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Petrominerales Ltd PMGLF



GREY:PMGLF - Post by User

Comment by maxleverageon Oct 06, 2012 8:45pm
357 Views
Post# 20458023

RE: Anyone......

RE: Anyone......

Here are the facts on PMG:

Current stock price of $8-ish is approximately base 2P NAV - estimating about 45 M barrels left (consensus per all the analysts reports which I have read).   The market is not valuing the pipeline assets ($3.50 per share which is the $310 M cost base/ 88 million shares) nor any exploration upside.   When it was a $24 stock, the base NAV was estimated at around $12, so there was a lot in the market price for the exploration upside and presumably the pipeline assets ($3.50).

Some oil companies do trade at a discount to 2P NAV (80-90%) so some downside is possible if PMG sentiments continues to get worse.

However, image if they find all the 36 M barrels they think they could in the balance of 2012.  That would be 36/45*$8 = $6.40 in 2P NAV addition.   People would then get excited about the stock and start assigning some value to the exploration upside (another $2-3).   And maybe one day, they get some recognition for the pipeline assets.   This is why I think with a good hit, this stock could double on us before you know it.  

The above just goes to show how "explosive" the stock could be if they find some meaningful oil.

If you don't think they can find oil, better to sell.

I think the risk / reward is in our favour.  Of course, all the analysts loved the stock at $24 (when it was expensive - lots of exploration upside priced in) and had sky high targets.  Now they hate it and have low targets.  I think retail investors are better served buying it now a $8.

Sheshea (Peru) well results are due at the end of October (24 M barrel target).

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