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ARPETROL LTD V.RPT

"ArPetrol Ltd is engaged in the exploration for and development and production of oil & natural gas, and also provides natural gas processing services for third parties in Argentina."


TSXV:RPT - Post by User

Comment by TheRock07on Sep 08, 2014 7:15am
141 Views
Post# 22914762

RE:RE:Next steps for RPT? What are the values of the alternatives

RE:RE:Next steps for RPT? What are the values of the alternativesGreat Summary and evaluations.

Just a few comments.

The Sale or Merger is still on the table.
There is one company that, if there were to be a sale, it would be the one.

And, that is Sipetrol which is the national oil company of Chile, with operations also in Argentina ( where it works closely with YPF ), Ecuador and Egypt.

Sipetrol Argentian SA provides 40 % of the gas which is processed at RPT's gas plant ( YPF takes the other 60 % ).

It operates in similar areas as RPT...Magallanes and offshore Faro Virgenes... and RPTs assets would be very complementary.

Sipetrol also has a subsidiary producing heavy oil in Eygpt.

Recall that all of our pro team have extensive experience in the Middle east including Eygpt.

In fact,Abdel Badwi founded and sold Rally Energy in 2007 for $900 million.
Rally was producing heavy oil in Eygpt.

Undoubtedly, Abdel knows the Sipetrol Egypt assets and management team quite well..from which might flow a deal in Egypt.

So, if there is a sale, it will probably be with Sipetrol.

Price ?

2j's estimate for the plant is very reasonable at $30 million.
Argentinian gas production is currently valued at about $20,000 per flowing barrel.

So, with 230 boe[er day, our production would be valued in the $4 to $5 million range.

2P reserves.
We have 8 mmboe, in 60 % of the FV concession.
RPT estimates that this amount will double, once the entire area is accounted for and considering that final production numbers nearly always exceed initial reserve estimates.

2J estimates $38 million which seems reasonable.

I will use $20 million, taking into account the drilling costs for 3 wells.
This will also include the onshore oil/gas concessions as well, so this is very conservative.

So, we have $30 m + $20 millin + $4 million = $54 million.

That is $2.35 per share USD or about $2.50 per share in canabucks.

Of course, the best deal would be to develop all of these assets but that entails risk and extensive dilution.

Almost certainly, RPT wont drill the offshore FV again, unless fully carried.

So, sale for over $2 per share is #1, with proceeds to acquire producing assets elsewhere.

#2 is rework up to 5 wells which should boost production to 1000 boepd, with a valuation of $20 million and JV the rest

#3 would be sale of all oil/gas concessions ( but retaining the gas plant) and then merging / acquiring downstream assets in Argentina ( processing plants/pipelines ).

Any of these should boost our share price to the $2 level.

That management are travelling to Argenitina in October indicates to me that a decision has already been made following what must have been extensive due diligence.

Buy on any weakness.
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