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Gold/Mining/Energy : PETROSTAR
PEP 142.23-0.9%Jan 2 9:30 AM EST
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From: james flannigan4/6/2011 11:41:22 AM
   of 50
 
PETROSTAR TWO POSSIBLE OUTCOMES.

Well I must say PEP has been like watching paint dry.It has been a long time waiting for the funding by the venture firm out of Florida to advance the first $5 million of the $20 million agreement with PEP.That said things are not as bad as the stock price would suggest.

First we are in $108 WTI and $120 brent oil.Second it is likely the DD process has run its time and the funding my be a matter of just around the corner.If so I would expect the shares of PEP to double on the funding news.With a market cap of around $5.5 million and $5 million stuffed into PEPs bank account by the lender the market would likely reflect a higher valuation for PEP shares.

The question is were is the funding? Well that is hard to answer,but it could be there at any given time near term if the DD has entered as we are told the final phase in the last update from the company.

If the funding were delayed I suspect Petrostar would terminate the agreement.They also could drill a few holes with the cash on hand from the Maidstone sale,make a discovery and then bring more paper to the market at higher prices,or bring in a serious partner.

Those are two possible out comes.The shares of PEP are im my view pricing in no funding by CCMB but I say not so fast.The Bakken play is hotter than a firecracker.The price of oil is much higher than when the funding was put in motion in Sept 2010.So all and all its been a long wait,but as the saying goes good things come to those that wait.

I rate the shares a screaming buy below 10 cents and if funding does come soon then a five bagger could be at hand.If they drill and strike oil then all bets are off to a price target.

I caution all readers to take care and do DD before stealing PEP shares from those who can not wait.

James
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