The tiny Irish stock on the brink of landing 'the first' post-sanction oil deal in Iraq. Ref 'Fleet Street Letter' 12-04-04..

I have a question re risk/reward for any new investors following this story and debating whether or not to "get on" at this advanced stage - assuming that much of the speculation on one or two contracts is already baked into the price, what do posters see as the potential upside for the SP (the inherent value) post the RNS e.g...

one tender ?

two tenders ?

three tenders ?

Also, what if (doomsday scenario) no tenders?

I realise this is asking a very simple question to a complex subject (beyond my limited information and capabilities) but it should be possible to define a range of valuation related to the market cap and financials post any of the above scenarios. Interested to hear views...perhaps we could even organise a sweepstake!?

Joehargan1 - Best advice is to go back thru the threads and take posting by Tokyo, Dexter and EWRobson to name a few, there are many many posts that are of great informative use.

thanks gra1969, I've been following the thread since it started with a few early posts of my own but just curious to hear views on the sp potential ranges post the RNS.

This is the Month -don't miss the boat! will be marked up tomorrow going by the trades today.

I have topped up so many times that i feel im about to burst!!!!!!!!
joeHargan1- there is a very interesting thread about two weeks ago that was commenting on anywhere from 2-4 SP, with an eventually 7-10 potential target from the bigger players a while down the line.

larger companies will wanna takeover this outfit at some point so this is very cheap! oilbarrel.com had them a buy at 1.21 and 1.50 etc with this in mind!

joehargan1 - Take a look at PET's website, click on 2004 slides, go to slide 17, you'll see with a 30% chance of risk sharing they price the shares at 3.30pounds, of course if it a risk sharing agreement straight away then in reality we could be looking at 10 pounds a share on just one tender, but very speculative, really depends on what people are willing to pay, and if the majors make a play for PET.

Just for fun do these sums (I did a while ago and came out with crazy numbers, as I was only looking for 4 pounds a share)

number of barrels per day (120,000) x 365 = 43,800,000

43,800,000 x $60 (a barrel) = 2,628,000,000

*note - DH has already stated Any reasonable terms (say 30% production sharing) could literally be worth billions given the size of structure and relatively fast time to develop giving existing infrastructure. Petrel has few shares in issue (only 66m fully diluted).


2,628,000,000 - 70% = $788,400,000

$788,400,000 / 66,000,000(shares in issue) = $11.94(EPS)

Earnings per share = $11.94 x 10 (P/E ratio) = possible SP of $119.40

$119.40 = 65 pounds


With the above maths you can see the potential, but until the RNS is released and we know what we are dealing with, I'm afriad they just remain silly numbers

Also remember if they get a risk sharing agreement, they are still a long way from being able to pump the oil out of the ground, so 10 pounds a share seems more likely until the oil starts flowing.


The numbers were meant only for fun and to show what could happen in the future, and not for anyone to use now as investment advice!!!!


Good luck all

Tokyo

about time this moved!! and a nice mark up tomorrow!

Tokyo,
You are being lauded over on iii as well as here,soon to be sir Tokyo !.You do deserve it, i have`nt been able to find anything of any for days now, very frustrating.One point though, people keep saying PET should put out an RNS because of the volitility of the sp, i don`t agree because since the visit to Dublin and subsequence visit to Amman and the news of further offers to be submitted, the sp has hardly moved, not even on a daily basis %wise.
Dexter

Thanks Tokyo, interesting anlysis...I'm staying in. Hopefully an RNS soon...and at the very worst before the US decides categorically on their next President:-)

Hey Dexter

How have you been? Don't need the title, just the cash!!!! Sir Dexter seems more fitting!
Interesting group over on fillyaboots, thinking of setting up an investment thread and pooling all research together on different companies, I've already started researching my next possible one.

Tokyo

Tokyo,
You top up any more and you`ll come in significant shareholder bracket!!.
I been quite busy last few days and had a poxy cold!,i hope nothing drastic happens in the next week or because i`ve sent all my PET certificates to comdirect and they won`t show until end of next week at earliest.
By the way, when do you fit in time for work, sleep etc. etc.?
Dexeter

Dexter - Sleep, What's that? Actually I run my own language school over here, so pretty much work my own schedule(occassionally quite a lazy one as my regular postings will atest to), bit busy if one of my teachers get sick, etc. I'm going to be busy as I've also got a few meetings coming up next week on a possible partnership for an import business for next year, if it comes off I'll be able to come back to the UK alot more on business expenses, so my fingers are crossed for good news from Petrel and for that

I remember last year I sent my RTD certificates to comdirect and they were pretty good at putting them into my account quickly, infact from not being able to use my barclay card with comdirect they have been an excellent on-line broker, will hopefully get the card thing sorted out by changing my account over to HSBC, appartently they don't have the same problem with postcodes as Barclays have.

Tokyo

Tokyo, whats it like over there for Phys Ed teachers, got my degree in 1995. you never know, I'd be reasonable to pay, obviously when PET kicks in.

watcher

Hahahaha Watcher for Phys Ed you'd have to work in one of the English speaking universities, and with all those fantastically fit young 18-22 year olds running around you everyday, the last thing on your mind would be the stock market!!!!

