Petroneft Resources Share Discussion Threads

[steelwatch] 09/7/2014 13:03

Don - that's what it says in the Annual Report.




page 8

[steelwatch] 09/7/2014 12:50

Thanks Db.

[dbarr0n] 09/7/2014 12:44

The 3D seismic and processing on licence 67 will cost Petroneft approx $ 2.4 million and the drilling of L-9 on licence 61 cost about $ 2 million so about $ 5.5 million remaining..

[steelwatch] 09/7/2014 12:21

Db - there was also c.$10m cash left over after paying off Macquarie and Arawak. Presumably they will have settled up with the drilling contractor for West Lineynoye No. 9 and, possibly, the 156 km2 of 3D seismic data acquired across the Ledovoye and Cheremshanskoye oil fields earlier in the year. Any idea how much of that is left?

[dbarr0n] 09/7/2014 11:52

2P reserves on licence 61 are approximately 116 million barrels, of which about 70% is undeveloped.
(Total reserves and resources 508 million barrels.)
50% = 58.5 million barrels which Petroneft received (excluding the $ 5 million production target bonus) $ 57.5 million or approximately 4.75p per share based on 708 million shares.

Petroneft now have after farm out deal...
2p reserves of 72.5 million barrels between licence 61 & licence 67.
Total reserves and resources 368 million barrels.
Production of 1,100 bopd.
No debt.
OIL will be covering 50% of administration costs from here on and spending $ 45 million on exploration & development after which OIL & Petroneft will be sharing all costs 50/50.

[rcturner2] 09/7/2014 09:58

No. I sold at 7p and would only buy much lower. I am pretty overweight in the resource sector at the moment and really need to sell rather than buy lol.

[steelwatch] 09/7/2014 09:50

The thing is RCT, which ever way you spin it, the OIL deal got us out of the condemned cell and onto a pathway to recovery. Have you bought back in yet, LOL.

[rcturner2] 09/7/2014 09:18

DBG, I actually believe that the value of the Oil India deal was even lower. It was about 4.5p, valuing the company at 9p. They way that PTR present the figures is misleading as they are counting the expenditure by Oil on Oil's half of the license in the total value, which is dishonest in my view.

[thetoonarmy2] 09/7/2014 09:02

Denis. Of course 35p is what dreams are made of but I could see a take out between 12 & 15p just now.

[thetoonarmy2] 09/7/2014 08:51

See the MMs are playing games on PTR this morning they want 6.5p to buy yet show 6.3p if anyone wants the best way is to buy on CFD with iG index its 6.3 to buy and you only put up 25% for margin

[denis black gold] 08/7/2014 23:26

I agree 35p is a ridiculous price target at the moment. Lets not forget that 50% of all of L61s present and future resources, plus 50% all production and all the countless tens if not hundreds of millions spent by PTR in development and infrastructure were sold to Oil I for "wait for it" 6 odd pence a share....!!!!! And that we are told was the "best" offer on the table... I wouldn't like to have seen the worst...!!! Production now BACK to 2,100 barrels per day and I guess still falling. I mean the 170 members of staff cant even maintain and service the few producing wells PTR currently has let alone "maybe" more to come..... Reality check needed guys.....

[ravin146] 08/7/2014 22:36

Sean well said, people getting a bit carried away here. The drill will do the talking from now. As for the 35p valuation, well ridiculous things can happen..look at tonight score!

[paulmurphy777] 08/7/2014 13:55

the bid moved on little volume which makes me think a larger order is in the market

[seangwhite] 08/7/2014 13:47

JY

With only about £13k of shares traded today you think its the 'big investors' trying to 'pull the price down' I do not see it that way.
The price of most E&Ps is rock bottom at present, PTR have a drill about to start and if it results in good news the share price will move without anyone manipulating it.

GLTA

[jyoti1] 08/7/2014 13:07

Now the big investors are trying pull the price down so the small investors get panic ..... Small investor, Please don't sale your share

[rockin robin] 08/7/2014 12:25

Not brill today. Maybe it'll make 35p....by close of play.

