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From the site pennyminingstocks.com
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
* 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.