Petroamerica added to TD's Action List Petroamerica Oil Corp.
(PTA-V, $0.31); 12-Month Target: $0.55
Jamie Somerville
We added Petroamerica to the Action List on June 2, 2014. Petroamerica is a
Colombia-focused producer exploring and developing conventional light oil
accumulations, and it is in the process of acquiring the smaller Suroco Energy
(SRN-V). We are attracted to Petroamerica’s relative valuation (particularly on
EV/DACF), high netbacks, and potential for free cash flow generation, as well as
its string of high-impact exploration wells that are planned for the next six-to-nine
months. The company is planning to spud seven high exploration wells before
year-end 2014.
We expect Petroamerica to start trading more in line with its larger peers as the
company grows production to over 8 mBOE/d following the acquisition of Suroco,
and potentially starts operating an increasing number of its assets. Lastly, we
expect the closing of the Suroco acquisition to be followed by a stock
consolidation and potential graduation to the TSX in late 2014, which should also
make the stock more investable for a number of institutions.
ciao vito