Petro Rio S.A. ADR fka HRPTY

[john1045]

Drilla/Bob/Gus,

What is your recommendation on how we should proceed with this change on GDS conversion on 1/27? You planning on keeping invested in this company on Bovespa or selling out? TIA

Happy and Prosperous New Year!

[john1045]

What is your recommendation on how we should proceed wi

[rzbern]

Wrong your comparation US$0.18 to US3.00 when had two reverse splits: x10 and x5 !!

[GusGold]

Deutsche bank will have to obtain the best possible price...also any broker has reps in Brazil...you were saying this was garbage at $.18 and now it is $3.00

[rzbern]

You, GDS shareholders, must elect a legal representative in Brazil. If this does not occur you will be sold your shares in the market at any and low price.

[DrillaHill]

Bob, here's what I found on the Internet

www.otcmarkets.com/stock/HRTPY/short-sales
www.dadosdabolsa.com/Aluguel/prio3 ("Aluguéis")

There may be games being played to get GDS at a discount compared to its underlying shares (arbitrage situation), a GDS holder should always be aware that for every 2 GDS there is 1 underlying common share of Petro Rio (prio3) deposited in Brazil.

ATB and a Happy new Year everyone!

[Bob322]

Drilla, thanks for the update. It looks like volume is up. Do we have any idea concerning the US short position in the stock?

[DrillaHill]

The GDS will be delisted from the TSX Venture Exchange ("TSXV") following the close of the trading session of January 27, 2017.

A GDS holder may either instruct Deutsche Bank to deliver its GDS's underlying shares (prio3) deposited in Brazil (1 prio3 for 2 GDS) or without any instructions Deutsche Bank will sell the underlying shares in Brazil and remit the net proceeds to the former GDS holder. In order to hold or trade common shares of Petro Rio (prio3) foreign shareholders must comply with certain requirements as described below (2011 Listing application).

MATERIAL FACT - DELISTING FROM TSX-V IN CONNECTION WITH TERMINATION OF GDS PROGRAM

"The delisting will occur in connection with the termination of the deposit agreement among the owners and holders of GDS ("GDS holders"), Deutsche Bank Trust Company Americas ("Deutsche Bank") and the Company (the "Deposit Agreement") which is anticipated to occur on January 27, 2017 (the “Termination Date”). Commencing on the Termination Date and ending on the date that is four months after the Termination Date, Deutsche Bank will, upon request from GDS holders, deliver the underlying Common Shares to such holders of GDS in accordance with the terms and conditions of the Deposit Agreement and such GDS holders’ written instructions. In the absence of written instructions from the GDS holders or their agents by the end of such four month period as to how the underlying Common Shares are to be delivered to a valid brokerage account, such Common Shares to which the former GDS holder was entitled will be sold in the market by Deutsche Bank and the net proceeds remitted to the former GDS holder.
The Common Shares will continue to be traded on the facilities of the BM&FBovespa in Brazil and GDS holders, if they provide instructions to receive Common Shares, will be able to sell the Common Shares received upon termination of the GDS program on such exchange without restriction, save for the general application of Brazilian securities and tax laws.
For further information, please contact the Company´s Investor Relations Department."

From the 2011 Listing application:
www.sedar.com/
- Search Database
- Search Company Documents
- type "Petro Rio"; Date of Filing: Apr 28 2011
- go to Listing application - English (pdf)

(Note HRT is now Petro Rio)
"Upon surrender of Global Depositary Shares and withdrawal of the HRT Shares, foreign shareholders
may elect to register their investment in the HRT Shares as (i) long term investments registered under
Law No. 4,131 (“4,131 Investments”) or (ii) portfolio investments registered under the rules of
Resolution No. 2,689/00 (“2,689 Investments”).
In order to hold the HRT Shares as a 2,689 Investment, foreign shareholders must comply with the
following requirements:
• appoint at least one representative in Brazil with powers to receive summons and represent the
foreign investor before the Brazilian Central Bank, CVM and tax authorities;
• obtain its registration as a foreign investor with CVM through its local representative;
• obtain registration of its investment in the HRT Shares with the Brazilian Central Bank;
• enrol itself through its local representative with the Brazilian tax authorities;
• appoint a custodian duly authorized by the CVM to render custody services with respect to the
HRT Shares; and
• appoint a local broker authorized to trade at BM&FBOVESPA.
In order to hold the HRT Shares as a 4,131 Investment, foreign shareholders shall comply with the
following requirements:
• appoint at least one representative in Brazil with powers to receive summons and represent the
foreign investor before tax and other governmental authorities;
• enrol itself through its local representative with the Brazilian tax authorities; and
• obtain registration of its investments in the HRT Shares with the Brazilian Central Bank."

