Whitepine, Ram Energy (RAME), Petro Resources (PRC) -- These two are completely different animals IMO. RAME's market cap is about 6 X PRC's and the daily trading volume, in dollars, is about 3 X PRC's. RAME is covered by 4 analysts to PRC's 2.
PRC is much more under the radar than Ram. For example, there were some very bullish comments on PRC's Cinco Terry play in the 1Q CC for AREX, who are the operator of that play, but these were basically ignored by the market for PRC stock. AREX confirmed that a second rig has been committed to Cinco Terry, and that they now plan to drill 42 wells there this year vs. 24 as of the beginning of the year. Also, they said that there should be an opportunity to downspace their acreage from 80 acre spacing to 40 acre spacing, at least at the Canyon Sands level. This effectively doubles the amount of potential of this play.
Cinco Terry is a small E&P's dream play, it is a resource play with "stacked pay". You drill down to the Canyon Sands and its basically impossible to drill a dry hole. You drill a few hundred feet deeper into the Ellenburger, and about half the time you find pay there too. If you get lucky and find the Ellenburger, the well pays out in something like 2 months. If you only get the Canyon Sands the well pays out in 6 months.
One of the best things about these microcaps is that you can often continue to buy them even after their story has begun to play out. On the flip side, these stocks are not for the "instant gratification" crowd, and its incumbent on you to know which kind of investor you are.
PRC will be putting out 1Q #'s next week, and they will not be tremendous (more than likely another loss), but will still demonstrate continued strong growth. But once they get that deep Newporte well spudded, which is gunning for 25 mmbo, I believe the stock should get a kick in the pants. I'm hearing that they finally got through all the permits for that location and have identified a rig, which may get on location by the end of next week. |
