Following along on two stocks (and watching a third) from the last blog post a week earlier....
GoldQuest Corp. (V.GQC) and Everton Resources (V.EVR)
GoldQuest traded from ..64 to a high of .83 this past week, and although it is showing it wants to rest a bit, many are excited about reports that the mineralization could be much wider than the first hole lead investors to believe. Proving the area up will be the next step with more drilling planned.
The play has garnered the interest of Brent Cook who has announced that he will travel to the DR shortly to examine this find himself, and to have a look at other possibilities on the island. We are hoping he will cast a glance at Evertons' holdings while there.
Brent offers a sobering thesis concerning junior resource plays over the next couple of years and we couldn't agree more fully that only the strong will survive. The upside of this is that well planned junior investment strategies could pay off nicely as interest and sentiment concentrate on only the best stocks.
http://www.youtube.com/watch?v=Ab6VXUw4X18&feature=plcp .........The visit interview.
http://www.thereformedbroker.com/2012/06/05/how-to-pick-a-junior-miner-i-interview-brent-cook/ .........7 to 70
The Daily Chart, annotated with Fibonacci Retracements, is here. http://investorshub.advfn.com/boards/read_msg.aspx?message_id=76463959 It suggests that the next leg could take this stock to $1.23, assuming a retrace to .61, and a bump and run from there.
The week began with the stock under accumulation and average daily volumes. The stock garnered buying pressure Tuesday June 05 and ten million shares were traded on all exchanges taking it to 0.115. The next day it topped out at 0.125. The price then slipped back into a technical 50% retrace zone for the remainder of the week. PTV closed at 0.08 Friday June 08 having seen a double on the week.
The updated Annotated Chart with Fibs is found here... http://investorshub.advfn.com/boards/read_msg.aspx?message_id=76447004
The stock has awakened. It is being actively traded and accumulated internationally, with much attention on it from the Nordic countries, given the AIO/Lundin connection.
With news slated for mid-month (the latter part of the next trading session) Merrill Lynch have chosen to box the trading on lighter volumes, both buying and selling to restrict trading and control the market. My feeling is that they felt it was getting out ahead of them during the earlier part of the week, for a reason that remains undisclosed.
I suspect they are not done buying for their client yet, and to do so may require some form of structured vehicle. The price for this may have already been set. We shall soon see. Keep in mind that the warrants beckon and are required for the treasury. This is potentially a huge sum of money and greasing the coffers at .30 rather then .15 is twice as much loot. The motivation to get the stock price up is definitely there. The valuations following prove out that this is achievable and underpin the route forward.
With the first workover expected to produce between 800-1400 boepd (see below), PTV's portion @ 37% could see revenues suddenly jump to $1.5M per month gross. This would ignite both the stock and augment their business plan to strategically expand their retinue of wells in shallow water ('the other zones could be perforated to contribute significant additional numbers to production rates. More development wells are planned and one could come in the latter part of this year' a colleague writes).
This base would also let them get on with the business of laying claim to deep water areas and setting up exploration proformas.
In the meantime, investors await news on the new management group coming in. Conversations with PTV reveal that Tullow is NOT the preferred choice for this first round (as first propositoned by this writer) as it is felt that a local oil management group will be best suited to the scope, ambitions and political realities of near term undertakings. This does not exlude a larger concern like Tullow from coming in at a later date when opportunities arise.
Coloring this is the 'Nordic Backdrop'. The mother ship.
Africa Oil's Certified Advisor on NASDAQ OMX First North is Pareto Ohman AB. Pareto were behind Horns' recent massive $15M PP.... I want to stress the Nordic connection to this play as we are convinced it is being underwritten from that side.
Are Merrill Lynch buying for the new group at the behest of Pareto Öhman AB?
ML are described by PTV as 'our good friends'.... and we see them most active on the stock. We feel they are buying for somebody.
By their own definition "The Pareto Group is a leading, independent Nordic financial services group, with shareholders’ equity of close to NOK 3.2 billion. Pareto Securities, the investment banking arm of the Pareto group, offers a wide range of financial services including equity and fixed income brokerage, equity and debt capital raisings, and advisory services in relation to mergers & acquisitions and restructurings. Pareto Securities reported operating revenues of NOK 1,230 million in 2010. Pareto Securities has approx. 370 employees, its head office in Oslo, and offices in Stockholm, New York, Singapore, Kristiansand, Stavanger, Bergen, Trondheim and Malmö."
When we are told that PTV need not look beyond its trusted allied groups when money is an issue, this is the organization being referred to in my opinion.
As Darren Devine explains: 'We're all part of one big group' when talking about where PTV fits into the grand scheme of things. PTV is not only linked directly with Lundin through Keith Hill and Ian Gibbs, but also indelibly into all the corporate affiliations, the houses, the backers, the machine. PTV will not be allowed to sit on the sidelines unattended; indeed, it enjoys all the comforts and accoutrements that a company one hundred times its size would have at its beck, under the Keith Hill Lundin Umbrella.
PTV Revenue Projections and Share Valuation
The workover in Brazil will likely yield production of 400-500 boepd to PTV based on their portion of the work, before net of taxes. We value quality Brazilian oil at $100 barrel for argument's sake. It may be a bit higher or lower any given month.
From that they should immediately realize, on just two wells, up to $1.50M in gross revenues per month, and therefore net of taxes, costs and royalties around $750K. With warrants cashed (taking the stock to 100M O/S) and between $3M to $7M added to the kitty, PTV could be easily sporting $ 0.234 per shares based on a 2.6 x earnings, and a market value of the company's shares at $23.4M plus cash.
A colleague writes “this would be a good start, allow them to build their cash position and fund additional drilling in Q4. I continue to see something larger in the works, .... a group that can fund a larger work program and bring on management.”
Given all of the above, the potential for immediate revenues and shallow water well additions, new teams coming in with power and depth to transform the company, and a view onto deeper offshore interests potentially fuelled by the Nordic consortium, we see this as a buy and hold. We continue to accumulate at these levels with a view to embracing the low 'twenties on immediate valuation, and more on speculative interest as the emergent PetroVista reveals itself.
Please keep in mind that both plays are junior exploration speculative plays, and in the case of PTV we do not know the company's full intentions or capabilities yet. There is risk, compounded by the fact that this is offshore drilling in Brazil. In the end my assessment is tempered by the knowledge that if anyone is going to do this right other than Pretrobas it will be someone like Keith Hill and Lundin. My expectation is that they are creating this vehicle for that purpose.... to do something large, correctly, with singular purpose.