[Hurrah]

I'm new to this board so I'm gonna ask some basic questions:

between the GDR trading on the Canadian exchange, the one trading OTC in the U.S. (HRTPY) and the actual common stock in Brazil, which is the best choice?

I see that the bid ask spread for HRTPY is huge by the way... And is it even possible to buy the common stock trading in Brazil? I'm not able to do it with Interactive Brokers.

Thanks!

[mick]

New Fed Voters Bring Wide Range of Experience to Rate-Setting Panel -- Update
Three of the four officials who gain votes next year on the Federal Reserve's rate-setting committee are from a minority group in the...
New Fed Voters Bring Wide Range of Experience to Rate-Setting Panel -- Update
Correction to New Fed Voters Article on Dec. 28
Top Stories of the Day
Top Company News of the Day

[mick]

higher/ Petro Rio S.a. (PC) (HRTPY)
3.6 ? 0.7 (24.14%)
Volume: 32,059 @ 3:51:55 PM ET
Bid Ask Day's Range
2.99 3.6 2.778 - 3.6
HRTPY Detailed Quote

[john1045]

lockout what is it? Finally seeing some small volume here for once and PPS moving upward!

Ht tip DrillaHill Bob322 john Mick

[lockout]

Ht tip DrillaHill Bob322 john Mick

[rzbern]

Drilla, what do you think about now GDS beeing extinct? Will you buy the common shares? Because, not have other way, the GDS are finished, as iI always said that wiould happen.

[DrillaHill]

John, the GDS represent only 5% of total common shares so I do not believe the delisting of GDS should affect the shareprice of PetroRio.

A GDS holder may either instruct Deutsche Bank to convert its shares into common shares traded in Brazil (prio3):

"Deutsche Bank will, upon request from GDS holders, deliver the underlying Common Shares to such holders of GDS in accordance with the terms and conditions of the Deposit Agreement and such GDS holders' written instructions."

or Deutsche Bank will sell the GDS holder's shares in Brazil:

"In the absence of written instructions from the GDS holders or their agents by the end of such four month period as to how the underlying Common Shares are to be delivered to a valid brokerage account, such Common Shares to which the former GDS holder was entitled will be sold in the market by Deutsche Bank and the net proceeds remitted to the former GDS holder."

[rzbern]

Game Over to the GDS shareholders.

[john1045]

Drilla, how does this affect us short term 30 days and next few months. I am not sure I understand this correctly. Any help is much appreciated!

MATERIAL FACT Petro Rio S.A.

DELISTING FROM TSX-v IN

CONNECTION WITH TERMINATION OF GDS PROGRAM

Rio de Janeiro, December 28, 2016 - Petro Rio S.A. ("PetroRio" or the "Company") (BM&FBOVESPA: PRIO3, TSX-V: PRJ) announces today that all of the issued and outstanding global depositary shares ("GDS") will be delisted from the TSX Venture Exchange ("TSXV") following the close of the trading session of January 27, 2017.

The delisting will occur in connection with the termination of the deposit agreement among the owners and holders of GDS ("GDS holders"), Deutsche Bank Trust Company Americas ("Deutsche Bank") and the Company (the "Deposit Agreement") which is anticipated to occur on January 27, 2017 (the "Termination Date"). Commencing on the Termination Date and ending on the date that is four months after the Termination Date, Deutsche Bank will, upon request from GDS holders, deliver the underlying Common Shares to such holders of GDS in accordance with the terms and conditions of the Deposit Agreement and such GDS holders' written instructions. In the absence of written instructions from the GDS holders or their agents by the end of such four month period as to how the underlying Common Shares are to be delivered to a valid brokerage account, such Common Shares to which the former GDS holder was entitled will be sold in the market by Deutsche Bank and the net proceeds remitted to the former GDS holder.

