Strategies

Thinking about the predicament of poor old Cott, and something comes to mind.

If the guys at CMT are clever, they could be turning this period of weak commodity prices and asset valuations to their advantage. There are a lot of dirt cheap assets around, and the market has clearly overreacted on commodity price and associated equity and asset valuations at present.

If I were CMT, I would be looking at trying to acquire a near development liquids (or even gas if it was located near to a market and not requiring LNG) asset via equity raise, or even debt or private equity funding. If CMT could locate a good, cheap asset in SE Asia for which a path to market can be demonstrated (and there are plenty in the region going cheap), then there are many avenues for funding. Some of the investment banks are very aggressive in this regard (particularly when they can lend against 2P reserves), as are private equity investors. Additionally, a JV or partnership could be struck to enter such an asset dirt cheap.

The above would be in keeping with the earlier cunning shown by CMT to enter PRL 38.

Really clever guys in management can pull that sort of stuff off, and thats what they are paid to do. It shouldn't be "oh the commodity price has crashed so we'll wait 2 years for it to recover so we can develop our static assets" - its supposed to be "OK, changed circumstances, its game on".

There's my 4.5c/sh in the spirit of being constructive