Value Microcaps Junior Energy

[kipp440]

Petrominerales, PMG.TO

(I added a bunch of links to Bobwins original post on PMG.TO. I really like this company and will buy shares on this pullback. Thanks Bob!)

http://www.petrominerales.com/

Chart: http://stockcharts.com/charts/gallery.html?PMG.TO

Recent IR Presentation:
http://www.petrominerales.com/webdocs/presentations/Petrominerales_Corporate_Presentation.pdf

I was worried about the country risk and investing in Columbia. I feel good about the situation after reading what the company says about it here: http://www.petrominerales.com/lat-changingcolombia.html


This is the 82.6% subsidiary of Petrobank (PBG.TO). They operate in Colombia and have over 1.5 million acres of land to explore. PMG.TO is coming off a record Q3 with 4,522bpd average production, revs of $29 million and EPS of C$.10 fully diluted. With a share price of $15, PMG.TO/PMGLF.pk might not look that cheap but there is extraordinary growth coming.

PMG.TO was producing around 2,000bpd when they hit a huge well in 2007. Corcel-1 tested at 10,000bpd. They can't produce at full rate because they need a pipeline. They are trucking around 4,000bpd from Corcel-1. Late summer 2007, PMG hit Corcel-2, which tested around 3100bpd and the company thinks can produce at 6,000bpd. PMG is currently drilling Corcel-3 and has a full schedule of 24 wells in Colombia. PMG is also permitting a 40,000bpd pipeline that should begin construction in second half 2008.

http://biz.yahoo.com/ccn/071106/200711060423890001.html?.v=1

This Q3 PR shows the potential of PMG. They generated 29million gross revs from 4522bpd. Current production with trucking is around 8100bpd. They could be close to 18,000bpd if the pipeline was in place. By late 2008, they could hit an exit rate of 30,000bpd or a potential gross rev of $240million per qtr!!! They could produce cashflow of $2/qtr or $8/yr forward casfhlow. The $15share price will look pretty cheap at that point.

PMG.TO has over 1.5 million acres left to explore. They have the license to use Petrobank's THAI extraction method, which could be ideal for the huge heavy oil resource in Colombia.
Overall PMG.TO has tremendous upside for increasing production. Colombia has one of the best financial royalty arrangements of any country so PMG will have high netbacks on any of their production.

I like it.

Kipp