FECOF is Forum Energy Resources a Vancouver traded company whose primary asset is a significant percentage shareholding in Forum Energy, which trades as FEP on the AIM. Both FECOF and FEP are majority owned by Philex Petroleum, which was recently listed by introduction in the Philippines as a distribution from parent company Philex Mining, the largest locally owned gold miner in the PI.
Forum's assets include on shore and off shore leases in the Philippines, most notable among them being almost 70% interest in SC72, on which they're completing analysis of a large area of 3-D and 2-D seismic, which it is expected the results of will be reported on, soon. Parent Philex has committed to funding the SC72 exploration effort through the first two holes. Estimates of the value in place are huge, ranging from 3 TCF proven to 20 TCF potential within the area of the lease. It is expected that the first find in SC72 will be larger than Shell's Malampaya development.
Risks include that the Chinese have been saber rattling, claiming the PI drilling within PI territorial waters will somehow be an insult to China's claimed sovereignty over waters well inside the PI's national boundaries.
Upside includes that SC40 is a holding that has production commencing, along with electricity production from natural gas produced in place and moved by a pipeline to the generating facility... which should begin to result in increased revenue for FEP in the current period, or "soon".
It's hard to understand FECOF without understanding the relationships between Philex companies, and without understanding the geology of offshore oil and gas, and the geopolitics of the relationships between the U.S., the PI and China.
This is an interesting opportunity for patient investors... who focus on facts and understand the timelines in which value development actually occurs. The PI government expects finds made in SC72 will begin production before Malaypaya runs dry... so, within the time period before another decade passes...
FECOF tends to be undervalued relative to FEP. FEP tends to be undervalued relative to peers on the AIM, and relative to comparable interests in Philex Petroleum... so, along with the structural issues and the geopolitics, there are issues of a range of market variables to consider... also making FECOF perhaps one of the more interesting stocks there is to follow... |
