• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Source Capital Group Announces Upgrading Opinion on Petrol Oil and Gas, Inc. (OTCBB:POIG) Strong Buy Recommendation

Posted on: Wednesday, 6 July 2005, 12:01 CDT

Source Capital Group, Inc. ("Source Capital") announced today that it has upgraded its recommendation on Petrol Oil and Gas, Inc. (OTCBB:POIG) ("Petrol" or the "Company") from a BUY to a STRONG BUY and raised its 12-month price target to $7.00 per share. Petrol is a participant in the rapidly expanding exploration, development and production of Coal Bed Methane. The Company has leases on approximately 165,000 acres in Eastern Kansas and Western Missouri, and produces nearly 3.0 million cubic feet of natural gas per day from wells located in the Cherokee Basin in Southeastern Kansas.

"The Company's year-end reserve report provides the basis for our price target," stated Joe Blankenship, Vice President Research at Source Capital in Scottsdale, AZ. "Although proven reserves are valued at approximately $1.65 per share, the case for adding value from possible reserves is strengthened by a September 2004 geological report published by the Kansas Geological Society. This report compares the thickness of coal seams in the Bourbon Arch, where the majority of Petrol's reserves are located, with coal seams in the Cherokee Basin, where extensive drilling and production has taken place. In the seams where the major amount of production is taking place, the seams are equal to or thicker in the Bourbon Arch than in the Cherokee Basin, indicating the potential for similar or greater gas production per acre of leasehold," continues Mr. Blankenship.

"Our value continues to apply a deep discount to the possible reserves and considers Petrol's potential to become a significant gas producer over the next 18-24 months. In an industry where larger companies are acquiring reserves to maintain natural gas production, Petrol's leasehold position also makes it a natural acquisition candidate," stated Mr. Blankenship.

Petrol's share price (POIG - $1.60) is only 9.0x our fiscal year 2006 earnings per share estimate of $0.22, a multiple that is significantly lower than our expected growth rate of 30% - 40% per year.

Our twelve-month price target for Petrol stock is $7.00.

Source Capital Group: Source Capital, headquartered in Westport, CT provides high-quality independent investment services, removed from the typical Wall Street environment, to individuals and institutions.

For information, Contact:

Joe Blankenship

Vice President Research

Source Capital Group, Inc.

7377 E. Doubletree Ranch Road, Suite 290

Scottsdale, AZ 85258

Phone: 480-368-1488 Fax: 480-368-1319

jblankenship@sourcegrp.com

Source: Business Wire

More News in this Category