vRE: Jennings CapitalHere is the summary from the Jennings Capital Report.
https://www.jenningscapital.com/reports/PTA20110307CORWithdraws.pdf
PETROAMERICA WITHDRAWS FROM BLOCKS
COR-12 AND COR-14
Petroamerica announced today that it has withdrawn from
blocks COR-12 and COR-14, located in the Oriental
Cordillera Basin. The Company mentioned that this is part
of its ongoing portfolio restructuring announced on
January 24, 2011.
?? The original farmout required Petroamerica to pay 100%
of the first exploration phase commitments for seismic
and drilling up to US$18.5 million, to earn a 50%
participating interest in both blocks.
?? Part of the withdrawal includes the Company
surrendering to Green Power guarantees of
US$2.3 million and paying an additional amount of
US$5.5 million to Green Power.
?? Petroamerica indicated that the cost of the withdrawal is
significantly less than the work commitments and sees
the risks outweighing the rewards of the blocks, when
taking into account the size and new strategy of
Petroamerica.
Background. Blocks VMM-3, COR- 12, COR-14 and LLA-10
were acquired through Green Power Corporation S.A for
US$9.5 million on execution and by agreeing to pay up to
105% of the exploration budget for Phase 1. Prior to the
withdrawal, Petroamerica would earn a 50% working interest
in the aforementioned blocks. The total commitment on all
four blocks is estimated at US$43 million by the end of 2012.
?? Block COR-12 covers an area of 76,807 hectares and
has a best estimate of 16.5 MMBbl net resources from
two prospects, both targeting the Caballos formation.
?? Block COR-14 covers an area of 34,502 hectares and
has eight identified prospects, with three prospects
having a best estimate of 5.7 MMBbl net prospective
resources and the remaining five prospects holding
5.7 MMBbl of undiscovered resources.
Valuation. We have removed the portion of our ExNAV
calculation relating to COR-12 and COR-14, which
represented
.07/share and
.04/share of our previous
ExNAV of
.85/share.
?? Including the US$7.8 million in costs associated with the
withdrawal and removing COR-12 and COR-14 from our
valuation, our target price drops by
.10/share.
We reiterate our SPECULATIVE BUY recommendation on
Petroamerica Oil Corp. with a revised 12-month target price
of C
.75/share.