Rockrose Energy (RRE.L, Market Cap Â£223m, 1930p, 9.1% of JIC Portfolio and 9.0% of JIC Top 10)
At the end of July, just after Rockrose Energy came back from suspension the share price was 1950p and it was 9.0% of the JIC Portfolio. Since then the share price has fallen 12%. On top of that, I have received a dividend of 60p, worth another 3% or so of the share price.
Due to the drop in the share price, and good performance from the rest of the portfolio the holding of 2167 shares is now 7.9% of the portfolio.
Since the end of July, the company will have steadily added to its cash pile. Unrestricted cash, i.e. cash that does not have to be put aside for future decommissioning costs, is estimated at around 1950p per share, or 114% of the current share price.
I expect that it will do further deals. It was reported last week that it had bid $1.2bn for Siccar Pointâ€™s North Sea assets. Given there were bids up to $2bn it is unlikely to win but it does demonstrate the scale of ambition. There are plenty of other deals to be done and Iâ€™m sure before long, there will be an announcement. In the unlikely event that another value-enhancing deal evades them, there is likely to be further substantial dividend payments to shareholders. If it only pays this yearâ€™s 85p to shareholders again next year, that is a 5.0% dividend yield; not bad while one waits.
There is also the prospect of news from its existing assets. For instance, it is currently drilling two infill wells on West Brae which hopefully will lead to increased production and or field life extension.
In short, I think the current share price, standing at a discount to cash on the balance sheet represents tremendous value. I have it as Low Risk/High Return. Iâ€™m happy with that and have just increased the position to 2,500 shares or 9.1% of the JIC Portfolio. I paid 1731p per share.