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Petronova, Pacific Rubiales Farm-In Worth Another Look: Black Spruce Merchant’s Sonny Mottahed

As posted on ceo.ca on March 2, 2014 by Tommy Humphreys

The $65 million market cap Petronova announced a farm-in deal with Pacific Rubiales that will see the tiny oil explorer carried for 4 wells in the largest untested prospect in Colombia, potentially worth as much as $4 billion (40% to Petronova), with drilling starting in this year’s second half. Plus: Petromanas, Petroamerica, Canacol and frontiers of interest in an interview with one of Calgary’s leading independent energy-investment bankers.

Petronova (TSXV:PNA) is poised to take off in 2014.

This from Calgary-based energy investment banker and investor Sonny Mottahed.

Mr. Mottahed in a telephone interview tells us about one company that impresses him a lot.

Colombian oil and gas explorer Petronova just announced a farm in-deal with Pacific Rubiales (TSX:PRE), Colombia’s largest non-state owned oil producer.

Pacific Rubiales can earn into 50% of Petronova’s Tinigua prospect by paying back-costs of U.S. $12.5 million and spending U.S. $33 million for drilling, completing and testing up to four wells. Petronova will keep 40% of the project.

Tinigua could be the largest untested target in Colombia, Mottahed believes, with unrisked potential of 159 million barrels of medium to heavy oil.

If proven successful, those barrels could be worth between $20 and $25 in the ground. Petronova’s 40% could be worth $1.27 billion to $1.6 billion, which is impressive considering the company’s market cap today is $65 million.

Our request for comment sent to Serafino Iacono, co-founder and co-chairman of Pacific Rubiales, was responded with two words, “Good grounds.”

The first exploratory well at Tinigua will start drilling in the second half of 2014.

Petronova has a second asset in Colombia, the PUT-2 block (75% working interest), which just drilled its first well; results are expected any day now. Success there could lead to an early production scenario.

“Management may not come across as the most promotional, but they are capable, focused and experienced,” Mr. Mottahed said. “If they are successful at PUT-2, watch out.”

[This is Sonny Mottahed’s first appearance in these CEO.ca blogs, and we are grateful to him for sharing his time and ideas with us.]

PNA Weekly Chart

CEO Technician: There is a big 2 year base here but PNA needs over $.40 to get the excitement going. (Stockcharts.com)

Mottahed owns other energy names in Colombia, including Petroamerica Oil Corp. (TSXV:PTA), a 6,000 barrels per day light-oil producer trading at 1.4 times cash flow. Mr. Mottahed says the company has a strong exploration track record and has been creative in its deal making, even as Petroamerica receives little recognition in the stock market. Petroamerica soon will show results from its sole risk La Guira 2 well. Barring success at La Guira 2, Mottahed expects the stock could see a tailwind of new buying interest after the expiry of 80 million $0.35 cent warrants on May 9, 2014.

PTA Weekly

CEO Technician: PTA has formed a very tight range around .28-.32; there is some evidence of quiet accumulation. A strong push above .35 would be very constructive and move towards a longer term breakout targeting .50+. (Stockcharts.com)

Canacol (TSX:CNE), having climbed 200% in recent months, is another Mottahed favourite.

“It’s had a huge run, but they have an incredible asset portfolio, and results from their Exxon well are imminent; so it’s very easy to be excited about Canacol.”

CNE Canacol

CEO Technician: Heavy accumulation within recent bullish consolidation – $10 is certainly achievable for CNE by June. (Stockcharts.com)

Petromanas Energy (TSXV:PMI) came up multiple times during our call. That company saw its share price rise to $0.205 from $0.14 last week after a report by Oil & Gas Investments Bulletin’s Keith Schaefer suggested Petromanas could deliver 20-fold returns to investors. Petromanas is developing its early stage onshore deep light-oil discovery in Albania with Royal Dutch Shell.

Mr. Mottahed says Petromanas Energy’s assets as they exist today could substantiate a share price of $0.70.

“These guys are onto something that looks like it is out of this world, enormous,” he says.

“Actually getting oil up and putting it into tanks and selling it will probably go a long ways in the eyes of any doubters of this discovery.”

