MMEX Resources Corp. (OTCMKTS: MMEX) “Poor liquidity & financial flexibility may impinge an otherwise attractive project”

MMEX Resources Corp. (OTCMKTS:MMEX), is a global energy company focusing on the acquisition, development and financing of oil, gas, refining and infrastructure projects in Texas and South America.

The company recently announced to build a $450 million refinery in the Permian Basin’s Pecos County. If approved, the proposed refinery will be able to process up to 50,000 barrels of crude oil per day and convert it into gasoline, diesel, jet fuel, liquefied petroleum gas and other products that will is expected to meet growing demand in Mexico.

Also, there has not been a new refinery built in the United States in more than 40 years & MMEX Resources project is the second one proposed to be built in Texas over the past six months.


Successful completion & commercialization of the Project is subject to the receipt of required governmental permits and more importantly, timely closure of incremental funding for the project. The Company has previously incurred continuous losses from operations, has an accumulated deficit of approximately $30 million, a total stockholders deficit of approximately ~$2.9 million and has  also reported negative cash flows from operations since inception.


Description & manufacturing set-up:

MMEX Resources Corporation is an oil and gas company. The Company is engaged in the evaluation, acquisition and development of oil and gas, refining, power generation, natural gas transmission and processing energy projects in the western United States and Latin America. The Company was previously engaged in the exploration, extraction and distribution of coal.


About the management:

MMEX business profile is expected to leverage on the longstanding experience (above 3 decades) of its management. The management has extensive experience in building and managing multi-million dollar gas processing, pipelines, power plants, refinery and oil and gas operations in Peru and the United States. The company’s upcoming project is likely to benefit from the robust track record of its management.


Recent announcement:

The company recently announced plans to build a $450 million refinery in the Permian Basin’s Pecos County. The proposed refinery will be able to process up to 50,000 barrels of crude oil per day and convert it into gasoline, diesel, jet fuel, liquefied petroleum gas and other products that will be shipped by rail to meet growing demand in Mexico.

Project at a glance:

As per management, Pecos County Refinery is likely to benefit from large oil discoveries in the Permian Basin, which has off late become the hottest shale, play in the United States.

Presently, the existing facilities and pipeline networks are largely unequipped to handle this growth and are limiting where products can be transported. By building a state-of-the-art refinery along the region’s existing railway infrastructure, MMEX hope to bring a local and export market for crude oil and refined products, which will add substantial job and economic growth to West Texas.

MMEX has a contract on a 250-acre property next to the Sulfur Junction Spur of the Texas Pacifico Railroad about 20 miles northeast of Fort Stockton. The rail line starts in San Angelo to the border town of Presidio and then into Ojinaga, Chihuahua.


Outlook – proposed time line & synergies:

The company plans to complete an environmental assessment for the property before submitting a permit application to the Texas Commission on Environmental Quality and other agencies.  If approved by regulators, the 18-month construction process will create around 400 jobs while the completed refinery is expected to employ around 100 people.

The facility is likely to entail a total capex of around half billion dollars. Construction is proposed to commence from early 2018, following the permitting & approval process, and the plant is projected to begin commercial operations from 2019 onwards.


Basis high-level calculation, at maximum capacity, MMEX would have the ability to generate (assuming a crude oil price of at least $50/barrel) up to $2.5 million in gross revenue on a daily basis.


MMEX Resources is bullish to work alongside the Pecos County community to produce a state-of-the-art facility that opens up economic and job opportunities for the region.


Key Stock Influences

Some key influences that might govern future stock price performance include:

  1. The company’s financial risk profile is marked by poor liquidity and inadequate financial flexibility. MMEX has incurred continuous losses since inception and has a large accumulated deficit in its book. In fact the company has a history of illiquidity and cash crunch. Therefore, its ability to arrange required funding for the captioned project in a time bound manner is a significant contingency.
  2. MMEX is burning through cash & do not have enough liquidity to run its existing activities. Its ability to continue as “an ongoing concern” is entirely dependent on its ability to raise additional capital. Therefore, any sort of inability to raise fund in a timely and prudent manner, could materially & adversely affect its operations. Also, additional capital is likely to lead to dilution in its present equity capital.
  3. The legal framework, expected approvals, permits and clearances, surrounding the upcoming project is uncertain at the moment. Future regulatory developments in these areas and its impact on MMEX business will remain a critical business sensitivity factor for the company.

Earnings Review

MMEX have not yet begun to generate revenues. As per its latest available filing, as of July 31, 2016, it had current assets of $3,335, comprised of cash, and current liabilities of $2,758,554, resulting in a working capital deficit of $2,755,219.

Because of continuing operating losses, MMEX have not generated positive operating cash flows. As a result, they have significant short-term cash needs. As of yet, its principal source of operating capital has been provided from private sales of common stock and warrants and debt financing.


Stock Performance


On Friday, March 10th, 17, MMEX shares declined by -28.81% to $0.0042 on an average volume of 79.35M shares exchanging hands. Market capitalization is $3.98 million. The current RSI is 33.33

In the past 52 weeks, shares of MMEX have traded as low as $0.00 and as high as $0.01

At $0.00420, shares of MMEX are trading near its 50-day moving average (MA) at $0.0 and 200-day MA at $0.0.

The present support and resistance levels for the stock are at $0.0032 & $0.0060 respectively.




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