Petromanas Energy: Shaking the Trees
Wednesday, July 30, 2014 in Blog
I’ve been keeping an eye on trading in Petromanas Energy (PMI.V/PENYF) these past few months since the company has delivered positive news and shares have performed well in 2014. This Canadian oil/gas play that is focused on projects in Europe and Australia, has big backers, big partners, and capable rainmakers surrounding it. Notably, Directors Frank Giustra and General Wesley Clark:
Giustra stepped up and got the markets attention when he scooped up 10 million shares at 20 cents in early March from a former partner/largest shareholder:
He can’t say much publicly about the company as a Director. However, we know he’s quite bullish by his actions and I have heard him say “Personally, I believe we’re onto something very large”. From the evidence thus far, that certainly seems to be the case.
Petromanas is elephant hunting in Albania with Shell Oil as their partner and they are obviously quite well capitalized (Also, PMI has close to $25 million in cash). The wells they are drilling cost close to $70 Million each but Shell has decided to carry PMI.V and now owns 75% interest in what appears to be a Billion barrels of oil recoverable field. Here are some nice details from a Seeking Alpha write up earlier in 2014:
The chart is now getting very oversold with RSI down to 27 and the stock put in a bullish harami cross pattern today. That simply means selling may be exhausted here, or getting close to it. The stock has very strong support at its 200 day moving average (21 cents) and the insider buys at 20 cents should combine for a strong floor in the low .20’s. However, shares just 60 days ago hit 40 cents so we have a 40% retracement and what looks to me like a solid entry point.
Petromanas also has warrants that trade and you can see the charts are identical. However, there is some leverage for more speculatively inclined traders like myself in the warrants. If the share price goes up from 26 to 39 cents that is a 50% gain (all that matters in investing is percentage gains/losses!!). The warrants hit 14 cents when the stock was at 39-40 cents and I was able to buy some today at 5 cents. So, if Petromanas recovers quickly, I will likely almost triple my money versus the 50% gain being had if the stock appreciate from 26-39 ish cents. Even buying at 7 cents commands a double, which is twice the gain. Now, you can’t buy huge size in the warrants, although they are somewhat liquid. And, it’s important to keep in mind that the exercise price is at a big premium (45 cents) and the expiration date in in late February 2015.
If you think there’s a shot PMI can go to new highs by early next year, the warrants should be considered for casino money because they could really fly. The downside is they can expire worthless and time is not on your side. But, I think PMI is going to minimally bounce back into the .30’s pretty quickly so the warrants could easily trade back to 10-14 cents. Theoretically, the warrants are a better bet for people that are investing small dollars because you get some decent leverage. If you want to invest six figures or even $25k or more, stick with the stock so you don’t have to sweat the clock ticking.
In summary, I believe this “shaking of the trees” on Petromanas Energy is a buying opportunity for traders and investors in the 24-27 cent range. For free updates on Petromanas and other special situations in the junior resource sectors, just enter your name/email into the box in the upper right hand corner of this page.
Eric owns shares in Petromanas Energy Warrants and may buy/sell at anytime. I am offering ideas for your consideration and education. I am not offering financial advice. I am not a financial or investment advisor and am acting in the sole capacity of a newsletter writer. I am a fellow investor and trader sharing his thoughts for educational and informational purposes only. This publication is a 100% subscriber supported. No compensation is received by the author from any of the companies mentioned for the recommendation of a stock in this service(if this changes or there is exception-it will be clearly disclosed to our readers).Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided on the Website is based on careful research and sources that are believed to be accurate, Mr. Muschinski does not guarantee the accuracy or thoroughness of the data or information reported. The opinions published on the Website belong to Mr. Muschinski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Muschinski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published on the Website have been prepared for your private use and their sole purpose is to educate readers about various investments. By reading Mr. Muschinski’s essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Muschinski, Gold Investment Letter’s employees and affiliates, as well as members of their families, may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.