HOUSTON, JUNE 22, 2000 (PRIMEZONE) -- Thomas Loyd, editor-in-chief of Investors' Alert, stated, "Rarely have we here at Investors' Alert seen a stock as undervalued as Pangea Petroleum (OTCBB:PAPO)."
Mr. Loyd went on to say, "The stock has a book value of approximately $1.00-plus, based on the value of an Internet communications company in which PAPO owns a considerable stake. Most stocks in this group are trading at 5 times book or better, which makes the stock worth $5.00 right now!
Also, PAPO will finish a project in South Texas soon, a very substantial producing gas well which will bring $0.20 to $0.40 per share to the bottom line. If you give that a 20 P/E on an average of $0.30/share, that is $6.00/share. The well is an offset of a major producing Enron gas well (NYSE:ENE), which produces over 5 million cubic feet per day. PAPO's well in the Wilcox formation will be at full production within the next 20 to 45 days, and is expected to produce 5 to 10 million cubic feet per day. The well has proven reserves of 10 billion cubic feet, and the Wilcox formation has a very slow decline on production. The well should be producing for 15 to 25 years to come. The contract price for gas on these leases is approximately $3.75/MCF. This equals approximately $0.20 to $0.40 to the bottom line for PAPO."
Mr. Loyd continued, "Yet, probably the biggest reason why we believe this stock is so undervalued is because of its project in the Republic of Guinea. We believe it will make this stock worth substantially more than $6.00/share.
The Republic of Guinea project is a refinery that will be completed in the next 7 to 12 months. The refinery's capacity will be 15,000 barrels per day. According to PAPO management, the company is under contract to deliver, at this point, approximately 12,000 barrels per day of Nigerian crude oil on an exclusive basis. According to PAPO management, the profit margins for turning the crude oil into usable products is approximately 25 to 50%. 12,000 barrels per day, at approximately $4.00 profit per barrel, equals almost $1.2 million gross profit per month after operating expenses. Except for the small administrative expenses that PAPO will incur, all of this will drop to the bottom line. This should equal $0.35 to $0.75 in additional net income to PAPO. If you give that a 20 P/E on an average of $0.55/share plus the $0.30 which equals $0.85, that is $16.00/share."
He concluded, "PAPO's new CEO is a seasoned veteran from Praxair (NYSE:PX). He ran many of Praxair's International projects with great success. So, we here at Investors' Alert feel extremely comfortable that these projects will be completed within the upcoming months."
Symbol - PAPO Shares Outstanding - 17,724,000 Float (est.) - 2,800,000 Short-term Target - $8.50
UPDATE:
This new lease that PAPO will acquire (press release 06-21-00) is worth almost $36 million, that's more than $2/share. We are now moving our short-term target up to $10.50/share.
Other stocks that we are tracking but have not yet made a recommendation: Safe Tech International Inc., (OTCBB:SFAD), Equalnet Communications Corp. (OTCBB:ENET), Imaging Technologies, Corp. (OTCBB:ITEC), American Diversified Group Inc., (OTCBB:ADGI), Talk Visual Corp. (OTCBB:TVCP), Kaire Holdings, Inc. (OTCBB:KAHI), United Systems tech. Inc. (OTCBB:USTI), Qualcomm, Inc. (Nasdaq:QCOM), Handspring, inc. (Nasdaq:HAND), Procom Tech. (Nasdaq:PRCM).
Investors' Alert is an independent research firm, owned by Thomas Loyd, with paid subscribers. Subscriptions are $199.00/year for Investors' Alert newsletter service. This report is based on Investors' Alert independent analysis but also relies on information supplied by sources believed to be reliable. Loyd Financial Consulting has been retained by Pecan Tree Consulting to represent PAPO for a period of six months beginning June 11, 2000 and was paid 90,000 of PAPO common shares by Pecan Tree Consulting. Thomas Loyd and Loyd Financial Consulting may from time to time buy or sell PAPO common shares in the open market without notice. Thomas Loyd has purchased 30,000 shares of PAPO in the open market. The information contained in this report is not intended to be, and shall not constitute, an offer to sell nor solicitation of any offer to buy any security. It is intended for information only. Investors should consult with their Investment Advisor concerning PAPO. Copyright (c) 2000 by Loyd Financial Consulting. All rights reserved.