Mottahed says the company’s second well, Molisht-1, probably will be cheaper and more efficient than its first well, Shpirag-2. Still, the banker warned that the play could take 2 to 3 years to mature, albeit with lots of milestones that could keep investors’ eyes on Petromanas.

PMI

CEO Technician: High volume breakout last week in PMI, needs to hold above $.25 to confirm and target $.40. (Stockcharts.com)

We discussed a few of Sonny Mottahed’s favourite frontiers in the international energy business in 2014.

He credited Peru for encouraging exploration investment and said that Gran Tierra (TSX:GTE) has drilled a “monster” discovery there.

GTE Weekly

CEO Technician: Big bearish engulfing candlestick on volume last week although GTE is in a very nice long term uptrend. Above $8.50 it’s no problem but it looks a little dangerous here in the short term. (Stockcharts.com)

Nigeria, where Mottahed once lived and worked and keeps close connections, is a tough place to do business but has a robust hydrocarbon system, the financier said.

“We think the onshore in Nigeria has a lot of low hanging fruit.”

Mottahed also is looking at early stage opportunities in Indonesia.

Junior energy companies have a very high risk of going bust. They are not suitable for most investors, he reminds us.

“No matter how good the science, geology or close-ology may be, you never know what Mother Nature is going to turn up until you turn the drill bit to the right far enough to figure it out.”

Sonny Mottahed, 41, was born in Los Angeles, the son of an oil executive with Exxon-Mobile. The family lived in ten cities during Mottahed’s childhood and after university, he joined the oil and gas business in Nigeria. He then relocated to London, and Houston, before settling in Calgary, Canada’s energy finance capital, in 2004.

In Calgary, Mottahed is growing Black Spruce Merchant Capital (BCMC) with two partners, Jeff Barber and Dave Cheadle. The three men have worked together for the past eight years at Canaccord, Raymond James and now BCMC. Collectively, they have executed more than 300 transactions, including financings and mergers-acquisitions, Mottahed said.

The six-person BCMC team invests in and advises early-stage energy businesses.

Some 70% of the firm’s business today comes from the international sector, while BCMC is also active in domestic Canadian energy names.

Jeff Boyce, Co-Founder and Former CEO of Vermillion Energy and Executive Chairman at Petroamerica Oil, does business with BCMC and told us what gives Sonny Mottahed his edge.

“Sonny is intuitive and creative in finding solutions to financial and business dealings. He also has one of the most extensive contact bases, along with being one of the more likeable and street-smart financial people I have dealt with in my 33-year career.”

Learn more about Black Spruce Merchant Capital by visiting their Web site and follow them on Twitter (@BlackSpruceMC) for updates from their portfolio and the oil and gas industry.

Disclaimer: Black Spruce has a business relationship or Sonny Mottahed is an investor in all of the companies mentioned in this article. Author has a financial interest in Petroamerica Oil Corp. and Petromanas Energy. Mr. Mottahed’s comments are his opinions solely and are in no way assurances of one outcome or another. Views expressed in this article are NOT to be considered individual investment or professional advice of any kind. All facts are to be verified by the reader. Always do your own due diligence. Thank you.

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Porto Announces Review of Strategic Alternatives to Maximize Shareholder Value

THE WOODLANDS, TX, Oct. 7, 2013 /CNW/ – Porto Energy Corp., (“Porto” or the “Company”) (TSXV:PEC), today announced that that in light of its ongoing capital requirements necessary to advance its oil and gas exploration program in Portugal, it has formed a Special Committee of independent directors and initiated a strategic review process to identify, examine and consider a range of strategic alternatives available to Porto, with a view to preserving and maximizing shareholder value. This process could result in a sale of the Corporation, a private placement or public financing through the issuance of debt, equity or a combination of both, a sale of a material portion of the Corporation’s assets, a merger, business combination or a corporate reorganization, among other alternatives. The Special Committee has retained Black Spruce Merchant Capital Corp. as its financial advisor to assist in the strategic review process.

Corporate Highlights

Porto currently has a working capital balance of approximately $1.3 million and a Portuguese income tax pool of approximately $130.0 million at May 31, 2013. Included in these tax pools are non-capital losses available to carry forward to future years of approximately $37.3 million.

