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Melrose Resources - Growing cash flows

August 2004

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

• In oil and gas terms, explorer and producer Melrose Resources (265p) is still tiny with a  market cap of £180m. However the business has attracted the attention of investors after three successive exploration successes in its El Mansoura Concession in Egypt. This followed a period when it had had five dry wells in succession and had not been able to raise expansion capital but the recent hike in the oil price has meant investors have been forgiving; four fundraisings over the past 16 months have transformed prospects. Melrose Resources was established in 1997 following a management buy out from AIM-listed Melrose Energy which used to manage a number of limited partnerships for oil and gas exploration. Such partne ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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