BlueNord ASA (BNOR.OL) was the topic of conversation when DirectorsTalk interviewed Gervais Williams, Co-Fund Manager of Diverse Income Trust plc (LON:DIVI)
DirectorsTalk asked: BlueNord reported robust production and cash flow from its North Sea gas assets. How do you see the company balancing reinvestment, debt reduction and shareholder returns as its projects mature?
Gervais noted: This is in the North Sea, but it’s in the Danish sector of the North Sea. It is a Danish company in terms of listings in Oslo and such like. Most particularly, it has been investing hard in bringing local gas to the EU, and specifically, as it does so, that again is low cost, low carbon intensity, but also improves the secure supply and energy security.
What’s been interesting about this is the company has been very overlooked, particularly over recent years. It is now in a period of cash maturity; it generates disproportionate cash surpluses and its dividends for the current year are likely to be very substantial relative to its share price. Specifically, we think it will carry on generating very substantial cash going forward because it has very little capex over the next few years.
So, it’s very overlooked, a bit like many other small caps. We think that although there’s plenty of competitors out there and other companies to look at. Ultimately, there are individual stocks where actually the valuation is so low and the cash generation is so substantial that if you hold them over a number of years, you can get not just a great return in cash returns and dividends, but actually a revaluation upwards in terms of its market capitalisation as well.
