Institutional selling weighs on Canadian Overseas Petroleum

Canadian Overseas Petroleum Limited (XOP:TSXV) has seen its stock has come under increased pressure since late August as one of its largest institutional shareholders has been reducing its stake in the company.

Canadian Overseas Petroleum’s flagship operation is located off-shore West Africa and was put on hold this summer following the devastating Ebola outbreak. This has put the lid on expected development and its share price has suffered.

Rosseau Asset Management Ltd. owned 40,549,000 million shares, representing 10.09% of the total outstanding shares of the company, on August 31st, 2014, according to Morningstar.

source: http://quote.morningstar.ca/Quicktakes/owners/MajorShareholders.aspx?t=XOP&region=CAN&culture=en-CA

Rosseau Asset Management has been a net seller in Canadian Overseas Petroleum’s recent weeks.

Only one institution owned a larger stake: Columbia Wanger Asset Management, LLC reportedly owned 47,255,000 shares representing 14.16% of the total outstanding shares of the company on April 15th, 2014, according to Morningstar.

Canadian Overseas Petroleum’s stock hit a recent 52-week low of $0.125 on September 8th. The stock has been in a trending downward since early 2014.

The company’s most liquid trading day in over 3 years took place on August 20th, when Rosseau Asset Management, one of its top institutional shareholders, sold 7,871,000 shares at $0.18.

Rosseau Asset Management most recent reported sells took place on 267,500 shares at $0.161 on September 4th.

Rosseau Asset Management was acquiring shares in the company as recently as June 26th, 2014. The management company bought 50,000 shares at $0.238 per share that day, according toinsidertracking.com.

Canadian Overseas Petroleum is focused in off-shore West Africa; the company holds a 17% working interest in Block LB-13, located in off-shore Liberia. ExxonMobil is the operator and holds an 83% working interest. The company maintains that it is actively pursuing opportunities in Nigeria as part of its strategy to generate stable cash flow from secure off-shore assets.

The company believes West Africa to be an attractive region because it has experienced significant oil and gas discoveries in the past 5 years, yet still remains underexplored because of its vast size.

On August 20th, the company announced the closing of an aggregate of 50,555,000 units, at a price of $0.20 per Unit, for aggregate gross proceeds of approximately $10.1 million. Needless to say, investors who took part in this capital raise are now under water, down more than 25%.

In respect to the company’s flagship asset, the LB-13 project, the company reported in a July 23rd press release that, drilling on Block LB-13 had “been delayed due to the recent Ebola virus outbreak in the region resulting in a reduced presence of expatriates in country.”

Until the Ebola virus is under control, many companies, including Canadian Overseas Petroleum, will likely be hesitant to move people around the country or engage in major exploration or operational expansion.

In respect to the company’s Nigeria development, it was announced in that same corporate update that the company was in concurrent discussions to acquire two offshore blocks each with appraised oil discoveries with contingent resources based on historic drilling results. Outside of that late-July update, there have been no updates in respect to either of the company’s main exploration targets.

Click here to read the entire press release from July 23rd.