I bought this at just over $16 after the water problems caused shut in of some of their wells and of course the market then overcompensated and created a nice buying opportunity. I did take a sizable position but did not really load up because I am a little concerned by the management and BOD and the connection to Petrobank and Petrobakken. I got stung some with Petrobakken and their mis-management left a bad taste with me. However PMG is an early entrant in South America with huge consessions and has very much going for it....especially at half its 2011 share price of ~42. It is both a growth and value stock at this share price level and with their exploration program for this year could have huge upside in addition to regaining some altitude as sentiment returns to the south american Oil and Gas sector. They have all been hit hard.
Petrominerales Ltd. - PMG CN, target price C$35.00/sh, BUY, Ryan
Savage
As with all of the Colombian listed E&Ps, PMG has faced issues through 2011 that
have hampered operations including field disruptions and the general slow down in
licensing and permitting (and therefore drilling) in Colombia. As PMG has a high
deliverability/ high decline production base, they are more exposed to this risk than all
other E&Ps in Colombia in our opinion.
We believe PMG will have a reasonably active 2012, with several key events that we
believe could be positive catalysts for the stock. This will include drilling their 1st
exploration well in the deep foothills (Block 25). For the deep foothills prospects, we
carry 35 mmb of risked exploration resources, or $3.78/sh. PMG has talked about their
heavy oil prospects for years, but with stratigraphic wells that have confirmed the
presence of hydrocarbons, we are becoming more optimistic (we carry 45 mmb of
risked exploration resources equating to $2.13/sh in our NAV). We believe an
announcement regarding the flow rates, resource size and ultimately a potential
commercial development could represent not only a new cash flow source, but also a
more stable and predictable production base, which we believe could reduce updateto-
update volatility within the stock. Despite the recent pull back in share price, PMG
remains one of our top conviction names.