Petro One Energy Corp CUDBF

The off take from today's POP news

[longshortman]

Well let me see…

Looks like the well was a modest success but no point running it at current oil prices, the water is too expensive to dispose right now.  It’s still a good one so they or a partner will bring it online when prices improve.  In the meantime it’s best to let it rest.  Stock has been soft for a while so no doubt this well’s baked into the cake.  Short story is no game changer in the company’s oil portfolio yet.

Good thing is Petro One’s 10-15 well at Milton continues to pump out dollars for the company and that should continue for a long time.  23 bopd light oil isn’t bad, they’ll still make money off this vertical.  Bromhead farmout continues to make money too. 

POP has cash in hand and no debt, so the company will be around for the long term.  The language “the Company continues to receive expressions of interest for its assets” tells me good offers are coming in.  They wouldn’t make statements like that unless there were real offers on the table.

All this makes me wonder what to do and how to play this thing.  I owned it before but walked when the Koreans did.   But now I’m thinking it’s actually a buy.  I look at it like a prospect generator that is cashflow positive.  It can either farmout oil assets or press them into production as the market improves.  It’s so beat up, the market is giving the reserves and land no credit, and clearly no one cares about this well.

The stock is cheap, oil is coming back, and it least it isn’t in Alberta, home of the 50% royalty regime and bloody NDP.  But the real potential here comes from the GSR shares.  It’s got 6 million GSR free traders in it and 7 million warrants.  That thing is just a born winner, I can’t remember anything like that since I started trading years ago.  You can just tell their promoters are going to put a run on it too.  Word on the street is they are going to shoot right down the throat of the Gold zones early, run the stock to the moon and then finance for a “second season” that will pump out results right through the winter and fall.  It’s Hades hot in the Yukon right now, so drilling is probably going to happen at any moment.  No doubt POP will harvest a boatload of cash when GSR goes on a monster run.  So POP looks underbought to me and it is a cheaper, risk-free way to play GSR and the oil prospects.  Easy to see how this thing can double or triple from here as that play keeps moving. 

Few people will see the logic in this but this stock has a habit of going on 2-5 bagger runs when people least expect it, just a bit of catalytic news and it lifts off for no good reason.  I’ve made money trading both, but POP has made me more, probably because it is so unpredictable.  So long it is now, expecting a 2-5 bagger in 2-5 months.  No need to check back with me, I’ll be around shoving it in everyone’s faces J

Remember I was also the guy screaming buy GSR when it was in the toilet at 5 cents in November…

Peace through superior firepower,

LSM