When a company such as MPET conducts a reverse share split, it is usually because shares have fallen to a lower per-share pricepoint than the company would like. This can be important because, for example, certain types of mutual funds might have a limit governing which stocks they may buy, based upon per-share price. The $5 and $10 pricepoints tend to be important in this regard. Stock exchanges also tend to look at per-share price, setting a lower limit for listing eligibility. So when a company does a reverse split, it is looking mathematically at the market capitalization before and after the reverse split takes place, and concluding that if the market capitilization remains stable, the reduced share count should result in a higher price per share.

Looking at the MPET split history from start to finish, an original position size of 1000 shares would have turned into 125 today. Below, we examine the compound annual growth rate — CAGR for short — of an investment into MPET shares, starting with a $10,000 purchase of MPET, presented on a split-history-adjusted basis factoring in the complete MPET split history.

About MPET

Magellan Petroleum is an independent oil and gas exploration and production company, focused on the development of liquefied natural gas projects along the U.S. Gulf Coast. Co. conducts its operations through two wholly owned subsidiaries: Magellan Petroleum (UK) Limited, which consist of various exploration licenses in or adjacent to the Weald Basin located onshore and offshore southern England; and Magellan Petroleum Australia Pty Ltd., which consist of NT/P82, an exploration block in the Bonaparte Basin, offshore Australia, and a 1.9% ownership interest in Central Petroleum Limited as of Sept. 9, 2016. As of June 30 2016, Co. had total proved reserves of 0.8 million barrels of oil. According to our MPET split history records, MPET has had 1 split.

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