More Giustra (He is going to make it a ten BAGGER (REALLY)
Frank is referring to the company’s successful acquisition of Suroco Energy earlier this week, which gives Petroamerica exposure to the potentially repeatable N Sand exploration fairway in Colombia’s Putomayo Basin. The takeover was hotly contested between Petroamerica and Vetra, a private equity backed firm that made a premium, all cash offer to Petroamerica’s bid, but Suroco shareholders elected to take the upside of Petroamerica stock.
“Now they forecast 30,000 barrels over the next couple years.”
The natural resources investor believes the projection is realistic based on management’s track record and is calculating what the company could be worth.
Petroamerica’s market cap today is $295 million, while peer Parex Resources is worth nearly $2 billion for 22,500 barrels per day (albeit with a longer reserve life and more diverse asset base).
“The way to get 10 baggers is not by waiting until they have achieved 30,000 barrels.”
Petroamerica is not Giustra’s first Colombian oil and gas venture. In 2008, he seeded Serafino Iacono’s Pacific Stratus Energy, with $5 million in early stage capital. Today that firm is Pacific Rubiales Energy, Colombia’s largest non-state owned oil and gas firm, worth $6.4 billion.
“I like to focus on something and make sure it’s worth my while. Wheaton River was the same idea; a great management team with nothing when we started.”
Wheaton River, which Giustra and Ian Telfer took over in 2001, went on to become Goldcorp, and spin out Silver Wheaton, creating tens of billions of value for shareholders over the decade that followed.
“Waiting for the company to deliver on its promise of 30,000 barrels per day is the job of big banks analysts,” Giustra says. “Mine is to make most of the money before they do.”
Courage might also have something to do with it, here’s Frank doing high altitude military parachuting earlier this year just outside of Memphis, TN.