Raymond James – PMI Releases Year-End Results



Petromanas reported its year-end 2010 results.



We are maintaining our Outperform rating and C$1.25/shr target price.



The company did not report any new updates or news in its 4Q and year-end results, thus we maintain our prior views. Also, as it is a pure exploration company, its financial results are not significant to our thesis at this time. During 4Q, the company continued its technical assessment, concluding the seismic acquisition program on Blocks D&E, as well as starting the seismic acquisition program on Blocks 2&3. The 2D seismic was recently completed at Blocks 2&3 (mid-March) and Petromanas expects to further refine the geological models of the Shpiragu, South Shpiragu, and Krasi prospects. The company anticipates completing all technical evaluation work by 2Q11 and opening a data room for examination by potential partners. The company has also fulfilled all work commitments for the first exploration phase on Blocks A&B and D&E, and has provided notification to the Albanian government that it will commence the second exploration phase of each of these PSCs. The second exploration phase extends to December 2012 and includes commitments to drill 2 exploration wells. For Phase 2, remaining commitments for Blocks A&B and Blocks D&E are US$6.3 million each. Phase 3 commitments (~2013-2014) are similar. Petromanas is also re-evaluating the unrisked resource assessment (which was prepared in 2009 by Gustavson Associates based on the seismic, geology, and limited well data available). The company expects an updated independent resource evaluation report to be completed in 1H11. We intend to revisit our NAV calculation (both resource potential and risk factors) on the back of this report.



Our valuation reflects our calculated risked NAV for Petromanas of C$1.40/shr, which has been adjusted from C$1.43/shr previously to reflect the company’s working capital at the end of 2010.