At $0.001 Pilot Energy (PGY) has a measly market cap of only $1.6mil. I estimate that they have cash reserves at approximately $1.5-$2mil. The market is putting a nil value on their asset in dispute plus their nearology permits next to O&G majors and previous discoveries!
Recently PGY received a company-saving payment of $USD3.7mil which allowed it to pay off a loan facility and become DEBT FREE. This debt has been a real worry for the co. and overhanging its survival. Even at a 5 bagger status the market cap is not a massively demanding $8mil.
Previously PGY was focussed on the Alaskan North Slope Oil & Gas project in the USA which has a prospective resource of 3.85 billion barrels! PGY has a joint venture partner in NASDAQ listed company “Royale Energy”. Back in 2013 PGY (or formerly Rampart Energy then) had lofty broker targets such as the following:
Unfortunately due to differing views on the way the project was to be developed with the JV partner has led to litigation between the parties. Since this original news the share price has sunk from $0.005 in October to lows of $0.001 currently. It also lead to significant dilution with a cap raising at $0.001. It must be noted however that the directors showed their faith in the company by stumping up their own funds in the raising and we have the chance to buy at the same price as them here at $0.001. As we all know, directors are closest to co. and have the most insight and valuable information. The four directors stumped up $50K each. They are substantial holders as follows:
Harper 74 mil
Todd 68 mil
Smith 60 mil
McGoldrick 53.45 mil
For more information about the North Slope asset you can visit the following link: http://www.nextoilrush.com/government-begs-junior-company-to-find-oil-and-foots-the-bill/
Since North Slope PGY has diversified into two other exciting projects in Western Australia. Earlier this year co bought an interest in the WA503P permit in the giant NorthWest shelf complex. Shallow water depth allows for cheap drilling and smartly this time the co is the operator. “The most recent discovery in the area, Hurricane, is believed to contain over 100 MMbbl of oil in place (plus associated gas and condensate) within a structural/stratigraphic combination trap.”
PGY also has acquired an interest in the WA507P permit. The company says the following about this permit:
“An independent prospective resource assessment by Gaffney Cline & Associates (GCA) has confirmed the potential for multi-Tcf gas/condensate discoveries within the permit (refer to ASX announcement dated 25 February 2015).
GCA’s report on the three exploration leads delineated by the Company thus far determines the total gross prospective gas resources within the permit to be as follows”
Lead Low
This permit is adjacent to another permit in which Statoil has an interest (WA506P). For those that don’t know, Statoil is a multi national O&G behemoth with a market cap of $46bil! The company has only three interests in Australia, this being one of them. They are committed to spend $50 mil over the first three years followed by possibly another $215mil later on. This demonstrates the prospectivity of the area!
If PGY signs any farm in agreements then this should be a very good share price catalyst.
The market depth looks a bit daunting with a wall of 128mil shares at $0.002. Having said that, in dollar terms it only equates to $256,000. On Friday the stock traded its largest volume in the past year with 43.2mil units traded (bar 15th July, however that day had a crossing of 40mil units). Of Friday’s volume an eye brow raising trade of 27.5mil units was executed.
Even if the co. didn’t proceed with any of their permits or lost them, even at a $0.001 or $0.002 share price they have a super low Enterprise Valuation (EV), worth less than tech vend in stocks like GAL, DUO etc pre vend in!
In conclusion, here we have a stock with cash almost equalling cash backing, big upside with permits next to either O&G majors or previous discoveries, directors with plenty of skin in the game as well as possible upside should by chance they realise value from their previous flagship project and/or positive litigation outcome.
Sources: http://www.nextoilrush.com/government-begs-junior-company-to-find-oil-and-foots-the-bill/ http://www.pilotenergy.com.au/
PGY Price at posting:
0.1¢ Sentiment: Buy Disclosure: Held
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