Petrominerales Ltd PMGLF

RE: RE: RE: RE: RE: RE: RE: bottom out?

[maxleverage]

Sorry, I don't have a "number for you" as to what the stock is "worth".    

I am a believer that they have a great land package, high net backs, and pipeline assets.  If they find some meaningful oil, the stock will explode to the upside.

However, the $200 M tax dispute scares the hell out of me.   The matter is not bad enough to bankrupt the company (the debt they have now is convertible debentures so can be converted to equity, plus they have a $250 M undrawn credit facility), so they can pay for the tax hit should they lose.  However, the implications of another $200 M of debt to the market cap will be terrible.   $200 M / 85 million shares = $2.35 per share more debt (and therefore less NAV).   At a $6.50 share price, that is a lot of value to potentially lose in one day on a bad outcome to the arbitration.   Thus, I personally would only take an overweight position in this stock after the tax dispute is settled (not until Q3 per management - my bet is that it will be settled before then).