The Common Shares will continue to be traded on the facilities of the BM&FBovespa in Brazil and GDS holders, if they provide instructions to receive Common Shares, will be able to sell the Common Shares received upon termination of the GDS program on such exchange without restriction, save for the general application of Brazilian securities and tax laws.

For further information, please contact the Company´s Investor Relations Department.


Sedar Profile # 00031536

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

[john1045]

Thanks Drilla it is much appreciated!

[DrillaHill]

John, numbers are only for GDS and get updated every month:

"As derivatives, depositary receipts can be created or canceled depending on supply and demand. When shares are created, more corporate stock of the issuer is purchased and placed in the custodian bank in the account of the depositary bank, which then issues new GDRs based on the newly acquired shares. When shares are canceled, the investor turns in the shares to the depositary bank, which then cancels the GDRs and instructs the custodian bank to transfer the shares to the GDR investor. The ability to create or cancel depositary shares keeps the depositary share price in line with the corporate stock price, since any differences will be eliminated through arbitrage"

remember two GDSs are worth one ordinary share of prio3, so for the 1.5M GDS there are 750k of outstanding shares held by the custodian bank in Brazil. The total number of outstanding shares of PetroRio is 13,190,747:
ir.petroriosa.com.br/conteudo_en.asp?idioma=1&conta=44&tipo=58650

As for the acquisition of GoldmanSachs' interest in Brasoil, it seems like this is only the beginning and PetroRio is aiming for more:

First step
By Lauro Jardim
12/21/2016 9:27 PM
blogs.oglobo.globo.com/lauro-jardim/2.html
"PetroRio announced today the purchase of 23.19% of Goldman Sachs shares in Brasoil. But what PetroRio intends to buy is the totality of the oil company's shares. So he took the first step.
Brasoil has annual revenues of R $ 150 million and operates in the fields of Manati (BA), Pirapema (AP) and two blocks in Foz do Amazonas (AM).
With the acquisition of all Brasoil, PetroRio will be 30% larger."

[john1045]

Drilla, is the current outstanding shares 1.5M correct below? When do you see some return on this investment for HRTPY ? TIA!

Release date- 02122016 - Rio de Janeiro - Petro Rio S.A. (BM&FBOVESPA: PRIO3, TSX-V: PRJ), announces that the records of the TSX Venture Exchange have been updated to reflect the number of PetroRio's Global Depositary Shares currently outstanding.

On December 1st, 2016, there were 1,497,588 GDS outstanding (each representing 1/2 of an interest in a common share of PetroRio). Further details regarding the GDS can be found in the Company's annual information form.

[DrillaHill]

MATERIAL FACT: PURCHASE OF INTEREST IN BRASOIL (12/21/2016)

PURCHASE OF INTEREST IN BRASOIL
ir.petroriosa.com.br/download_arquivos.asp?id_arquivo=E1C9BFCD-4AF6-41FD-BD6C-F446F002F451
Rio de Janeiro, December 21st 2016 – PetroRio, (“Company” or “PetroRio”) (BM&FBOVESPA: PRIO3, TSX-V: PRJ), hereby informs the execution, through one of its subsidiaries, of a Share Purchase Agreement aiming to purchase the indirect interest equivalent to 23.19% held by Goldman Sachs & Co. (“GS”) in Brasoil do Brasil Exploração Petrolífera S.A. (“Brasoil”).
Brasoil is a holding company, with indirect stake of 10% over the rights and obligations of the Manati Field concession contract, that, in turn, currently produces 4.1 million cubic meters of natural gas per day (approximately 26 thousand barrels of oil equivalent per day), ranking as the 8th largest producing field of natural gas in Brazil (*).
Additionally to the stake in the Manati Field, other relevant assets from Brasoil include the indirect stake of 100% in the concessions of the Pirapema Field – gas asset currently in development – and of Block FZA-M-254, both in the mouth of the Amazon River.
The closing of the sale and purchase transaction between PetroRio and GS is subject to certain conditions precedent, among which, the period for exercise of the right of first offer and tag along by the remaining investors of Brasoil, additional to the analysis of the transaction by the competent regulatory bodies, as deemed necessary.
The execution of this agreement is aligned with the Company's business model and acquisition growth strategy and it represents a diversification of its portfolio of revenue generating assets.

