Opinions
Josef Schachter
Gran Tierra Energy Inc.
GTE-T
BUY
Dec 05, 2012
Stock price when the opinion was issued
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He's out of the energy sector. It's one of the worst sectors due to an exodus of investors. He owns BP and a few smaller Canadian ones, like Cardinal.
Gran Tierra (GTE-T) vs Parex Resources (PXT-T). A tale of comparing two brothers. Both are in South America with Columbian core assets. Parex being a pure play vs Gran Tierra having ventured into Peru and Brazil and have exited these areas and now looking at Mexico and so forth. Prefers Parex as a South American play, very consistant. Gran Tierra has had its misteps, still has very good core Columbian assets.
Small oil and gas producer operating in Colombia. His preferred play is Parex Resources. GTE is more aggressive and not as financially strong. Parex has no debt, in fact has cash. GTE production fell off a cliff last year. Higher beta. More leveraged to an oil recovery, if you think oil's going to $70-75, which he doesn't.
Likes the company. His target is $6 so there is some upside here. Key for the company will be the drilling in Peru that hopefully results in Q1. Continuing to add more results at Moqyeta. Costayaco is still doing very well, but at some point depletion will kick in. Very strong balance sheet but they need another win at the drill bit after Costayaco. Moqyeta has been a nice discovery but not on the size of Costayaco. Potentially, the play they are drilling in Peru in Q1 could be a sizable play of 30-50 million barrels.