RE:Great Quarter..Net earnings of $1.6 million and strategic re A very strong quarter in which working capital increased to $1.4 million relative to negative $800,000 at exit 2013.
The largest contributor to this improvement comes from the company's success in reaching settlement agreements with the outstanding vendors from its 2012 drilling program.....clearly, RPT was able to get a great deal in this transaction. Net earnings increased to $1.6 million or about $0.003 per share versus a loss of $300,000.
Fund flows increased to $850,000 from a negative position of nearly $700,000 in Q4/13.
RPT is now fully sustainable in its capex requirements.
Natural gas prices continues to increase.
More importantly, the company is quickly moving forward with its restructuring/strategic review.
This will enable ArPetrol to develop a go-forward strategic plan that will allow management to look at and finance growth opportunities in Argentina and elsewhere when they become available.
For the initial step of the corporate restructuring, the board of directors of ArPetrol has determined that it is in the best interests of the company to implement the consolidation of the issued and outstanding ArPetrol shares on the basis of one new post consolidated shares for every 25 pre consolidated shares.
This is a great move as it will enhance marketability of the shares, increase share value and will facilitate future financings.
Share consolidation has a very positive impact on share value when there are tangible assets under pinning the market cap.
As an example see V.WED.
Such is the case here.
With $15 million in annual sales and cash flowing $3.5 million per year from its current production and income from its gas processing plant, along with $115 million in 2P reserves ( 10 % disc ), the current share price of 1.5 cents ( Market cap of less than $10 million ) does not do justice to the intrinsic value.
With a solid balance sheet, at 7.5 times cash flows, fair value would be about $25 million or 4 cents preconsolidated.
But, then we have 2P reserves of $115 million which can now be monetized into a 3 well program, with each well producing about 1200 boe/day.
Based on what we have seen here today, the initial share price ( post consoldiated ) should start at about $1 or a market cap of $23 million.
They will need about $12 million to complete the initial Virgines well, so one might expect an initial fianncing of about $15 million at $1 or more per share.
Of course, the Virgines field may be sold and producing assets elsewhere could be acquired with a combination of cash and equity.
This consolidation opens many options for future growth.
Load up at prices 4 cents and less..