It has pumped a heap of money into Impact Oil & Gas — considerably more than into any other investment in its 25-year history — but its financial report to end-March does not provide much information.


Hosken Consolidated Investments (HCI), at the time of writing, finds itself in the strange position of trading at a slight discount to its latest stated net asset carrying value of roughly R225 a share.

That is quite an anomaly, considering the wide discounts — sometimes 25% to as much as 55% — that the market has been recently applying to the larger listed investment counters on the JSE. HCI, of course, has an unquantifiable (at least at this point) X factor in its oil and gas exploration interests.

Quantifying the value of that investment is not easy, because HCI’s financial report to end-March does not provide a surfeit of information on Impact Oil & Gas (IOG) . There is not the kind of detail investors could use to formulate an authoritative valuation of the oil and gas interests, and, more particularly, the much-mooted Venus well off the Namibian coast. That said, HCI has pumped a heap of money into IOG — considerably more than into any other investment in its 25-year history.

There has been an enormous amount of hype in oil and gas industry journals, which has fuelled speculation that HCI’s minority interest in the Venus field could be worth billions. Hopefully the speculation is not off the mark, because a big return is required to justify this investment.

Of course, actions speak louder than words. In early June Copelyn — who some wags now refer to as the “Sage of Sea Point” — spent R118m to snap up HCI shares on the open market at around the R200 mark. This immediately reignited sentiment for HCI, which briefly sped right past its last stated NAV number.


Naturally, one could easily argue the market is getting itself in a huge froth. But Copelyn has, over the past two decades, proved one of the more astute investors on the JSE — with excellent entries into the gaming, transport, renewable energy and mining sectors. As one enthusiastic shareholder points out to IM: “Johnny is already a big shareholder in HCI … he would not buy more shares unless he had a high conviction over the group’s immediate prospects … and by prospects, I mean a real gush from the oil and gas interests.”

While such logic is hard to fault, it may still be some time before definitive pronouncements can be made on the Venus field. There may even be frustrating delays to cope with before anything tangible can be reported.

IM would see HCI as fully priced at this point and would prefer to transact on any pullbacks in the months ahead. The share remains — at the right price — a good long-term bet, offering a diverse and dependable operational portfolio with an expanse of bright blue sky.

Source: Business Day Live – Marc Hasenfuss