I just got off the phone with the Petroamerica Oil Corp. (TO:PTA) CEO Ralph Gillcrist in Calgary. The company has been under intense selling pressure in recent weeks, after having declined approximately 75% since September.
Clearly, investors in PTA were caught off guard in the oil price crash, myself included.
Ralph’s message was Petroamerica has a strong balance sheet and asset quality.
The company has approximately US $60 million in cash and CAD $35 million (approx $28 million US) in debt due in April. The company had previously announced it looks to refinance the facility.
The company is guiding 5400 barrels per day production for the first half of 2015 and is deferring its growth plans until oil prices recover.
PTA is substantially carried for two high impact wells in the Llanos Basin that Parex will drill in the first half of the year. Both are 50% working interest to PTA.
Year end reserves and end of year financials will be released by mid April.
It’s all about cost saving measures now, Ralph says. The G&A has been reduced by a third already and they intend to decrease it further. They are working to renegotiate service contracts. Transportation and diesel costs are coming down.
The company’s Llanos Basin production should have sufficient margin down to the mid $30’s, with Putomayo production likely costing $40-$45 per barrel (my estimates). This is inclusive of royalties.
They are selling their production at a slight discount to Brent.
Management has their head down and are talking to analysts. They will likely start pounding the pavement more aggressively in March. Nobody knows who the big seller from RBC is over the past couple weeks, which has put a lot of pressure on the stock.
I’m concerned the selling is startling retail investors. Additionally, some investors may have bailed on Petroamerica for its tempered 2015 growth plans.
I never thought I would see the day with PTA at $0.105, as it was this morning. In the past hour, the shares have recovered to the $0.12 range, giving the company an approximate enterprise value of $55 million ($95 million CAD market cap less $75 million cash plus $35 million debt). All figures approximate.
I am a shareholder in the company and have averaged down recently. Always do your own due diligence as this work may contain errors.