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Tag Oil (TSE: TAO) is extremely undervalued probably because it flies under the radar.

 

Shares are currently trading at 0.10 CAD. At this price you get:

  • 0.17 CAD of cash per share (net of debt)
  • all of their Australian assets for free
  • a royalty stream yielding 11.8% on their market cap for free

 

Tag Oil recently distributed a part of their mountain of cash through a dividend of 0.30 CAD (reducing net cash per share from 0.47 to 0.17).

 

There is a stock buyback program allowing TAO to buy 6.4 M shares but it's probably pretty tough to put in practice as daily trading volume is low.

 

I see their Australian assets as free call options where any discovery could significantly and positively impact share price.

 

I am not an oil and gas expert but I am pretty confortable when things are free.

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Tag Oil (TSE: TAO) is extremely undervalued probably because it flies under the radar.

 

Shares are currently trading at 0.10 CAD. At this price you get:

  • 0.17 CAD of cash per share (net of debt)
  • all of their Australian assets for free
  • a royalty stream yielding 11.8% on their market cap for free

 

Tag Oil recently distributed a part of their mountain of cash through a dividend of 0.30 CAD (reducing net cash per share from 0.47 to 0.17).

 

There is a stock buyback program allowing TAO to buy 6.4 M shares but it's probably pretty tough to put in practice as daily trading volume is low.

 

I see their Australian assets as free call options where any discovery could significantly and positively impact share price.

 

I am not an oil and gas expert but I am pretty confortable when things are free.

 

With a cursory view, I see that the projects are not sustainable with current oil prices, assuming it halves revenues. Hence it will be a cash burn until oil prices recover.

 

Unless I'm wrong, and there are new projects where they can extract value. Not too sure what you meant by royalties, as I have not seen any on the financial statement as opposed to the royalty income of $248,000 for the quarter and it seems all the revenues are being generated from all their properties, but again I just took a quick second.

 

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