The Next Oil Boom Is Already Taking Off Here
August 02, 2017 at 09:00 AM EDT
LONDON, August 2, 2017 /PRNewswire/ --
What's better than proven heavy oil resources in Argentina and three spots on natural gas plays in Colombia? That's easy: A management team led by a man who owns the largest conglomerate in Colombia and backed by billionaire mining legend Frank Giustra. Active resource companies in the sector include: Parsley Energy, Inc. (NYSE:PE), SeaDrill Limited (NYSE:SDRL), Diamond Offshore Drilling, Inc. (NYSE:DO), Pioneer Natural Resources Company (NYSE:PXD), Pretium Resources Inc. (NYSE:PVG)
Introducing PentaNova Energy Corp. (PNO.V; PENYF) the next explosive bet on Latin American resource riches by the dream team of Giustra and Serafino Iacono, the owner of Pacific Group and the mastermind of Pacific Rubiales, the famous mid-tier Colombian oil company that went from $7 a share in 2009 to $36 in 2011.
Now they're leveraging their high-value-creation track record in Latin America, in some of the richest oil and gas fields with proven reserves.
The two have already made a fortune in Colombia, and there is no one better at identifying grossly undervalued resource plays in proven grounds and then creating maximum shareholder value.
They always think big. And they always pay out.
Here are 5 reasons to keep a close eye on this dream team and their next big move in Colombia and Argentina with PentaNova Energy Corp. (PNO.V; PENYF)
#1 No Strangers to Success in Colombia
When you bring together a Canadian billionaire who's already created four multi-billion-dollar companies and an icon of resource discovery and development in Colombia, you expect something like…
Well, you expect something like Pacific Rubiales, because you've already seen it happen once.
Serafino Iacono truly has Colombia covered, and it's not just about oil and gas. He was one of the first to take advantage of Colombia's resource sector and he has connections at the highest level of officialdom. He owns the Pacific Group, one of the biggest conglomerates in Colombia, and they have their hands in everything from coal, gold, and oil and gas to sweeping infrastructure assets.
Iacono and Giustra also jointly own Blue Pacific, which is building ports in Cartagena and Barranquilla, and owns a wide range of infrastructure assets, power plants, farms and mines across Colombia.
Now, with a fortune already behind them in Colombia and new natural gas assets lined up for development, the two are targeting huge heavy oil assets in Argentina.
With Iacono's proven track record in the region and Giustra's backing, PentaNova seems destined for greatness, and investors will be looking for a repeat of those fabulous first years of returns for Pacific Rubiales.
This is about vision, guts and all the right people; something PentaNova has on a massive scale.
#2 Colombia's New Gas
PentaNova Energy Corp. (PNO.V; PENYF) is now shifting its attention to the oil- and gas-rich fields of Colombia, just next to the prolific Chuchupa Block, which accounts for 40 percent of the country's entire gas output.
They have several prized gems in their crosshairs…to acquire, develop, exploit and unlock their full potential.
The company has already secured three acquisition opportunities in Colombia:
Maria Conchita will require an estimated $70 million in capex to develop the field at a high working interest rate of 80 percent, meaning potentially high ongoing returns on investment.
Tiburón requires US$430 million capex to develop but has a potentially high IRR of 109 percent.
The block is very close to the Caribbean export terminal. That means it's served by excellent infrastructure and open access to Canacol's oil and gas pipelines. Bottom line: This is likely to lead to high well-head netback prices.
# 3 Next Stop, Argentina's Heavy Oil
Thinking big is what this is all about, and Colombia isn't big enough to contain PentaNova Energy Corp. (PNO.V; PENYF)
Argentina's heavy oil is even more spectacular. That's because all the super majors have shifted their attention to the Vaca Muerta shale and left prime heavy oil, light oil and natural gas assets ripe for the picking. It's a free-for-all… if you have the right people with the right relationships. And PentaNova has the regional experience and connections that put it way ahead of this game.
The company has targeted 4 blocks for acquisition in the region.
PentaNova has picked the right time to invest in the massive resources since oil and gas sales in the country are quickly moving to world pricing.
#4 Cash-Flow Positive by 2020
PentaNova's three Colombian oil and gas fields hold a total of 303.8 MMBoe, worth at least $5.18 billion at current prices.
The three assets have a Net Present Value of $1.6 billion and a healthy combined IRR of 32 percent.
The near-term financial outlook looks great, with operations in the three fields expected to be free cash flow positive as early as 2020.
Meanwhile, the three Argentinian assets hold about 515 MMBoe in Estimated Exploratory Gross Resources worth about $8.78 billion at current prices and another 5 million bbls worth another $229 million.
#5 Asset Potential Worth More than $10 Billion
PentaNova Energy Corp is a $192-million market cap company that's sitting on assets potentially worth more than $10 billion.
The company has only issued shares worth $155 million in the secondary market.
It's a very attractive model, with minimal cash going into SG&A and capex to maintain infrastructure. The company expects production to hit 50Mboe/d by 2019-2021, nearly 10 times current production.
With such a dramatic production ramp, it isn't a longshot to expect the company's shares to make strong gains in the coming months and years.
By. Joao Piexe
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