performance

Ive traded in and out of PVE over the years. A little history might be interesting

At the time of the IPO, PVE forecast commercial gas production in late 2005. It was late all right. Not 2005, 2006, 2007 2008 or 2009, finally achieved in early 2010. They seem to have greatly underestimated the ponderous Italian beaurocracy, and probably how influential the sitting big player is.

Since IPO the operating costs have ticked away, dilution, accumulated losses and now debt in the last couple of years. Almost none of this was originally envisioned to get the production they will shortly have. The Euro and the Italian gas price was higher back then as well, and 90% was supplied from overseas pipelines running at capacity. Five years on and significant new capacity has been built. Italy is no longer running on the knife edge. Given all that it always amazed me that the share price refused to yield.

Given the lost ground, imo the likely NPAT from their 2 fields was not particularly enticing at the previous share price. PVE always markets itself on its potential. Provided there is a steady stream of projects in the pipeline, the grindingly slow appraisal/development process should only really hurt over the first five years. But now, after all this time, the development pipeline (say the next 1-4 years) looks very thin to me.

My guess atm is that a large shareholder (not connected with mgmt) was sick of holding and spat the dummy, the final straw being their review of Thursdays announcement. The information given in it was much more precise and negative then previous hints. Bezzecca was to be the near term big hope. Now the drop to 3P and the suggestion two wells (the first possibly producing in 2012) might produce 1.5bn bcf each is scarcely breaking even imo. The Fantuzza appraisal is essentially a deepening of Sillaro. Beyond those youre likely looking at 5years to production given the next appraisal well is successful. And longer if it isnt.. A very long timeframe for the action driven oiler community to get excited about.

I think the drop can be seen as more of a catch-up to reality, but with the % drop providing trading opportunities. You have to have the patience of Job to hold these things long term. Nice shiny announcements but hardly anything happens each quarter imo.