Penta Nova Energy Corp, PNO.v C$.395
Posted: Thursday Nov 16 11:11:20AM 2017
I have a small position in this junior energy company with big plans to develop heavy oil in Argentina. The main reasons I like this junior are the mgmt background, the amount of proven reserves in Argentina and their plan to bootstrap operations in Argentina by developing gas in Colombia.
Penta Nova has several big hitters amongst their founding members. Serafino Iacono was the chairman of Pacifc Rubiales, which went from nothing to more than 150,000 bpd oil production in Colombia. Frank Guistra is involved in several mining and energy companies and has a long track record of success.
PNO plans a two step approach. They have some land in Colombia and are getting ready to drill their first big ngas well late this year or early next. South America doesn't have the pipeline infrastructure of the US so even though there appears to be plenty of ngas, it isn't readily accessible by the growing Colombia economy. Colombian gas production is falling and demand is rising. Local gas prices are around $5-6/mcf and are quite profitable. Canacol is another Canadian energy company that has done well in Colombia focusing on ngas. PNO expects good results from their first well and subsequent wells because of the location of the land and nearby results. They expect the Colombia ngas production to help finance their main goal. They hope to invest in cold flowing heavy oil in Argentina. They control over 125,000 gross acres. and several BILLION barrels of heavy oil. All the hoopla about shale oil and light oil development has left these types of fields without interest.
Here is the latest presentation: http://www.pentanovaenergy.com/wp-content/uploads/2017/09/Sept-2017-Investor-Presentation.pdf
The current market cap is around C$71 million so there are plenty of shares already outstanding. Company raised capital two times recently to fund the acquisition of the interests in Colombia and Argentina. Those financings may be contributing to what I consider mediocre stock performance recently. Each news release seems to bring lots of eager sellers. My average cost is right at the current price. Hoping first Colombian gas well will spark some interest.