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Petroamerica oil (PTA.v) – A must own junior oil stock for 2013?

Petroamerica Oil

Petroamerica is a junior oil stock that is currently producing approximately 4250 barrels of oil per day in Columbia.

I believe Petroamerica offers a very attractive risk/reward at these levels (36.5 cent close Feb 8,2013).

Here are two strong reasons why you should consider owning Petroamerica stock in 2013.

A) Growth – Petroamerica management has stated several times its goal is to increase production to the 7000-10,000 bopd level in the next 12-18 months. It is listed in the January presentationhere.

B) Cashflow – Petroamerica sells high quality brent crude oil which today is over $118 per barrel (Feb 8). This gives the company extremely high netbacks which were $72 in Q3 2012 when brent averaged $106.81 per barrel. I am assuming netbacks of $75 per barrel at the moment is cashflow of  $318,500 per day ($75*4250 bopd).

How to play a potential move in Petroamerica?

You have two options. The first is to buy the common stock. The advantage here is the stock trades good liquidity .

The second is to buy the Petroamerica warrants. Petroamerica currently has two trading warrants listed – pta.wt and pta.wt.b.

PTA.wt – has an exercise price of 75 cents and expires October 8,2014 (closing price of 2.5 cents Feb 8,2013)

PTA.wt.b – has an exercise price of 35 cents and expires May 9,2014 -(closing price of 10 cents, Feb 8,2013)

Below is a typical chart of oil stocks – Petroamerica is right at the start of the production = cash flow stage

oil chart

* Disclosure – As always do your own due diligence before investing and make your own investing decisions. I am biased as I own pta.wt and pta.wt.b which I may sell at any time.

Questions or Comments? – Please feel free to ask.