PTA currently not that cheap Like I keep saying PTA need to increases its 2P reserves.
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Oddly enough, after doing my own due diligence, what I came up with on the negative side was also a valuation argument! There is an angle through which Petroamerica is not cheap. This angle is the EV/2P ratio. This ratio is defined as follows (Source: Investopedia ):
The EV/2P ratio is an investment term that refers to the valuation of oil and gas companies. The enterprise value (NYSE:EV) divided by the proven and probable (2P) reserves shows what multiples the company is trading at. The enterprise value reflects the company's total value. Proven and probable (2P) refers to geologic reserves, such as oil, that are more likely than not able to be recovered. This is determined through geological and engineering modeling.
The ratio thus compares the company's value to the value of its proven and probable reserves. Petroamerica's EV is around $160 million, whereas it has 10 million P2 reserves. This gives it an EV/P2 of $16.0. This, in turn, is not incredibly cheap - indeed, it's right around where its average peer trades. For instance, in this recent Regan Pearson article over at Motley Fool, we have the following table:
As we can see, Petroamerica trades right around the same EV/2P ratio as all of these peers.