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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:
Now, throw all those ingredients together,
put them in the proverbial investment oven by taking a position while the
stock is cheap, and let the cake, or the stock price in this case, rise
as it heats up in the oven. If you've put all the ingredients together
properly, you have an excellent chance of a very profitable result. The
main theme of this kind of story- you are using other's disappointment
and loss to position yourself to make money.
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,
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
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,
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
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
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
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.
|Press Release Source:
Platina Energy Group, Inc.
Platina Energy Group
Connects More Wells to Pipeline in Kentucky
Thursday June 19, 4:05
DALLAS, TX--(MARKET WIRE)--Jun
19, 2008 -- Platina Energy Group, Inc. (OTC BB:PLTG.OB - News), (Frankfurt:O5Y.F
- News) reports as of the close of business on Thursday, June 19, 2008,
more gas wells have been connected to the pipeline for purchase by a major
Blair Merriam, President
of Platina stated, "Combined production should range in the 750-1000 mcf/day.
At current gas pricing, annualized revenue run-rate should rise to exceed
$4,000,000+ from the new connections by the end of June. We are only part
way done with our present developmental program in Kentucky, but expect
to enjoy cash flows beginning in July and a healthy revenue stream from
these wells for years to come."
According to Joel Patton,
field management for Platina, "We've been working at top speed to get these
wells on line in Kentucky as in addition to our Tennessee field. We're
very excited about the revenues that these wells will deliver as both areas
have long histories of consistent production."
About Platina Energy
Platina Energy is an
environmentally responsible, E&P strategic reserve and development
Company. Since organization in 2005, it has acquired proven producing and
proven non-producing reserves in addition to other possible reserves. The
Company also owns rights to German Inspired oil extraction technology.
The Company continues to be aggressive in developing and acquiring new
and existing producing fields.
herein contains forward-looking statements; not guarantees of future success.
The presence or recoverability
for optimal/timely reserves, costs, scheduling, etc., cannot be promised.
This release contains "Safe Harbor" provisions of the US Private Securities
Litigation Reform Act of 1995 & involves risks and uncertainties that
could cause actual results to differ materially from those estimated herein.
Platina Energy believes
the forward-looking statements to be based on reasonable assumptions however,
no assurances are made. Unpredictable & unanticipated risks; trends;
potential unprofitability; cash flow impairments; access to financing;
and other risks must be understood.
Platina Energy assumes
no obligation to update or supplement forward-looking statements that become
untrue because of subsequent events. Issuances of shares for acquisitions,
settlements or services may dilute future earnings.
Oilfield leases contain
certain terms and stipulations, often developmental or financial that may
require performance by the lessee. This could result in loss of future
rights and underlying assets.
Platina Energy Group
Source: Platina Energy
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