Why I think PGPM is about to run
Before I talk chart, here's the leading reason why I think the stock is headed higher very soon.
My reading of the resource evaluator's report in question makes me think stock is undervalued.
The numbers I paste below are copied from the "Resource Evaluation Report On The Pilgrim Petroleum Corporation Interests in Archer and Wichita Counties, Bend Arch-Fort Worth Basin Province, Texas, USA
Prepared on Behalf of Pilgrim Petroleum Corporation
15 September 2006
By Gustavson Associates, Independent Qualified Reserves Evaluators."
In section 3-2 the report lists "Prospective Resources" as...
Oil Gas
Low Estimate 996 MBbl 3.98 BCF
Best Estimate 1,831 MBbl 7.32 BCF
High Estimate 2.676 MBbl 10.70 BCF
(Acronym definitions, MBBL = Thousand Barrels; BCF = Billion Cubic Feet)
So what are these "prospective resources" likely to be worth? Do the math using the "expected prices from section 2.11 of the same report:
2.11 EXPECTED PRICES
Current oil and condensate prices for the area are about $59.75 per barrel. Well-head gas prices are estimated to be $4.65 per MCF as of the date of this report.
Low estimates: Oil, 996,000 x $59.75 added to 398 x $4,650 = approx $60 million.
The "Best estimate" of reserves in the report is double that, or approx. $120 million. 358,841,164 outstanding shares, divided by $120 million = .29 per share.
What really makes this a hot stock is not just the above numbers from the report, but the anticipation of a second "prospective resources" report soon to be forthcoming
Quoting Rafael Pinedo, President of Pilgrim Petroleum Corporation: "In its efforts to become a fully reporting company, Pilgrim Petroleum concluded its initial phase of acreage resource estimation and economic valuation. It will continue to value and put in line the additional properties recently added to its asset portfolio, while implementing its ongoing well re-activation program."
Now I would like to quote fellow IHub poster Willie Mac who wrote a very convincing post ( at least to me) last week:
"... it is foolish to sell now for anyone who has been waiting a while for this report because it isn't finished. It doesn't take rocket science to figure out that the 15,700 acres in Clay County are not being reported here and that considering that area, it will at least double if not triple the current figures."
I agree with willie mac that this first prospective resources report from Pilgrim released on Sept. 15 shows you about roughly half of the underlying value of this company. Thus, the $120 million should more correctly seen as closer to $200 million.
Now let's look at the CHART.
I see a base of around .035 to .04 cents going back several months. I see this as level of solid support. I see there was a positive impact and change in the base, a very big uptick, last Friday with 13 million shares traded, for a dollar value of approx $800,000 to the upside... In the two days following what cynics have labeled a "pump," but what I consider a "breakout" there have been between 3-4 million shares traded on Monday, and between 2-3 million traded today (Tuesday) for a total dollar value of approx. $400,000. I see this movement, up on big volume Friday, and down on lesser volume on Monday and Tuesday as very bullish. Stronger hands getting in and weaker hands getting out while it maintains a level above Friday's low.
It all adds up to minimal downside risk at this level, considering the prospects this stock has , including possible listing on the Toronto stock exhange soon and OTCBB next year.
Conclusion: PGPM is primed for a run to .10-.15, short-term. All it will take to trigger is a close above .055 sometime this week to regain the momo and start a buying stampede.
Good Night and Good Luck
