Replies to post #616 on Oleo e Gas Participacoes Sa, Brazil (fka OGXPY)

[BVE]

Hi,

Glad you did post this question. I'm also on the HRT side of things. My take on his stock is that it will surprise a lot of people towards the end of the year. Although the company is under bankrupt protection, about which I know nothing, let alone in Brazil, for me this one can only go up by a large margin. So, yes, I'm invested in it an bought at the price it stand now.

- In June/July they added another field so I expect near future volumes to reach 20,000 barrels/day: that's about a $600 - $700 million company right there!

- Last month production "dropped" from 16000 to 13000 average per month but to hook up that 4th field to an FPSO you will be a few days off-line just for safety alone.

- Unfortunately they need 2 FPSO's (OSX-1 and 3) to get the the 20,000 barrels / day so extra cost of about $250,000 per day.

- They have participation in gas operations in the north of Brazil which has huge profit margins and they are increasing production. They try to sell their stake and although there were some preliminary contracts, it eventually did not happen. They try again next month.


- To simplify: if $600 million per year from just oil production: with a 10% profit and P/E of 10 and 3.2 B shares my guesstimate is around the $ 0.17 to $0.20 SP.

- For the gas part I'll have the read-up a bit further but their BOE for these fields is about 10,000 boed although gas is at about 1/3 of the price of oil but profit margins are almost 3 times better so you can almost add another 50% (10,000 vs 20,000 barrels per day) to the SP.

In resume: for me this has to be about a US $0.25 to 0.30 share price.

I'm looking forward to their Q2 statement in August as for sure this will give a better insight as to what is still owed to creditors. I expect OGpar to do about the same as Q1 and do not expect better things till Q3/Q4.

The "good" thing for us is that by being under bankrupt protection, they have to have to inform the court of every step/event they take/make so we have actually a better insight at this point than for example what's happening at HRT.

BVE