Investment Dealer Puts Petroamerica on 2011 ‘Best Picks’ List
Raymond James – an international investment dealer with 950 Canadian employees – has published a list of hot stocks for 2011.
No surprise that the list includes billion dollar companies like Bankers Petroleum (BNK-TSX), Eldorado Gold, (EGO-TSX) and Paladin Energy (PDN-TSX) – but a few eyebrows were raised to see the inclusion of Petroamerica (PTA-TSXV) – $.62 junior explorer focused on light/medium oil in Colombia.
PTA has assembled a large portfolio of prospective oil properties in several prolific basins and is joint ventured with established South American producers.
Raymond James best picks for the second half of 2010 posted returns of 24.9% compared to 12.3% for the S&P/TSX Composite Index. The average “high water” return was an eye-popping 36.4%.
Petroamerica has confirmed an oil discovery in the Balay-1 exploration well in the prolific Llanos Basin, in Colombia. The well has tested at a stabilized rate of 1,314 bbl/d of 28.3º API oil. The well was perforated in the Upper Mirador formation and long-term testing operations are continuing.
This is a significant discovery for PTA, which has a 15% interest in the property. The risk here is reduced by the presence of veteran Latin American oil partners like Petrobras, the operator on this project.
Petrobras has a solid track record in this region. Worldwide they currently have 112 production platforms, daily production of about 2 million barrels of oil per day and 16 refineries, as well as 54 Tankers.
Balay sits adjacent to the north east side of Petrominerales’ (PMG-TSX) oil-producing Corcel block. Some members of PTA’s management team, including President and CEO Paul Kroshko and VP Operations Wade Spark were involved in developing and finding the Corcel play.
Colombia is now rising up as a global oil producer. Currently, about 660,000 barrels of oil flow out of Colombia every day. Petroamerica’s 175 sq mile tract is sitting in a sweet spot.
“In the past 10 years, Colombia has gone from being nearly a failed state to becoming a very attractive destination for foreign investment,” stated a recent Barclays analyst report. New regulatory initiatives have catalyzed a rush of foreign oil investment.
On January 5, 2010 PTA announced that it had been recognized by the ANH (National Hydrocarbon Agency) as to its 15% participating interest in the Balay Block in the Llanos basin of Colombia. The ANH’s mandate is to manage Colombia’s Oil & Gas resources, representing the Colombian government and its citizens when designating exploration areas. This is a significant milestone, as it gives PTA an official voice in front of the Balay joint venture of companies.
PTA has raised $65 million through private placements and $29 million through bought deal financing (the bought deal was brokered by Raymond James).
According to disclosures on “Canadian Insider” CEO Paul Kroshko and V.P. of Administration Pat Klassen have recently been buying large blocks of PTA.
The stock price of Petroamerica has doubled in the last 3 months, from $.37 to $.74 but with comparisons being made to Petrominerales – currently trading at $33.00 the run may be just beginning.
The investment analysts at Raymond James are fallible like the rest of us. But they follow a universe of over 1,000 companies. When a junior explorer makes their top 10 list, it’s worth noting.