Following TAG’s recent announcement of Alex P. Guidi’s resignation as Chairman of TAG Oil’s Board, we caught up with the busy entrepreneur for a few words of farewell and his thoughts on what lies ahead.
“Change is healthy!” said Alex, enthusiastically, during our conversation. “Regarding my board resignation, I would like to remind everyone what a strong, I mean really strong, growth platform and top-notch team TAG Oil has in place.
“I am — and will continue to be — a supporter of TAG Oil, but in addition to oil investments, I am now focusing on investing in the technology sector. I’ve always had a great passion for disruptive technology, including one of our earliest companies, Walking Stick Oil and Gas Ltd., an early adaptor in horizontal drilling technology. I also co-founded a technology company that was a pioneer in building business-to-business trading platforms on the Internet.
“With the support of an incredible team, we at the IREMCO Group have incubated and operated five international oil and gas companies, but the entrepreneur in me is passionately embracing a new focus. The oil and capital markets business has been personally rewarding and I feel very fortunate to have worked all over the globe — and had the opportunity to meet some wonderful, colorful individuals along the way, and forged lasting relationships. Looking back, I’m extremely proud to say that all of the oil companies we founded became industry and equity market leaders, which attracted prominent institutional investors, hedge funds, M&A activity and numerous major oil company partnerships. In fact, during the 1990s, the IREMCO group of companies became one of the fastest growing international oil and gas enterprises and top market performers in the world!”
What’s the future of oil stocks?
“Oil stocks are extremely cheap right now, particularly in the international space. But those who think oil and gas is a sunset industry are kidding themselves. The world will continue to transition towards other sources of energy, however with world oil demand projected to soon surpass 100-million-barrels a day and natural gas use rising, there will be investment opportunity for many decades ahead. This down cycle has punished share prices in all oil and gas companies, which are trading at extremely low valuations — valuations I have not seen in my many years of trading oil stocks.
“Market cycles and valuations tend to be extreme, particularly when it comes to international oil companies. When the pendulum swings, it swings. For example, and there are several similar examples, in the last up cycle, investors drove TAG’s market cap from about $12 million to $600 million in the 30 months following the 2008 oil price crash. I recall the equity raise in mid-2012 priced at $10.45 per share; investors were scrambling over one another to secure a larger position in TAG, primarily based on exploration speculation. Today TAG’s market cap is about USD$25 million, yet TAG’s operational platform and upside potential are more solid and even better defined than when the market cap was over $600 million. The stock market is currently placing little value on TAG’s proven reserves, production increase opportunities, production facilities and pipeline network, technical data, field development with huge upside, and drill-ready, prospect-rich exploration acreage.
I’m betting against the herd
“Oil prices are cyclical and when it comes to stocks, in my experience, if you can stomach volatility, significant returns can be made by buying international oil stocks when they are as undervalued and completely out of favor as they are today. I’ve been through numerous market cycles, more than I can count, and after many lessons learned, I view them as tremendous investment opportunities. I am personally investing heavily in the international oil and gas sector and will continue to accumulate stock in select companies trading at decade-year lows. There are many dynamics at work when it comes to world oil pricing and a lot of moving parts, including geopolitical factors, but with OPEC cutting production and companies slashing their capital expenditure budgets, oil prices will likely move substantially higher as world demand continues to strengthen.
“And with that said, I would like to thank the entire TAG Oil team and its board of directors for all of their contributions and dedication. More importantly, a great deal of gratitude to all of the TAG Oil shareholders, both past and present, for their ongoing support.”