To OTC Journal Members:
 

Platina Energy Group (OTC BB: PLTG): My Kind of Twelve Cent'r

It's a recipe Betty Crocker herself would be proud of. It's a recipe for successful speculation on low priced stocks. Here are the key ingredients to bake into the cake:

• Find a company in the hottest sector- the one investors are piling into
• Find a company that had previously spiked to a much higher price on anticipation of great things to come
• Find a company that had disappointed impatient investors to the point of the stock being at a multi month low- this limits your risk
• Find a company that is now going to deliver the results investors were hoping for when it was at its high
• Invest, be patient, and wait for it to go back to its previous high

It was just last week when an associate asked me to look at Platina Energy Group. I had planned on winding things down for the summer and working mostly on the new video rich OTC Journal web site (coming soon).

In last weekend's edition, I asked for feedback. I wanted to know if you would be interested in a 10 cent energy play, trading at an all time low, down to 1/5th of its former value. The response was pretty definite- it was a resounding yes. So, as requested, here it is. Sorry, it became a 12 cent'r in the last week, but it's still cheap.

PLTG is an oil and gas production company. This is not a complicated story, so it's going to be very short. This company has oil and gas properties in Kentucky, Tenessee, Wyoming, and Oklahoma.

PLTG has technology which allows them to rework old wells. At the same time, they are drilling new wells. Many of the older oil producing wells in the Continental United States contained large natural gas reserves. Years ago, drillers would bypass the natural gas to get to the oil. In those days, natural gas was too cheap to be profitable, and there was no pipeline infrastructure to support its delivery. They would either flare the stuff, or leave it in the ground.

PLTG has technology which allows them to go into the old wells and recover the Natural Gas. At that same time, they have an aggressive drilling program for new properties.

Their current drilling program is focused primarily near the Kentucky/Tennensee border at the location you see on the map. They've been drilling, and have found natural gas. Now, it's time to start harvesting.

Today, just after the market closed, PLTG announced that a large utility's pipeline has now been hooked into three of their producing wells in Kentucky. According to PLTG, these new wells together are currently delivering 700 to 1050 MCF. This equates to about $4,000,000 in annual revenues if natural gas remains in the $10 to $13 MCF price range.

Cash payments from this natural gas will begin to flow to PLTG as early as July. As I said, it's not complicated. They are officially making the jump from exploration to production as you read this information. It's literally happening today.

Here's the other very uncomplicated aspect to this idea: The Entry Level for the Stock! This is the component that really enticed me into the coverage. The stock is trading at $.12- it's a relative number, but relative to a $.55 all time high, and a $.05 all time low. You have to go all the way back to September of 2006 to find this particular stock much below $.10- you only have to go back to August of 2007 to find it at $.55- more than five times today's closing level. You are looking at a weekly chart- each bar represents one week of trading.

I haven't been too anxious to cover a small oil and gas producer as they had all run up the charts with a bit too much enthusiasm of late. However, here's one that is about to begin generating really significant cash flows as it trades near a multi year low.

Now, on to capital structure- or anotherwords- the supply/demand component. There are 67 million shares I&O- at $.12, this equates to a market capitalization of $8 million. There are several preferred issues, but they don't have toxic conversion features. However, fully diluted, we should assume 100 million shares I&O for the purpose of looking at market capitalization- equating to a market cap of more like $12 million.

PLTG recently entered into an institutionally funded debt financing. The funding was earmarked for drilling. The debt can convert into shares at $.08- sound toxic? Take another look at the structure- the monthly debt payment can convert into shares at $.08- but only if the stock trades above $.30. By the time there are any conversions, the stock has to be a triple from today's level. Here's a thought- let it go up 2.5 fold, then take profits ahead of the fund providing supply to the market. To date, PLTG has made its debt finance payments with cash. If they continue servicing the debt in that manner, there will be no dilution.

My target price for this idea is $.25 short term with an SSL (suggested stop loss) at $.08. I wouldn't chase it at or above $.14 or $.15 on the intial surge from today's news.

As I said- it's a pretty simple story. The company has evolved from an exploration situation to a revenue producer as of today, and the stock is at 1/5th of last year's high, near an all time low. I don't believe there are going to be large toxic blocks available for sale, so this idea might trade up quite easily.

With a $11 million market value at today's price, $4 million in annual revs kicking off today, and a number of other properties close to producing revenues, it seems like this idea offers lots of upside and very little downside from today's levels.

Here's today's post close press release. Read it- revenues are here for PLTG.
 

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