SCOT Research : a database of metals, mining and energy issuers you never knew you needed ………….. …. www.scotresearch.com
This exercise is about the challenge of comparing valuation between four variables that define every business. The objective is to find a way of gathering and centralising the valuation building blocks of the upstream metals and energy industry and enable quick, reliable and affordable access. Why does the market assign such different valuations to similar assets in the same postcode? How can better data increase the consistency by which asset allocators, board executives and m&a teams separate winners from lost causes?
For the extractive industries, there is a well-trodden path for nearly all pre-revenue developers. From early stage projects and a single asset, the building of a resource, the capex funding challenge, and the focus on an exit. Investor time horizons are imperfectly synced to the pace of development and with delays comes dilution. Our preferred data points aim to help a diverse group of user types to question implied asset values and examine why apparently similar resource ounces or 2P barrels are treated so unequally.
At the generalist level of investor experience, the web is not set up to compile relevant peer group comparisons. When data on $100 million oil and gold producers appear alongside grandees like Shell, Exxon, Newmont or Barrick, there’s little to glean. Without a way of defining the characteristics of a business, genuine sector comparables are hard to obtain. We aim to improve this experience.
Company research, assuming it exists at all, might stretch to twenty pages of analysis on a single company. However liquidity criteria and economic reality mean fewer and fewer issuers match the banks and brokers’ terms of engagement. Sponsored research builds awareness and fills some gaps but continuity is often limited. Getting the attention of genuine capital providers in the digital era will require easier access to basic CPR data. If industry reporting standards can be regarded as much improved and more transparent, it’s essential to assemble the data in a way that provides context to the valuation debate. It may be available on every company website but that stops well short of ‘easily accessed’ data. For junior companies, pre or post resource declaration, we consider this an unmet need.
Performance, mindset, confidence, and culture. There’s no computer science solution to substituting judgement when it comes to explaining how these variables combine. This exercise is our approach to improving the first layer of analysis and should allow viewers to identify and challenge valuation anomalies across a whole range of upstream operators.
We aim to soft market the resource data on 2000 mining and energy issuers early in January 2020. You are welcome to contact us for a fuller emailed summary of our plans.