Potential Asset/Company Sale
Jeremy Raper has recently highlighted an interesting activist campaign at Carnarvon Energy. It is an Australian company that trades at a significant discount to its NAV comprised primarily of net cash and stakes in several development-stage O&G assets. Recently, two of CVN’s largest shareholders, Collins Street and Nero, managed to rather promptly oust the incumbent management and take control of the board. The revamped management team has stated that it intends to preserve cash balance, cut corporate expenses, and explore company sale/monetization of assets. There seems to be significant upside in either a full company sale or asset divestiture scenarios. CVN has an adjusted net cash position of A$0.15-A$0.165/share compared to the current share price of A$0.205. There is likely to be significant additional value in CVN’s stakes in Dorado (10%) and Pavo (20%) oil and gas fields. In each of these assets CVN has already sold 10% stakes earlier this year. A disposal of the residual stakes on similar terms would generate another A$0.12-A$0.14/share in value. On top of that, there is an optionality of further upside from CVN’s other assets.
Note: The ‘Ideas Elsewhere’ section is intended to highlight interesting event-driven investment ideas by other authors. These ideas are not my own, and I am simply summarizing them to bring the attention of SSI subscribers. I might not actively follow the developments of these ideas, so there might be limited updates or follow-ups in the comments section.