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Gem of a share this one at the moment. Steady rises everyday with the help of Brent prices. FCF rising all the time and with success at the drill bit what is not to like. Local residents appear happy at the moment which is always a bonus. New Govt don’t appear to be interfering with PATAL.
Re-rate is surely on the cards especially when the herd decide to make an appearance when the market realise what a ‘cash cow’ PATAL’ is becoming. No chance of top slicing as they say, I’m going to let this one run.
Honestly I see no reason to top slice anything here the next year. Once Bretana Capex is done and we have 20.000 BOPD and no capex... just do the math. FCF will be greater than current market cap every 5 - 6 months. So...
Top slice? Maybe at 1 CAD. Maybe at 1 £.
top slice at 50p! Me too!
Let the side down a bit @ 08h00. Added 1k to JSE but have left PTAL unmolested.
Investment fundamentals are very similar.
I may top slice here @ 50p.
Good news oil above 80 ! I bought 20000 yesterday silly selling 25000 other day my nerves got to me . One way to lose money ??
Now above 80!
And production still on the rise :)
I wonder what FCF would be in 2022 & especially 2023 @ 80.
$78 (b)reached.
Was diverted by TXP news so have added there.
Mildly surprised we didn't do better today.
Good session across the pond yesterday, top up time I think! Gla bd
Thanks, Sturm.
Shall clear out of ENQ and bring the pennies here. SP could quite easily settle here @ 21p tomorrow.
Have gone through the warrants' issue several times without reaching a clear-headed conclusion.
I also keep a weather eye on GTE (Guidry) involvement, never sure what their next step will be. His predecessor, Dana Coffield, left under something of a cloud owing to Peruvian misadventure. Subsequently it was decided they had no future in the country preferring to focus attention on Colombia. So will they change their tune when further huge reserves are discovered?
My recall has faded in the mists of time but see -
https://www.grantierra.com/press-room/article/156-gran-tierra-energy-announces-oil-discovery-in-peru
I'll try another search on Bretaña Norte Exploration Well because of a suspicion we have a monster field stretching to the south.
So... it's not all ranting. Read the last 2 lines first if the wall of text is too much.
Re. the investor warrants - TBH I think the offer was much to generous to II's and retail got screwed. "The Placing was significantly oversubscribed" - indeed. If something is too easy to sell it's probably too cheap. 70,601,945 warrants @16p = 11,3 mio. £ / 15,5 mio. USD. Quite generous on top of the 30p top we had just months before. And after a (much too early) dividend payout -(instead of just strengthening the balance or better yet, a hedging plan).
So now we have a dilution "overhang" for a 15.5 mio. USD cash injection we don't really need. And the 100 mio. bond seems to have been placed without the warrants in mind.
All in all, I'm not very impressed with the financial playbook. IMHO the best thing they can do is to just buyback up to 70 mio. shares /spend those 15.5 mio USD on shares AND keep them in the vault until the warrants are exercised. Those money will come in + they're still restricting quite a bit for a potential acquisition.
If warrants are exersiced @ SP = 20p, then we (in theory) would get perhaps a 0,3p - so that's just fine (ofc. they should still spend that cash on share buybacks IMO). But if warrants are exercised @ 50p we get a 5% drop at least + 9% less dividend per share due to dilution.
When all warrants (another 42 million performance warrants) are exercised we're looking at 12% dilution in total. IMHO good governance is to at least cover warrants with a share buyback.
To put those 912 million fully diluted shares in perspective they had 671 million when I bought the first @0,25CAD mid 2019.
But of course #PTAL is absurdly cheap (regardless of dilution) and investors clearly don't understand where the reserve update is going (Bretana alone will probably double up in the next 2½ years). Capex is also "mature" meaning we have a huge tax asset (worth more than half of the market cap) and not that far to go before the field is fully developed AND of course a river of cash incoming at this Brent price.
Downside is ofc. it's Peru (corrupt and with social disturbances) + there's perceived uncertainty with Castillo in charge (of not so much, due to Peru at least being a power-balanced democracy) - that's just minor noise to me, since Peru need the oil, as a net importer and a 3rd world nation.
So #PTAL should trade with a discount.
Look at the note on page 9 in the latest presentation: "Using the December 31, 2019 NSAI price deck on the December 31, 2020 NSAI reserves, holding all other assumptions constant, the year-end net present values (before tax) discounted at 10% would increase by the following
approximate amounts: 1P - $250 million, 2P - $480 million, 3P - $780 million surpassing the December 31, 2019 before tax net present values"
That is - INCREASE - the eg 2P 830 million USD NPV (before tax) with 480 million.
Silly cheap.
Sturm - re: your last note . . . what are your thoughts on the warrants and potential overhang? You have drawn attention to
them over the past months.
I am none too sure of the effects. Hence I tend to be conservative, not unlike Manolo in his briefings. I have yet to come across a CEO who treads as carefully as he does. I again went through his conference call comments (Aug 17) and lean towards the idea of a 20-well Bretaña programme becoming bigger than he has stated. Also Constitucion is now in the mix.
On the ground he is referred to as "Brother Manolo" when onsite discussing matters with the Kukuma locals. He is a hands-on bloke.
(Brent @ $77.22)
They surely need to update their presentation from 50 - 70 USD - maybe 10 USD increments from 50 - 90. I wrote that to Doug & Manolo 3 months ago :D
I hope Manolo is too busy drilling (planning) to answer.
Note the huge number of investor warrants. A lot of cash coming in at some point from those - it's a tricky overhang.
Brent @ $76.77 . . . a 12-month high.
Looking back, I had the opportunity to add considerably more @ 14.70 but did not have the cojones. Can possibly do so with profits from elsewhere. ///// Bid is slowly on the rise . . . 19.8875p when I last checked.
>NB. Lot #95 is going to get bigger when exploration commences to the south. Manolo is also sounding more confident with Constitucion