"PTA is trading at the lowest multiple in the peer group, the company had been overlooked by investors due to its single asset risk (all production was previously from one field), lack of operatorship, and low RLI - issues addressed – TIME TO BUY.
We did highlight this stock post the close of the acquisition – catalysts ahead worth mentioning: the company plans to announce a revised production guidance and combined capital spending program by mid-September, 2014.
PTA has stated that they expect to be able to fully fund the operations internally through cash flow and cash on hand (~$30mm/qtr of CF + ~$40mm on hand); the company will be active with the drill bit through early 2015 with six exploration wells and up to eight development wells (PTA added interests in 5 blocks after Suroco closed the acquisition of the PUT-7 block in May - we expect 5 exploration wells to be in the Llanos basin and then 1 in the Putomayo).
Current production is located on the Suroriente Block (15.8% W.I.) where production primarily is from the Cohembi field. The company has identified additional potential around the Quinde discovery on the Suroriente Block. Put-7 is a key to PTA (this is what was pushing the rival bid from Vetra) as this is an ANH contract (better terms than the Suroriente Block) and believed to have the same formations – and PTA has applied for operatorship. Petroamerica is trading at peer group low valuations on 2015 numbers: A GMP Best Idea."
Company was clearly undervalued - and still is even with this move. Biggest surprise though has been how good management is. These guys did a nice job with the Suroco deal, recent farm-out to Parex and other moves.