[DrillaHill]

The Pact: First Global Cut in 15 Years
Bloomberg 12/10/2016: "Non-OPEC Said to Join OPEC in First Global Cut in 15 Years"
BRENT OIL (Feb 17)

"Russia and several other non-OPEC nations pledged to curb oil production next year by more than 600,000 barrels a day at a meeting in Vienna on Saturday, joining forces with the Organization of Petroleum Exporting Countries to end a global glut, a delegate familiar with the situation said.
The pact -- the first between the two sides in 15 years -- comes two weeks after OPEC agreed to reduce its own production by 1.2 million barrels a day.
Saudi Arabia, UAE warn refiners of lower shipments in January "

[mick]

Petro Rio S.a. (PC) (HRTPY)
2.17 ? -0.05 (-2.25%)
Volume: 2,834 @ 1:53:39 PM ET
Bid Ask Day's Range
2.15 2.42 2.143 - 2.2
HRTPY Detailed Quote

[Bob322]

Thanks Drilla. I always look forward to your comments.

Have a super weekend!

[DrillaHill]

Renato Jerusalmi: The pipeline is full of opportunities

From the 3Q16 Conference Call:

"I'd like to make a final remark which is a doubt about that always comes about M&A. We remain focused on acquisitions that will generate value to our shareholders and we have interesting opportunities, the pipeline is full. We have some negotiations underway, but these are complex ones. And if an M&A crosses, we don't know whether we are going to get the deal."

We know Bauna field (45,000 bbl/d) was one of the fields PetroRio was bidding for this year, however Karoon Gas seem to have won the bid. PetroRio might be drilling for additional resources within its Polvo license in 1H17, workovers in 1Q16 opened the door for new pospects. I do not personally know any members of management and do not have any more information as is being provided by the company to the public/shareholders.

As for the Namibian licenses, our former partner in Namibia Galp Energia is now operator and 80% owner of PEL 23 (Walvis Basin, Wingat) and PEL 28 (Orange Basin). Galp‘s partners are NAMCOR 10% and Custos 10%(Knowledge Katti). PEL 22 now belongs to Windfire Capital Corp. (Duane Parnham - UNX Energy). I am currently invested in Chariot O&G (LON:CHAR) and Pancontinental O&G (ASX:PCL) both with licenses in Walvis Basin near to PEL 23 where light oil has been discovered in 2013. Pancontinental (Ultra Small Cap: US$ 6 million) is partnered (and free carried) with Tullow Oil who has comitted to drill a well by late March 2017 . The spud is still not 100% certain but if Tullow announces a spud date I expect ASX:PCL to increase by many muliples towards drilling. High risk - High potential Reward.

As for PetroRio, I still consider we are massively undervalued by the market - Market Cap @ R$16.59/share (prio3) is R$219 million (US$61 million). We have a great Cash Position (3Q16: R$529m), good Production Volume with Upside Potential (Oct/16: 8,768bbl/d) and it looks like we are just about to experience a new cycle of Oil price (Brent currently @ US$54 after Opec production cut). In my opinion PetroRio should be trading a lot higher. --> R$50/prio3; US$7/hrtpy; CA$10/prj.

BRENT OIL (FEB 17)

PetroRio (prio3, R$) 13,190,747 common shares

[Bob322]

Drilla, you have followed Petro Rio for a long time, and I believe that you express a greater knowledge than any of the rest of us about the company. The materials we have seen show a functional company with a practical business plan in need of more resources in the ground. If you are inclined, perhaps you can share your thoughts on a few company matters.

Do you have any idea if/when and how Petro Rio will acquire additional development resources?

Do you know any members of management? If so and you are at liberty to share your feelings on the same, we would appreciate your impressions.

Did you follow up on the Namibia tracts released, and do you have any thoughts on investments in the companies acquiring the tracts?

Do you have other early stage companies you like? I believe that you follow Chariot Oil & Gas as an exploration company.

Anything else you would like to share would be appreciated. With the potential for tax loss selling, your answers may shape our personal inclinations to round up positions.

Have a super day!

