MMEX Resources Corp (OTCMKTS:MMEX): A Different Perspective

Over the last few months, two of my colleagues here at Insider Financial have delivered scathing reviews on MMEX Resources Corp (OTCMKTS:MMEX). I thought I’d take a look and see what all the “hoop-la” was about, and possibly offer a different perspective. After closely reviewing, and confirming, the work of my fellow writers, Alex Carlson, and Jarrod Wesson, I categorically concur with all the information the Alex and Jerrod put forth in their articles. However, where my colleagues take a “Buyer Beware” posture, I offer a slightly different conclusion, of which I will make a case for.Before I do, a quick background on the Company, MMEX Resources Corporation used to be focused on the exploration, extraction and distribution of coal, but in April 12, 2016 the company changed its business activity to the exploration, extraction, refining, distribution of oil, gas, petroleum products and electric power. The name of the company was also changed from MMEX Mining Corporation to MMEX Resources Corporation.First, I will start off by echoing my colleagues with regard to MMEX Resources’ financial statements, SEC filings, and corporate structure. All of which fall firmly into the “Highly Questionable” category, and fail miserably in passing the proverbial “smell test.” That being said, I’ve always made it a point to be as objective a possible when conducting analysis on a company. As challenging as it may sometimes be, (and in this case its extremely challenging) I nonetheless make an effort to examine all the “pros and cons.” My colleagues do a great job of pointing out, in detail, all the “cons” associated with MMEX, and there are many. But none of their articles offered so much as a morsel to place in the “pros” column. So I will indulge in an attempt to find a “silver lining.”At the center of the controversy is the question of whether or not MMEX Resources can deliver on its objective of building a $450 million crude oil refinery in the Permian Basin near Fort Stockton, Texas. Let’s, for the sake of argument, examine the question: Is it a good idea to building a $450 million crude oil refinery in the Permian Basin near Fort Stockton, Texas. I’ll start with the big picture and zoom in. For starters, the energy sector in the United States is on the rise. President Trump campaigned on the promise that he would re-invigorate the fossil fuels and coal energy sectors. He’s delivering on that promise as exemplified by the approval of the Keystone Oil Pipeline, the dismantling of the Environment Protection Agency (EPA) and its regulations that are unfriendly to the oil and coal industries, and most recently by withdrawing the U.S. from the Climate Change Paris Accords. As a result, the oil industry is now in a growth mode. According the U.S. Department of Energy, U.S. crude oil production averaged an estimated 8.9 million b/d in 2016. U.S crude oil production is forecast to average 9.3 million b/d in 2017.Now let’s zoom-in to oil refineries in the United States. The U.S. Department of Energy also cites that:

The newest refinery with significant downstream unit capacity began operating in 1977 in Garyville, Louisiana. That facility came online in 1977 with an initial atmospheric distillation unit capacity of 200,000 b/cd and as of January 1, 2016 had capacity of 539,000 b/cd.

This means that once completed, the Pecos County refinery will be one of the first significant oil refineries built in the United States in more than 40 years.We’ll now zoom-in closer to the Permian Basin near Fort Stockton, Texas. The 250-acre plot of land on which the refinery is to be built on is located 20 miles northeast of Fort Stockton, Texas, near the Sulfur Junction spur of the Texas Pacifico Railroad. The Company intends to utilize its connection to EXISTING railways to export diesel, gasoline, and jet fuels; liquefied petroleum gas; and crude oil to western Mexico and South America.From what we’ve examined so far, we can conclude that building a $450 million crude oil refinery near Fort Stockton, Texas may not be such a bad idea after all. Thus, the problem with MMEX is not that it has a flawed product with no future, (i.e. CDs or fax machines) for which I would also take a “buyer beware” position. The problem is the integrity of the company. If this was a project that a company like Exxon was executing, there would be no problem.So now let’s examine if MMEX is making good on its promises. While much of the press releases are sprinkled with words like “intends to,” or “subject to,” there are a few tangible event that indicate some legitimacy. On Feb. 20, 2017, the Pecos County Land Purchase and Sale Agreement for 500 acres was executed. The sale of the land is now in process, and the Pecos County Land site survey that is part of the process has been completed as of April 26, 2017. Most recently, on May 17, 2017, MMEX opened an office in downtown Fort Stockton, Texas, complete with Ribbon Cutting Ceremony and all. Even the local TV news (News9) broadcasted a feature story highlighting the project on March 12, 2017. Other events have taken place, but none as visually evident as these. So now the question of whether or not this is one big “pipedream” remains. My colleagues make a very compelling case that is very difficult to dismiss. Nevertheless, in light of the above-mentioned analysis, a careful and objective cost-benefit analysis dictates that consideration be given to MMEX Resources Corp. Let’s consider a “What if” scenario. What if tomorrow we wake up from this “dream” to a press release that MMEX has acquired its necessary permits, followed by another press release that the Company has secured the needed financing for the project, followed by a third press release that the Company has broken ground on the construction of the refinery. This changes everything. And however unlikely you may think this is, it is not outside the realm of possibility, especially when you’re talking about Texas and oil. At the current stock price for MMEX of $.0090, the potential upside if the “dream” becomes a reality far outweighs the risk to the downside if Alex and Jarrod are correct and the Company self-destructs.I’m definitely not advising anyone to go out and load up on MMEX stock, but MMEX CEO Jack Hanks is scheduled to speak at the 9th Annual Southwest Energy Summit June 13th, 2017 on the development status of the Pecos County Refinery project; prudence would dictate that MMEX be put on the radar screen at least until then to see what Mr. Hanks has to say. We will be updating our subscribers as soon as we know more. For the latest updates on MMEX, sign up below.Disclosure: We have no position in MMEX Resources Corp (OTCMKTS:MMEX) and have not been compensated for this article.