[seangwhite] 07/7/2014 23:20

RCT - I agree with you on the value of in ground oil being too high at the present time.The whole sector is a 'valuation' disaster and this hopefully cannot last forever.GLTA

[rcturner2] 07/7/2014 21:06

The in the ground valuations are total rubbish, so can't take that seriously.

[carlo sartori] 07/7/2014 20:42

I'd love to think you were right gavinbell - it is a MUCH richer valuation than that given by Davy or Goodbody.

Carlo

[gavinbell] 07/7/2014 11:51

wexboy new target after farm out

35p

wexboy.wordpress.com/2014/07/02/tgisvp-end-h1-2014-snapshot/#more-9697


Well, I've had plenty of Petroneft questions & debate from readers in this post (see comments) & others! Now we've had a fund-raising & a 50% farm-out of Licence 61 to Oil India (OINL:IN) – and possibly reached an inflection point - an updated valuation's clearly warranted:

As of June 25th, total net outstanding debt was $24.9 million (from Arawak & Macquarie Bank). Which looks about right, as year-end debt was $30 M & cash was fairly minimal – the subsequent debt reduction was essentially funded by the net 4.8 M raised from the March placing. To this we can add the upfront farm-out payment of 35 M to be received from Oil India. Unfortunately, this is offset by a substantial dilution in asset value, with Licence 61/67 reserves reduced to 11.3 M of 1P & 72.2 M of 2P barrels of oil – which we'll value at my usual 'in-the-ground' $10 & $5 per proved & probable boe of reserves:

($35 M Farm-Out Cash – 24.9 M Net Debt + 11.3 M boe Proved * $10 + 61 M boe Probable * $5) / 1.7107 GBP/USD / 707 M Shares = GBP 35.3p

So, Petroneft continues to look massively under-valued..!? OK, I know somebody's dying to talk about Russian political risk, domestic Russian oil prices, the implied value of the Oil India deal, etc. Let's skip that debate – note the farm-out was a totally distressed deal, my in-the-ground values are 100% valid in a global context (and I believe in the long-term power of convergence, smuggling, arbitrage, call it what you will), and (most importantly) my valuation incorporates a mere 20% of the company's post-deal 3P reserves & exploration resources.

There's also the cash situation – as PTR investors have painfully learned, cash (or lack thereof) is often far more relevant to market valuation & sentiment than underlying asset values. But what's been overlooked in the past couple of years is Petroneft's generation of 8 M of operating cash (on average) a year. Which actually translated into 3.6 M of free cash flow before interest expense (and 0.9 M after interest expense) in 2013! Now, we should see a reduction in operating cash flow (at least initially, due to PTR's reduced stake in Licence 61), but the elimination of 3 M odd of annual interest expense should provide a decent offset. And Petroneft now has another 45 M on tap from Oil India for Licence 61 exploration & development expenditure (which doesn't feature in my valuation).

If management exercises some prudence, it's reasonable to assume the company can remain cash flow positive & debt free going forward, while Oil India funds a steady increase in production & (ideally) reserves. [NB: Plus we still have an activist, Natlata Partners, on the register with a chunky 14.75% stake - hopefully, they're in for the long haul & will continue to hold management's feet to the fire]. On the other hand, the share price still seems to be painting a very different picture..! But when a chart looks like this, the market will often hate a company & its share price long past what seems like an obvious inflection point:

PTR Chart

After enduring such a decline, many investors (new & old) can't even stomach the thought of buying 'til the shares rally at least 100% – then gradually excitement, conviction, greed & momentum all start kicking in! My own portfolio holding in PTR was never very large (fortunately), and now amounts to a mere 0.6% – I've yet to decide if a value investing perspective's at all useful in determining whether I should add to this position...

Price Target: GBP 35.3p

Upside/(Downside): 442%

[rcturner2] 07/7/2014 11:37

Looks like a triangle forming on the chart, should be a breakout up or down shortly.

[woodpecker25] 07/7/2014 11:26

Much more likely to be MacQ selling, rather than Natlatla.

[spudders] 07/7/2014 09:07

EXI on the move, maybe the sentiment is going positive on Russian oilers at last.

Slow and steady rise until well results will do for now.