Business Summary

Activities

The Company is a venture capital investor, principally  in the energy sector. Areas of specific focus include but are not limited to the following possibilities:

  • Pre-IPO (initial public offering) corporate investment opportunities in the oil and gas sector (both overseas and in New Zealand)

  • Direct investment in oil and gas exploration opportunities (both overseas and in New Zealand)

  • Investment in listed oil and gas stocks overseas

Major Investments

Widespread Energy has invested in the following opportunities 

  • 90% of a joint venture with Widespread Portfolios which holds Mineral Prospecting Licence 50270 covering an area of 4,726  km2 near the central Chatham Rise, 600km east of Christchurch. The joint venture is seeking phosphorite (rock phosphate) and associated minerals.
  • PEP 38526 which covers part of the Kotuku Oil Seeps, near Lake Brunner on the West Coast, South Island
  • 11.8% of Green Gate Limited, a holder of PEP 50110, onshore Taranaki.
  • Akura Limited (privately owned, Fiji based oil explorer)

Principal Business Risks

Prospective investors are cautioned that an investment in Widespread Energy is speculative and may involve a high degree of risk. An investment in this company is designed for people who can bear the loss of their entire investment. The principal risks are: 

  • The Company will invest in some opportunities in the energy sector that are in an embryonic stage of development and which may not be successful.

  • Even if these investments are initially successful there is a risk that energy prices might fall and these investments could fail as a result.

  • The Company will at times invest in offshore projects, and will therefore be exposed to currency risks. For example, if the New Zealand dollar increases significantly in value these offshore investments will fall in value in New Zealand dollar terms which will have an adverse effect on both the financial position and reported operating results of the Company.

  • The Company will invest part of its venture capital in the early stages of projects that will need very large sums of money to become commercially successful. Even if the early results are successful, if sourcing the subsequent capital required for the next stages of these projects is not achieved then the Company could lose its entire investment.

  • The Company may invest in unlisted, un-traded, privately owned opportunities that cannot easily be sold. As such, these investments will not provide the exit options that would be available were the Company to invest only in stock exchange listed opportunities.

  • There is a risk that whilst the underlying performance of the Company and its investments may be quite successful, this may not be reflected in the share price of the Company, meaning that the returns experienced by an individual shareholder may differ from the underlying performance of the Company.

  • There is a risk that the Company is unable to perform its business activities described above, due to no or too few investment opportunities being identified post-listing which satisfy the Company's investment criteria.

  • The Company has no employees and is reliant on its key personnel, being its directors and advisers, to identify suitable investment opportunities.

  • An active trading market may not develop for the Shares and Options in the Company.

However, shareholders should note that risk would be minimised to the extent that it can be by the following strategies:

  • Investments will be financed solely from equity sources (the Company will have no borrowings);

  • The Company will avoid investing in projects with open ended liabilities;

  • Investments will be well researched before acquisition;

  • There will be frequent monitoring of the portfolio and market conditions generally;

  • There will be continuous ongoing assessment of investments in the context of other investment opportunities available. 

Key Performance Drivers

The Company operates by investing in energy sector projects. While some will be privately owned, unlisted opportunities, the Company's goal is to either develop these to the point where they generate profit and dividends/royalties, or alternatively can be profitably exited, either by trade sale to other private investors, or by stock exchange listing and subsequent sell down. If this strategy is successful, the value of the Company's investments will increase and this should translate into an improved financial outcome for the Company measured both in terms of profit and increases in the net asset value of the Company. 

For this strategy to be successful, the key performance drivers of the company are:

  • To identify and invest in a range of suitable projects

  • To have the financial resources and expertise to add value to these projects

  • To attract significant further capital to advance projects - this will require industry expertise, marketing skills and strong negotiating abilities

  • To identify and implement exit strategies for certain investments

Returns to Investors

The Company is presently small with limited resources and no profitable trading operations. This is expected to remain the situation for the early years of the Company's existence. Any incoming cash flows for the next few years will be ploughed back into new investments. Accordingly it is not proposed to pay dividends for the foreseeable future.

Assuming a scenario where the Company is successful, the returns to investors should logically be reflected in increasing share values reflecting the improved financial position of the Company. Any improvement in financial position will be determined by the underlying performance of the Company's investments and accordingly the activities and risks of the Company that are discussed above demonstrate the key factors that will determine returns through increased share values. However, even in these circumstances, if investors don't consider the Company to be an attractive investment, or if market conditions are generally depressed, there can be no certainty that the value of the Company's shares will reflect any increased underlying value of the Company's investments.

The nature of returns intended by the Company are accordingly through capital growth meaning returns on an investment in the Company will most likely only be received through a longer term holding of securities of the Company.

 

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