PMG issued an operations update today. The stock is down on the announcement of several exploration well dry holes. Like GTE, PMG is an exploration company that is testing a lot of high risk / high reward exploration prospects. IMO the market overreacts to these dry holes. Also, the Canadian based companies trading on the TSX and only on the pink sheets in the U.S. have been hammered by this risk-adverse market.
http://finance.yahoo.com/news/Petromine ... 7.html?x=0
I am updating my PMG forecast model and I will post it under the Sweet 16 tab this afternoon.
Petrominerales (PMG)
Petrominerales (PMG)
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Petrominerales (PMG)
CIBC on PMG:
Petrominerales Ltd.
Downgrading To SP: Two Wells D&A On Block 31; November Production Down 5% M/M
Petrominerales provided an operational update on exploration activities in Colombia and Peru. There were multiple negatives in the release, the most disappointing of which includes the non-commercial results from two wells (Socaco-1 and Caspio-1) on Block 31, NW of the Corcel trend.
Two additional wells are drilling on Block 31. On the Corcel Block, PMG had drilling problems in Cobra-2, but the well was sidetracked and should be on production next week. In the Central Llanos, the Gaita-1 stepout well was dry. November production was 34,193 Bbl/d, down 5% from October.
We have updated our model, removing value for eight Corcel locations and downgrading our Q4/11 and 2012 production forecast. Given poor results from Block 31 and the general market conditions, we believe the market will seriously discount the upside that the company is targeting.
As of 12/7, we are reducing our rating from SO to SP and have reduced our NAV-based PT from $34.50/sh to $29.25/sh. In the near term, we believe that the share price will struggle to get above $20/sh as we believe shares will trade just above the $16/sh core NAV until momentum turns positive.
Petrominerales Ltd.
Downgrading To SP: Two Wells D&A On Block 31; November Production Down 5% M/M
Petrominerales provided an operational update on exploration activities in Colombia and Peru. There were multiple negatives in the release, the most disappointing of which includes the non-commercial results from two wells (Socaco-1 and Caspio-1) on Block 31, NW of the Corcel trend.
Two additional wells are drilling on Block 31. On the Corcel Block, PMG had drilling problems in Cobra-2, but the well was sidetracked and should be on production next week. In the Central Llanos, the Gaita-1 stepout well was dry. November production was 34,193 Bbl/d, down 5% from October.
We have updated our model, removing value for eight Corcel locations and downgrading our Q4/11 and 2012 production forecast. Given poor results from Block 31 and the general market conditions, we believe the market will seriously discount the upside that the company is targeting.
As of 12/7, we are reducing our rating from SO to SP and have reduced our NAV-based PT from $34.50/sh to $29.25/sh. In the near term, we believe that the share price will struggle to get above $20/sh as we believe shares will trade just above the $16/sh core NAV until momentum turns positive.
Re: Petrominerales (PMG)
I agree with their assessment. All of the Canadian based E&P companies have been hammered this year. Primarily, because so many risk adverse U.S. investors have pulled out of the Toronto market.
PBG and PMG will be dropped from the Sweet 16 on January 1st and I'm taking a hard look at GTE and TGA. All four have solid fundamentals but I thing the headwinds are too strong in the TSX right now.
PBG and PMG will be dropped from the Sweet 16 on January 1st and I'm taking a hard look at GTE and TGA. All four have solid fundamentals but I thing the headwinds are too strong in the TSX right now.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group