Highlights

• Peru’s CV19 cases needs to stay undercontrol
• Iquitos is slightly concerning
• Mining and Hydrocarbon industry is preparing back to work (in my opinion) by lowering the health condition requirements for workers
• RANDOM: Are the shale zombies reviving?

Peru’s CV19 cases curve look “meh”

I think it’ll take a month at least for Peru to stabilize from CV19.

Energy Transfer claims shale producers are turning back on production.

“Oil producers have generally been vague about when they’ll ramp output back up, though some have hinted that oil prices in the high-$20s or low-$30s could be sufficient. “

https://www.bloomberg.com/news/articles/2020-05-11/shuttered-oil-wells-are-turning-back-on-pipeline-giant-says

Iquitos not looking good at the moment: “Iquitos regional hospital: 11 doctors for 600 patients“

https://diariocorreo.pe/peru/hospital-regional-de-iquitos-11-medicos-para-600-pacientes-noticia/?ref=dcr

“Protocol modified so that workers can work in the reactivation of mining, energy and hydrocarbons”

“According to Ministerial Resolution No. 135-2020-MINEM-DM , it is established that from now on, workers over 65 years of age and those with a BMI of 40 and over will be considered as part of the risk group. With this, the age limit will no longer be from 60, nor the BMI from 30 to more”

https://gestion.pe/economia/coronavirus-peru-minem-modifica-protocolo-para-que-trabajadores-puedan-laborar-en-reactivacion-de-mineria-energia-e-hidrocarburos-nndc-noticia/

When questioned about his anonymity, he blocks me :o. I’m deeply saddened by his actions, and it’s truly a shame that I don’t get his insightful (hindsighful) updates.

Let me start off with this thread.

“If PTAL manages to sell their Bretana at -$4/bbl to WTI then maybe they will be fine”

I don’t know how this comment makes sense. Bretana oil is high quality sweet heavy oil. They sell at a discount to Brent.

Those who are well hedged are well protected this year
What happens with 2021 hedges of brent only clocks $40 in Jan?
Will be tough environmental for most Oilers

If PTAL manages to sell their Bretana at -$4/bbl to WTI then maybe they will be fine

WTI forward curve is worse pic.twitter.com/pDZVFPOQWV

— 🅰️lex (@Alexios1201) May 10, 2020

More threads, maybe it’s just naive misunderstanding, but there are enough people out there who spread misinterpretation and misinformation. If you did your research, you’ll know whose right

Hang on, so they took the payment of $33M and $55M for 580kbbls and 1.2mmbbls, total of $88M and spent it all already???

Is this all went into this stated $99M 2020 expediture?

And crude is unsold now…

Don't get it still why are they called in for $42M pic.twitter.com/VpBovvFrMq

— 🅰️lex (@Alexios1201) May 10, 2020

Good luck investing folks!

A lot of times YOU are smarter than you think. And folks on twitter are dumber than you think. Take their advice with a grain of salt.

If you spent time doing your researching, talking to the right people, backing your analysis with data, and verifying your investigations; there is no reason to panic when you hear rumors on social media such as Twitter.

PTAL is a good example. There has been noise of insolvency, and bankruptcy because they are strapped on cash. I don’t think that’s going to happen. There are plenty of last resort options management can use, such as a raise, farm out Bretana, or a loan.

First, a cap raise is not ideal because it diluted my investment :(. Farm out is an OK option but given the current lack of interest in O&G, maybe that’s not a viable option. Finally, a loan is going to be hard to hash out a deal. Where the heck are the going to get a loan from?

Meanwhile in the TwitterSphere:

looks horrific – little chance to avoiding bankruptcy for me.

— n (@nigelpm_uk) May 7, 2020

There are rumours that the Peru government will spread the payment due over 3 years and renegotiate the deal. Lots of oil in the ground…Just to level up with US trading we need a 35% rise #PTAL

— AimB (@bagger_aim) May 9, 2020

My thoughts

A lot of people don’t know the strategic importance of Bretana, and PTAL CEO’s connection with PeruPetro. Most of their “liabilities” are to owe to PeruPetro. With the CV19 pandemic, everyone is suffering, and I believe it is at Peru’s best interest to work together to resolve issues to avoid fire sales and mass panic. A lot of other producers are affected by PeruPetro’s Northern pipeline shutdown. The question I ask is, will PeruPetro repossess everything from everyone who doesn’t get oil revenue because of the impact? What would PeruPetro do so that they can minimize impact to themselves?

1. assume producers will never get cashflow again, and repossess assets from companies that can’t pay,
2. get a minority ownership in worthwhile producers
3. negotiate a debt restructuring plan and payment plan
4. help out their friends by doing #2 and/or #3.
5. Get government help and #4

It’s hard to say, but it’s not going to #1.

I’m just looking to a non-dilutive solution for PTAL. PTAL isn’t going away, I’m more worried about losing upside