Seismic reflections: Singing those 100% equity blues

Junior oil and gas companies with large equity positions in prized assets offer investors plenty of upside when things go well. However, markets often do not value this potential, and in some cases penalise the junior for what is viewed as a high-risk strategy. Development risk and access to funding are often key to this discount. However, farm-ins also confirm the value industry partners are willing to give to assets “in the ground”, while adding a sense check to decision making. Without this, some juniors may continue to suffer to get the recognition their assets quite possibly deserve.

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