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  • Prumo Logistica: Private Port In Brazil And Beneficiary Of A Take-Or-Pay Contract [View article]
    FYI:

    http://bloom.bg/1GUgpKV
    Dec 23, 2014. 12:42 PM | Likes Like |Link to Comment
  • Prumo Logistica: Private Port In Brazil And Beneficiary Of A Take-Or-Pay Contract [View article]
    From the 2014 Q3 Earnings and ITR Statement:

    "a) From the time AAMFB starts to ship iron ore at the terminal T1, it shall pay Ferroport a tariff of US$7.10 per WMT (Wet Metric Ton), to be adjusted at 100% of the United States Producer Price Index (“PPI”) in the period from July 1, 2013 to the date of the first shipment of iron ore and so on, based on the variation of 2/3 of PPI per annum.
    b) Payment by AAMFB to Ferroport of a fixed take-or-pay amount for a period of 25 years: 26,568,017 WMT per annum. In the pre-expansion, if shipped volume p.a. is greater than that amount, the tariff on excess ton shall be US$4.25/ton."

    note: I can't lay my hands on it right now but I'm 99% sure Prumo said in conference call that current inflation adjusted ore revenue is about US$7.51 per ton.
    Dec 22, 2014. 12:00 PM | Likes Like |Link to Comment
  • Prumo Logistica: Private Port In Brazil And Beneficiary Of A Take-Or-Pay Contract [View article]
    Felipe, thanks for your replies to mine. Agree you are being conservative in your estimates. One other positive to note, the current stock price is something around 0.3x of book value. In the Q3 earnings call the Company said the currently underway (and soon to be completed) capital raising effort will provide all the capital needed to a) finish the current phase of investment (eg, completion of the T2 terminal area/commercial cargo canal/powerline/etc) and b) finance the 2015 investment needed.

    Other interesting notes from the call:
    - revenue from OSX is no longer counted as of August
    - the revenue from the take/pay contract with Anglo has been accumulating on balance sheet since July as pre-paid customer revenue and will start to be recognized after the first shipment in October so it should appear in Q4 revenue
    - huge investment phase of 2014 is nearing completion
    Dec 20, 2014. 08:36 PM | Likes Like |Link to Comment
  • Prumo Logistica: Private Port In Brazil And Beneficiary Of A Take-Or-Pay Contract [View article]
    Thanks for this analysis. I've unfortunately been invested in this company and several other Eike Batista originated disasters. Here are some additional points worth considering:

    1) LLXLF is a grey market security with NO market whatsoever. No US investor should buy this particular security. The true ticker for Prumo is PRMLY. It is a GDR handled through BNY/Mellon. It is an OTC listed security. It has virtually ZERO investor protection from US securities law so buy at your own risk. It is very thinly traded.
    2) A severe downside of owning PRMLY is that when Prumo does any type of recapitalization or secondary offering (which they are in the midst of right now) the US investor gets screwed. Prumo can't issue rights or other securities to the GDR holders because they would violate US securities law doing so. For instance, they just gave rights for additional share subscription to Brazil investors but for GDR holders the agent sold the rights in Brazil market and gave GDR holders pennies worth of income from sale.
    3) The Bank of America report you link to is severely out of date. There is an English version of it, also available through Prumo's web site. It was produced several years ago when Eike Batista tried to take the port company private and the BofA valuation report showed, at the time, he was trying to steal it from shareholders and he never did take it private. The data in the report is completely obsolete and the report should not be relied on at all.
    4) The oil based revenue you cite is non-existent. There is not currently any capacity of offload, process or reload oil at the port. There are plans for future ability to do this but no capital at the moment to make this happen.
    5) I'm not sure the Anglo revenue is available to Prumo. The entire Anglo deal is within it's own company - Ferroport - that is a joint venture between Prumo and Anglo. I suspect the revenue has to stay within that company and even if not Prumo owns only 50% of Ferroport and would be entitled to only 50% of the net income.
    6) On the plus side; the controlling shareholder of Prumo is an American investment fund called EIG who is now running the thing. One hopes they will make a better job of it than Eike Batista who now only has about 10% of the equity.
    7) A major tenant of the port now is Edison Chouest who provides logistics and ship maintenance and repair to oil industry in Campos Basin and may, repeat may, bring in Petrobras business into the port.
    8) One of the major tenants of the port was supposed to be OSX that was going to build tons of ships from the ground up to service sister company OGX's massive oil finds. Problem though OGX turned out to be nearly a complete scam, all its initial fields are duds, OGX bankrupt, OSX bankrupt. Shipbuilding - none. Other major tenants that have failed to materialized or cancelled include GE and a power business of Batista's.
    9) A severe negative is that one of the founding principles of this port was its proximity to Campos and nearby basins and Prumo was supposed become the premier logistics center for deep water and pre-salt oil activity. With oil at less than $50 bbl and Petrobras on the ropes with bribery scandal the entire Brazilian oil project is at severe risk and hence Prumo could become a white elephant.
    10) Similarly the port was conceived, funded and built bases on what now looks like a commodities bubble. With the prices all types of commodities crashing the entire project is at risk.

    However, EIG is not going to let its investment go down the tubes and Brazil is severely in need of radical improvements in logistics as existing ports are insanely inefficient.

    I hope this thing works out, both for Brazil's sake and for my mistaken investment.

    DO NOT BUY LLXLF, it is a non-existent grey market security and I'm not sure what this author is trying to do pushing it. If you want to take a penny stock flyer on this one buy PRMLY but no that there is no investor protection for US investors in this one.
    Dec 19, 2014. 07:03 PM | