The energy sector + Westgold (WGX)

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Question asked 12/11/2021

The energy sector + Westgold (WGX)

James, Enjoying the content & updates. Your insight to the following please . . . Held WPL for over 12 months. Does not seem have tracked Exxon or Chevron with the rise in oil price & LNG, now becoming frustrated with it treading water. Based upon current expected cash flows, why is the stock lagging? Is it to do with ESG concerns, the BHP merger or other factors? Continue to hold or would you suggest to build a position in BHP with WPL funds? BHP - a buy at these levels? If they merge with WPL what do you envisage happening with the share price? Will it drop in relative the number of WPL shares received? WGX - Following an unsuccessful takeover of Gascoyne (due to the Firefly Scheme agreement), would you envisage they will have another go when GGC & FFR merge. They seemed to be in 'box seat' with GGC shareholders. Would this be favorable for WGX?

Answer

Hi Bernie,

The Energy Sector has been frustrating on a number of fronts, if I had known where energy prices would be on January 1^st I would have called WPL to have risen to around $30, not actually fallen towards $22! We prefer BHP as a company with its resource mix and valuation after it’s decline courtesy of the move by iron ore. RE BHP & WPL merger, yes, it will drop by the same / similar amount as the value of the shares given in WPL – net net neutral.

I’m not sure whats on the minds of the WGX board but whether any deal proves positive for WGX will largely come down to price and operational synergy. However MM is keen on the Gold Sector as we head into 2022 with WGX looking set to initially test its 2021 highs.

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Westgold Resources (WGX)

LAST UPDATED 12/11/2021 14:55

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