VET deal"Any way you look at it, this was a sweet deal for VET".
VET paid $24.20 per boe of 2P reserves or $106,500 per flowing barrel. Netbacks of $60/boe. Producing 3750 boe/d. 16MMboe 2P reserves.
Price paid: $400 million or so. Very roughly in the PXT valuation ballpark if you scale it up. Multiply the price, production and reserves by 2.75, and you get PXT's $1.1 billion market cap, 10300 bpd of production and 44MMboe of 2P reserves. Lower production and higher reserves. If this was a 'Sweet deal for VET', then PXT would be a sweet deal for an acquirer as well. How about PTA?
With a market cap of $172.9 million, and $95M in cash at the last update and $35M in debt, what would PTA's assets, net of cash and debt be worth? Well the market currently values these assets at $172.9M - $95M cash + $35M debt = $112.9 million.
Using the price VET paid per boe of 2P reserves, and our ancient 5MMboe 2P reserve number, PTA's net of cash assets could be worth $24.20 x 5 = $121 million. But wait you say, PTA is producing almost double what the new VET assets are producing, and at higher netbacks as well. OK, VET paid $106,700 per flowing barrel. $106,700 x 6500 boe/d = $693.6 million.
Well, we can't rationally conclude that
PTA's net of cash assets are worth as much as $693.6 million. We can't rationally conclude that they are also worth as little as $121 million either... UNLESS you also believe that the 2P reserves will have decreased in the next reserves update.
Assuming for the moment that the market is always right, then shouldn't metrics with our 50/50 JV partner be relatively equal? Is Las Maracas not the best property for both companies? Why don't we have a look at the price per flowing barrel valuations for both companies?
(Market Cap + Debt - Cash) / Production Barrels Per Day
PTA: ($172.9M + $35M - $95M) / 6500 boe/d = $17,369 per flowing barrel
PXT: ($1015.4M + $56.5M - $8.5M) / 18400 b/d = $57,793 per flowing barrel.
Quite a discrepancy wouldn't you say?
If you prefer, have a look at price per 2P reserves (net of cash and debt)
PTA: ($172.9M + $35M - $95M) / 5MMboe 2P = $22.58 per boe of 2P reserves.
PXT: ($1015.4M + $56.5M - $8.5M) / 32MMboe 2P = $33.23 per boe of 2P reserves.
Again, quite a discrepancy. And it might get worse after our 2P reserves report is released, at least if we have an increase in 2P reserves anything like PXT's doubling of their reserves. If PTA's 2P reserves were to double to 10MMboe, then our price per boe of 2P reserves would fall to $11.29.
Clearly PTA is much cheaper than PXT based on these two metrics.
Clearly PTA would be very accretive to PXT in a takeover offer, even with a 30% to 40% premium with either metric.
I have no idea if PXT plans to make an offer for PTA in the near or far future. I do believe that based on these metrics, and on metrics of other companies being taken over, that PTA is just one darn cheap stock at this share price.
I hope this counters some of the mindless bashing and helps to keep it real for everyone. Yup, the share price isn't flying as high as PXT's is based on relative value. Yes, this is partly management's fault, and partly the fault of the seller(s?) who has/have been hammering PTA almost daily since we peaked earlier this year at .375.
It is what it is. If you love the value here, buy more. If you wish you were in PXT instead, sell your PTA and move on.
If you are just down, and want to whine about management, well, I guess you've come to the right place. Have at 'er. But if you are holding PTA shares while doing so, remember you are also hurting yourself.