[DrillaHill]

Polvo Field Production Volume October 2016: 8,768 bbl/d

[DrillaHill]

OPEC is finally agreeing to cut oil production

BRENT OIL (Feb 17)


www.bbc.com/news/business-38155185
"The oil cartel Opec has agreed its first supply cut in eight years in order to boost the price of oil.
Mohammed Bin Saleh Al-Sada, Opec's president, said a cut of 1.2 million barrels a day would start from January.
It comes after more than two years of depressed oil prices, which have more than halved since 2014, due to a supply glut on the market.
The price of Brent crude jumped 10% to $51.94 a barrel, and US crude rose 9% to $49.53.
In addition to the production cut by Opec members, non-Opec countries will be expected to reduce production by 600,000 barrels a day, according to Mr Al-Sada."

[john1045]

Drilla, great find and thanks for sharing! Quite encouraging and very focused plan on Petro Rio's management.

[Bob322]

Drilla. Thanks for the video! From it, I learned two things I would like to share. First, EBDITA was positive (about $2M) in a down oil market. Second, Nelson Tanure has a lot less hair than I expected. For some reason, I was expecting someone a lot more like Jonathan Goldsmith - the former Dos Equis guy.

Have a super holiday season and Merry Christmas to all!

[antenahum]

Many thanks, DrillaHill, for posting the link to the interview of Nelson Tanure and Renato Jerusalmi at World Finance. Excellent update.

[DrillaHill]

Nelson Tanure and Renato Jerusalmi on the future for Brazil's oil industry as Petrobras continues to divest its assets:
PetroRio: Small indie oil firms will profit most from Petrobras sell-off | World Finance (YouTube)
PetroRio (prio3 in R$) 13,190,747 Common Shares

[rzbern]

The boat is making water.

[DrillaHill]

Hi John, there was no trading in Brazil yesterday due to "Proclamation of the Republic Day" - so prio3 could not react to the 3Q16 results until today. I agree volume in US and Can could have been much better - also agree on games being played to get shares cheap....

prio3 looking good so far...

[john1045]

Drilla, I always appreciate your commentary and I am at a loss as to why is there no movement/interest in trading volume (622 shares yesterday)and PPS with this report on financial results?

I also think someone is trying to keep HRTPY below $2.00 on this low volume trading.

[DrillaHill]

Hi Bob, my thoughts are PetroRio should be trading a lot higher...

As for net income - financial income was ~R$110m - I believe mainly driven from investments made in "Oi SA" (BVMF:OIBR3) in 3Q16. According to the following article PetroRio started buying shares in Oi (6% of outstanding shares) at R$0.8 "which have increased by 330% since then."

Dispute between shareholders may hinder Oi's recovery (google translater)

OIBR3 is currently trading at R$2.23


Conference Call with Q&A tomorrow:
webcast.neo1.net/Cover.aspx?PlatformId=RreJlP9xFsJ7M%2FNl8uzKww%3D%3D

[Bob322]

Thanks Drilla. The Press Release stated that the company had "net Income" of $71.5(R) or about $20.7(US). Isn't that about $1.57/sh? Any thoughts?

[DrillaHill]

MANAGEMENT REPORT - Petro Rio 3Q16 Earnings Release

3Q16 Earnings Release

We are pleased to present one more quarter of positive results in an environment with highly volatile oil prices and Brent averaging less than US$ 50/bbl. PetroRio’s EBITDA adjusted for non-cash expenses reached R$ 15.0 million, surpassing the previous quarter. This strong performance was driven by our continuous operational efficiency, which kept costs in line with its historic low levels, and our assertive commercial strategy. Additionally, we are proud to record another quarter with no accidents, extending the expressive milestone of 1,500 days without lost-time injuries reached on July 14, 2016.

Our success is essentially driven by our entrepreneurial team, made by dedicated and creative people. The commercial strategy used in the quarter is another successful example of our DNA that continuously pursues innovation to maximize returns. In order to obtain a better realized price and taking advantage of low maritime freight prices, PetroRio postponed the sale of two offtakes to September which were priced at the higher Brent average of October, thus enabling the Company to increase gross selling price by US$ 4.2 per barrel.

