Member Info for Brasso3

If they cannot drill 1 or 2 successful wells at PF and EV then we may as well shut up shop. This is as low risk as it gets in O & G development. I would forget about Paraguay and hope they pull a rabbit out of the hat at some point. The main objectives for me in 2020 are to reach 4000 BOEPD in July and then have 1 (not 2) successful well causing production to peak at 4500 BOEPD.

Interesting RNS especially regarding Paraguay. Are PPC the most unlucky company on the AIM market?

The two wells in Argentina should bring some near term interest. $4.5m for a potential 1000 BOEPD looks like sensible risk reward.

1m trade at 11.75p (£117k) seems to have changed the direction.

That must be the last of the 13m shares IMO.

40m volume in the last 4 trading days.

1.5m sell at 1.6p (£24k) gone through. Still think Schroders are not offloading?

It might be a simple question but its not a sensible one. I do not understand the logic behind it? Secure financing is dependent on P2 reserves, production, cash etc. Why would Trafigura put its assets up as collateral so PPC can get into more debt? We already have 25m in P2 reserves so we should be able to get finance against that. The problem is of course which international bank would lend to someone where all of their assets are in a basket case country like Argentina?

*now have another new strategy

I agree. If we go back 3 years we were looking to tap into our large P2 reserves at PG and they were targeting 1500 BOPD from that asset. The Dos Punitas horizontal well was expected to come online at 500 BOPD. We were sold the story of easy cheap expansion at PG and yet we have not touched it in years! Similar story with Paraguay where PL said we had found a hydrocarbon system yet no farm in interest in 5 years. It feels like we keep being deceived and when a new strategy is implemented we should just forget about what we have been previously told.

What the hell has happened to Jefferson island?

Its so frustrating and I feel we will not have another new strategy with Trafigura on board.

No I do not think that will help PPC.

I think Trafigura are our customer in Argentina and during the Covid19 crisis they have turned the screw. They knew that we were in trouble with $20m debt if they refused to take our oil and gas at their refinery we would have been in deep ****. Most other local refineries were closed during April and May. They have been gifted shares at 1.85p and maybe forced PL to convert debt to equity at the same time.

The positive case here is that PPC has P2 reserves and production so it hard to imagine further downside. I do not think the Argentine assets will ever be valued the same as equivalent assets in other parts of the world. I am hoping the next acquisition is outside of Argentina as diversification is key to improving the value of the company going forward. Having Trafigura on board is positive but the dilution at 1.85p is now. PL will not have the freedom and control he has been privileged to in the past now and Trafigura will be able to block any bad moves/ decisions. The blue sky remains with Paraguay and the main reason I stayed invested here. Although I do not expect drilling anytime soon.

When looking back at PLs success at IEC you cannot overlook the importance of the fact that it was during the greatest oil bull market of all time. From 2000 - 2009 oil went from $20 to $140. This make organic growth very easy compared to the current market conditions.

Thanks NicetoMichu for your kind words. I also get abused on the ADVFN threads too f or being honest about PPC. Here is my explanation to those on the other side why PPC has fallen in the last 18 months.

I have heard those same arguments about 'new beginnings' at the 35p, 20p, 12p, 6p and 4.5p placings. I hope it bounces to 4p but it was going in that direction 1 week ago. Lets compare revenue now to 18 months ago and take into consideration the shares in issue:-

Jan 2019 - 3300 BOPD
(1 billion shares in issue)
Oil - 3300 x $60 = $198k (daily)
$198 x 365 = $72.2m (annual)
$72m / 1,000,000,000 = $0.07 / share

June 2020 - 3000 BOEPD (1000 BOEPD = 6 MMCFD)
(2 billion shares in issue)
Oil - 2000 x $34 = $68k (daily)
Gas - 6 x $2600 = $15.6k (daily)
$68k + $15.6k x 365 = $30.5m (annual)
$30.5 / 2,000,000,000 = $0.015 / share

The earnings per share was 5 times higher 18 months ago! This is why we have gone from 10p to 1.7p. Debt has come down by around $10m in that time period which is obviously positive but it has come at a massive cost in terms of dilution.

Drichi

We paid $22m for the PF and EV assets in 2018. We have spent $25m on those assets in the way of pipelines, generators, processing plant, workovers and drilling. Total spend around $50m. Todays market cap.... Under $50m.

Sells at 1.71p. How depressing.

They have prioritized paying down the low interest secured debt at 7.5% interest ahead of the LCM debt at 15%.

I think deep down PL knows he has made a mistake over committing to Argentina and he wants a way out of this as much as PIs do. Assets in Argentina will never be priced close to the similar assets in other parts of the world. Look at BPC for example (no production, no money).

The price controls on oil also limit the upside. When the rest of the oil industry was banking cash in 2019 (Brent at $60 - 80/ barrel), PPC was subject to the government price restrictions and a further 12% royalty on top. When the price crashed they were very slow to introduce the floor price ($45/ barrel) and even today PPC has not benefited from it. You get penalized in a high and low price environment. Once oil reaches higher levels there is less reason to hold here as you have no exposure to very high oil prices (>$60/ barrel) and that will cause selling as PIs move to other similar size O & G companies that operate in a free market (eg. JSE, PTAL, PMG, TXP etc).

It will not be PL that takes this private now it will be Trafigura.

NM

I cannot see how they can do it without dilution but the price is obviously key. Any more dilution at these levels will be devastating for existing holders. If they can get the share price up to 5p then I would support further dilution but some organic growth is needed. This can be easily achieved if they get 1000 BOEPD of gas on line next month and then kick off the 2 well drilling campaign. To dilute before those events would be very disappointing.

I also expect a share consolidation at some point as having 2 billion shares in issue firmly keeps you in the 'penny junk stock' bracket on AIM. The irony will be that PL has already done one 6 for 1 share consolidation about 6 or 7 years back. Has any CEO ever done two share consolidations before on AIM?

NM

The concern for me is that Trafigura seem to be forcing PPC to reduce its debt which peaked at around $30m and now is down to $15m. That would seem to suggest that any acquisition will be with more dilution. PL has not exactly proven himself on the acquisition front. If you look at the price paid for Puesto Flores ($22m) and Puesto Guardian ($10m) and consider that we spent $5m on the EV pipeline then that is more than the market cap. of PPC today. Its hard to work out what we paid for Angostura but that seemed to be a good acquisition at 4p+ but as CGC have now been able to subscribe for shares below 2p it does not look so smart. We spent $100m on the Paraguay assets too!

At least any new acquisitions will have to be signed off by Trafigura so that gives me some hope.

For anyone interested I have just finished reading 'The Bitcoin Standard' by Saifedean Ammous. An excellent read if you want to have a better understanding BTC and the future. I find it hard to see how anyone can be positive on gold and not BTC as it would seem to be a contradiction. In the book he uses examples in history like how small islands in the pacific used to use sea shells as currency until explorers arrived and introduced gold into their small societies.

I hope as many people as possible benefit from BTC in the next few years as it seems inevitable that it will increase many multiples. With large investors (Paul Tudor Jones) and institutions (Grayscale) now starting to buy in.

I think if you are buying here at 1.8p then there is a good chance you will be able to sell for 2.5p - 3p in a few months time. This might come around the time that PPC brings further gas online as per the March RNS):-

Gas production

President reports that gas production from Rio Negro is now in excess of 1,000 boepd (6 MMScft/d) and building. President reiterates that it is on target to achieve 2,000 boepd (12 MMscft/d) of gas production by the end of H1 2020.