I spent a year over here on the international exchange program here when I was a student at Leeds uni, great fun but too much temptation.

although with all your PET profits, Tokyo is a great place to celebrate!!

Tokyo

Tokyo: When do you plan to be back in London Town? I too spent many happy years based in Hong Kong with lots of long (and very pleasureable) assignments to Tokyo!! We really will have something to celebrate by the end of this month as I am as sure as I can be from all the data we have on PET that there will be a +ve announcement/s over the next few weeks. John

I could put it down to networking and hang the expense. The PET profit will no doubt cover that. real consideration when RNS arrives. traveling, sport and cultural understanding that sounds balanced enough to tempt any investor. Dexter you any good at football, we could call it a tour, I got some classy mates on that front?

watcher

Watcher,
I used to be employed as a "stopper",very effective when the ref was otherwise distracted!!,got the bath to myself if i was caught!.
Been so bored with lack of info., i`ve started to look at properties in france and bulgaria in readiness!.
Dexter

just been reading this from PET`s website, i know it`s old but some parts are very relevant ie.the bit about placings to avoid dilution.

Dexter

PETREL IN IRAQ

Petrel entered Iraq seeking a concession to develop and/or refurbish existing oil fields in Iraq. In 1999 we submitted a detailed tender to refurbish the Subba/Luhais oil fields in the Basra area. The feasibility study envisaged the following:

Capital cost $355m.

Daily output of 180,000 bbls rising to 240,000.

27-36 month refurbishment period.

The tender was well received and over the following months a detailed evaluation took place between the Iraqi Oil Ministry staff and Petrel staff and consultants.

As a small junior oil venture Petrel lacked a track record. The Oil Ministry suggested that we cut our teeth on an exploration block and indicated that we should apply for Block 6 a choice block in the Western Desert which lies between Baghdad and Jordan. Only 9 blocks in the area were offered for tender. Outstanding exploration areas in the North and South were not offered.

Block 6 is a 10,000 sq kilometre block about halfway between Baghdad and the Jordanian border. It had some work done in the early 1980s and has pipelines running along the edges of the block.

Over the following two years long and torturous negotiations took place to agree a work programme and then to negotiate commercial and financial terms. In Spring 2001, we signed an agreement with the Oil Ministry. Together with other applicants such as ONGC of India and Petronas of Indonesia we awaited the Proclamation of the Agreement. In December 2002 we were informed that the Proclamation was approved and would be made on December 15th 2002. That is where events remain.

Where are we now? We are open for business in Baghdad. We have presented an interim work programme on Block 6 to the current executives in the Oil Ministry. We have re-affirmed our interest in the development of the Subba and Luhais oil fields. If we get approval we proceed. If we do not we fight. It is as simple as that. We will be flexible not intransigent. I hope and expect that commercial sense prevails and that all realise how we can develop oil projects far quicker than new entrants. It is not as if there is a scarcity of projects. There is oil development work for the next generation. We would like to have a local Iraqi partner as well as the Oil Ministry. We are not averse to taking in an international oil industry partner. The opportunities are so good that to use an old expression half a loaf is better than no bread.

Rest assured that we are, and will remain, at the head of the queue.We have laid down our markers.

FINANCE

Petrel has been run on a shoestring for the past three years yet even the lowest level of operations cost money. It costs in excess of 100,000 stg. a year to maintain an AIM listed company. In recent years small placings mainly with the directors and friends has funded ongoing activities. In the Spring of 2003 we agreed a small placing with a City institution which raised 136,000 stg. Since then our price has quadrupled. We will continue a policy of small placements to minimize dilution until we need to raise money for development and/or exploration.

PEOPLE

I cannot complete this report without commenting on the people involved in Petrel, particularly our directors David Horgan and Guy Delbes. They have taken significant personal risks and suffered hardship to venture into Iraq to re-establish our operations. Our success will be in large part to their efforts. I am delighted to welcome Stefano Borghi to our board. It will be my pleasure to propose him for re-election at our Annual General Meeting. Stefano is an experienced international manager with Iraqi oil experience. He is currently managing an Italian venture capital company. His experience, contacts and advice will be valuable.

John J. Teeling

Chairman

June 27, 2003

Tokyo, dexter

Just looking at the numbers above, one significant factor will be the capital cost during the first year of operation. Whilst, from Dexter's post, this would involve additional share capital, the issue price is likely to be quite high given the likely explosion in the price on winning the tender. Again, the risk sharing agreement may involve partners who already have much of the equipment and infrastructure.

The other, albeit slight, concern from the post is the unwillingness to risk a major play with Petrel that resulted in them being allocated Block 6. Do you see that we are past those concerns with the risk sharing agreement, implying a tendering group? Possibly working the other way is the extent to which the Iraqi Oil Ministry might feel an obligation given that Block 6 is not in the immediate plans.

Eric