The Company’s independent resource evaluation (the “Report”) performed by Dallas, Texas-based Netherland, Sewell & Associates, Inc. (“NSAI”) effective December 31, 2012 and dated January 10, 2013, assigned a P50 risked recoverable Contingent Resources associated with the Company’s Jurassic reef and other exploration prospects of approximately 44 mmboe and a P50 risked recoverable Prospective Resource mainly attributable to the Company’s Lias Resource and Presalt Conventional prospects of approximately 637 mmboe (535 mmboe on a net working interest basis).

As stated in the Company’s January 31, 2013 press release, work to characterize the Jurassic Lias resource play included finalized aeromagnetic data over the blocks, the drilling and analysis of 23 shallow wells and the development of a Lias deposition model that greatly increased the Company’s understanding of the Lias marls in the central and northern blocks. This work underpinned the Report by NSAI and points to a very prospective unconventional resource play that merits additional technical evaluation.

Review Process

Porto does not intend to disclose developments with respect to the strategic review process unless and until the Board of Directors has approved a definitive transaction or strategic option, or unless otherwise required by law or disclosure of which is deemed appropriate. The Corporation cautions that there are no guarantees that the strategic review will result in a transaction or if a transaction is undertaken, as to its terms or timing.

Porto’s common shares trade on the TSX Venture Exchange under the symbol PEC. Porto currently has 198,954,653 common shares outstanding.

About Porto Energy Corp.

Porto Energy Corp. is an international oil and gas company engaged in the exploration of crude oil and natural gas in Portugal, including the appraisal of a gas discovery. Through its wholly owned subsidiary, Mohave Oil And Gas Corporation (a Texas corporation with branch offices in Portugal), the Company holds working interests in seven concessions in Portugal’s Lusitanian Basin totaling 1.6 million net acres. Through its exploration efforts to date, the Company has identified seven major exploration trends over its concessions and generated more than 45 prospects and leads. Porto Energy’s shares trade on the TSX Venture Exchange under the ticker symbol “PEC”. For more information on Porto Energy visit www.portoenergy.com.

About Black Spruce Merchant Capital Corp.

Black Spruce is a private merchant banking firm focused on providing specialized financing and advisory services to the global energy industry. Our award-winning principals have a history of achieving success for clients based on high-level industry focus, strong industry relationships and innovative transaction skills. Offering advice in project, corporate and credit syndication; equity-linked financings; mergers and acquisitions; and strategic business development. For more information on Black Spruce visit: www.bsmc.ca

Cautionary Statements

No proved, probable or possible reserves have been assigned by the Company at this time. Undiscovered resources are those quantities of oil and gas estimated on a given date to be contained in accumulations yet to be discovered. Estimates of resources always involve uncertainty, and the degree of uncertainty can vary widely between accumulations/projects and over the life of a project. There is no certainty that it will be commercially viable to produce any portion of the resources.

Estimates with respect to resources that may be developed and produced in the future are often based upon volumetric calculations, probabilistic methods and upon analogy to similar types of resources, rather than upon actual production history. Estimates based on these methods generally are less reliable than those based on actual production history. Subsequent evaluation of the same resources based upon production history will result in variations, which may be material, in the estimated resources. Resource estimates may require revision based on actual production experience.

Contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable because of one or more contingencies. The contingent resources shown are contingent upon demonstration of the economic viability of the projects. Commercial flow rate testing and documentation of development plans will provide further evidence of economic viability of these projects. If these contingencies are resolved, some portion of the contingent resources estimated may be reclassified as reserves. There is no certainty that it will be commercially viable to produce any portion of the contingent resources.

Low Estimate is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. Using probabilistic methods, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate.

Best Estimate is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. Using probabilistic methods, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.

High Estimate is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. Using probabilistic methods, there should be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate.