Polvo Field’s production was in line with our estimates. After the operational start-up of the three wells that underwent interventions, average daily production remained stable at 9,100 bbl for a period of approximately 30 days between July and August. As expected, Polvo’s production showed in 3Q16 a natural monthly decline of around 100bd. However, average production in the quarter stood at only 8.4kbd mainly influenced by the scheduled maintenance stoppage in September, which reduced production by 44 thousand barrels, and the interventions carried out in July when we operated with all wells that underwent interventions for only 18 days. During July and August, before the scheduled stoppage, operational efficiency reached an exceptional average of 99.3%, with few operational failures and improved efficiency of the boiler.

In the first nine months of the year, Polvo Field’s production totaled 2.2 Mbbl and we estimate a total production in 2016 of three million barrels, in line with 2015 and 25% higher than the amount estimated in our last reserve certification report. This result shows PetroRio’s excellence in the operation of mature fields, which normally show an annual production decline of around 10%, and it indicates potential for reserves addition. Total investments in Polvo’s redevelopment program came to US$ 17.9 million and we do not expect any additional expenditure with well interventions and workovers in 2016.

The Company executed three offtakes in the third quarter, with the sale of 1,056,756 barrels of oil, generating revenue of R$ 139.2 million. EBITDA, adjusted for non-cash expenses related to the write-down of receivables (R$ 15.6 million), was positive in R$ 15.0 million, while earnings totaled R$ 71.5 million, boosted by the return of our financial investments. Our consolidated cash position, including all financial investments, reached US$ 162 million at the end of September, increasing by US$ 37 million year-to-date and by US$ 25 million in the quarter. It is also worth highlighting that the US$ 16 million in receivables from oil sales in 3Q16 were fully received in November, further strengthening PetroRio’s cash position. The Company's financial health has been enhanced and PetroRio is increasingly prepared to make value acquisitions in a scenario that continues to offer ample opportunities both in Brazil and abroad.

We expect the high oil price volatility observed in the third quarter to continue in the coming months. However, in the medium and long term, we remain strongly confident on a structural price recovery to begin after the first signs of supply weakening following a long period of low investments. The beginning of the quarter was marked by the "perfect storm" for oil prices that started with international pessimism triggered by Brexit at the end of 2Q16, plus successive weeks of increasing rig counts data in the U.S. that fueled fears of an upturn in supply by marginal oil producers. Also contributing to the price decline, there were successive releases confirming a widespread increase in production from OPEC countries, particularly Libya, which signaled with the possibility of tripling production.

In response to the sharp drop in prices (Brent of US$ 41/bbl in early August), OPEC indicated a possible agreement to freeze production, also including non OPEC members, particularly Russia, which expressed interest in the maneuver to raise prices. The quarter ended with a strong price recovery and a clear indication of an agreement between the Arabs and Russia. Oil prices followed this upward trend in October peaking at US$ 53/bbl, but at the beginning of November we saw increasing lack of confidence on the effective announcement of this possible agreement bringing prices back to current levels of US$ 45/bbl.

Lastly, we highlight the important recognition of PetroRio as the best E&P Company in Latin America in 2016. This award reflects the significant results achieved in 2015 when we initiated our ambitious programme to reduce costs, optimize operations and increase reserves.

Polvo Field’s success case involves key elements of our strategy and represents the first step in the construction of an even more solid company.

[DrillaHill]

PetroRio 3Q16 results - increase in Cash Position
Cash R$529m almost 300% of Market Cap R$186m!

PRIO3 (R$)

13,190,747 Common Shares

ir.petroriosa.com.br/conteudo_en.asp?idioma=1&conta=44&tipo=58658



Conference Call on Wednesday:
webcast.neo1.net/Cover.aspx?PlatformId=RreJlP9xFsJ7M%2FNl8uzKww%3D%3D

[DrillaHill]

3Q16 Production Volume: 771,558 bbl (09/16: 7,379 bbl/d)

3Q16 Production Volume from Polvo Field:
771,558 bbl

Potential Production Volume sold during 3Q16:
+ 2Q16 oil in inventory: 554,000 bbl
+ 3Q16 production volume: 771,558 bbl
1,325,558 bbl

September 2016 Production Volume:
7,379 bbl/d
- probably some operational issues?
(2Q16 operational efficiency 96.6%)

3Q16 results:
11/10/2016