvertently provides the rationale for the Elk board to find alternative ways in which to realise the value trapped in their business. Elk is by no means the only development stage company stuck in this value trap. The question now is how much more industry investors are prepared to pay than an Australian portfolio investor and what message that sends about how listed stocks with multi year development timetables need to create value.


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John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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