Barrels of oil equivalent (BOEs) include oil, solution gas, associated gas and condensate. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl has been used and is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

This press release contains certain forward-looking statements. These statements relate to future events or the Company’s future performance. All statements other than statements of historical fact are forward-looking statements. The use of any of the words “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “should”, “believe”, “predict” and “potential” and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. These forward-looking statements are made as of the date of this press release and the Company does not undertake to update any forward-looking statements that are contained in this press release, except in accordance with applicable securities laws.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Porto Energy Corp.
For further information:

Heath Cleaver – Chief Financial Officer
Phone: 1-713-975-1725

Black Spruce Merchant Capital Corp.
Sonny Mottahed – Managing Partner
or
Jeff Barber – Managing Partner
Phone: 1.403.351.1779
Email: info@bsmc.ca

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Tuscany International Drilling Inc. Announces Hiring of Financial Advisors to Conduct Review of Strategic Alternatives

CALGARY, ALBERTA–(Marketwired – April 8, 2013) – Tuscany International Drilling Inc. (“Tuscany” or the “Company”) (TSX:TID) (COLOMBIA:TIDC) is a Canadian-based oilfield services company, offering drilling, completion and workover services to the international oil and natural gas industry.

The Board of Tuscany announces that it has retained Citigroup Global Markets Inc. (“Citi”) and Black Spruce Merchant Capital Corp. (“BSMC”) as its financial advisors to consider a range of potential strategic alternatives for the Company with a goal to enhancing shareholder value.

There can be no assurance that any transaction will occur and that there is no defined timeline for the strategic review. The Company does not intend to comment further regarding the strategic review until such time, if any, as Tuscany determines that disclosure is appropriate or required.

Walter Dawson, President and CEO of Tuscany, made the following statement: “The Board has been focused on the recent decline in Tuscany’s share price, which we do not believe reflects the long-term value of the Company. Therefore, we have taken proactive steps by appointing two well-regarded financial advisors in Citi and BSMC to work alongside us to develop ways to enhance shareholder value.”

While undertaking the strategic review, Tuscany will continue to conduct its business as usual and remains fully-focused on servicing its customers.

About Tuscany
Tuscany, a corporation headquartered in Calgary, Alberta, is engaged in the business of providing contract drilling and work‐over services along with equipment rentals to the oil and gas industry. Tuscany is currently focused on providing services to oil and natural gas operators in South America and Africa. Tuscany has operating centers in Colombia, Brazil, Ecuador and France.

The listing of Tuscany’s common shares on the Colombian Stock Exchange does not imply a certification by the BVC of the value or the solvency of Tuscany.

The Toronto Stock Exchange has not reviewed, nor does it accept responsibility for the adequacy or accuracy of this release.

FOR FURTHER INFORMATION PLEASE CONTACT:

Tuscany International Drilling Inc.
Walter Dawson
Chairman & CEO
(403) 265-8258
(403) 265-8793 (FAX)
or
Tuscany International Drilling Inc.
Matt Moorman
CFO
(403) 265-8258
(403) 265-8793 (FAX)
or
Tuscany International Drilling Inc.
1950, 140-4th Avenue S.W.
Calgary, Alberta
www.tuscanydrilling.com
or
Citigroup Global Markets Inc.
Octavio Molmenti
(713) 821-4701
or
Citigroup Global Markets Inc.
Serge Tismen
(212) 816-6000
or
Citigroup Global Markets Inc.
Grant Kernaghan
(416) 947-5500
or
Black Spruce Merchant Capital Corp.
Sonny Mottahed
Managing Partner
(403) 351-1779
or
Black Spruce Merchant Capital Corp.
Jeff Barber
Managing Partner
(403) 351-1779
or
Black Spruce Merchant Capital Corp
11th Floor, 505 – 3rd Street SW
Calgary, Alberta
info@bsmc.ca

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STREET MOVES: Black Spruce Adds Energy Banker From Raymond James

TORONTO–Black Spruce Merchant Capital Corp., a Calgary-based merchant-banking firm focused on the energy sector, bolstered its ranks, bringing aboard investment banker Jeff Barber, Sonny Mottahed, Black Spruce’s chief executive, confirmed.

Mr. Barber, who couldn’t immediately be reached, joins Black Spruce from the Canadian arm of Raymond James Financial Inc. (RJF) and in doing so reconnects with his former colleague Mr. Mottahed, previously head of international oil and gas with Raymond James in Calgary.

Mr Barber’s hiring also comes after Black Spruce recently added Melanie Love, a former energy analyst at Canaccord Financial Inc. (CF.T), a Canadian brokerage firm.

Write to Ben Dummett at ben.dummett@dowjones.com

Original article can be found here: http://online.wsj.com/article/BT-CO-20121203-710421.html

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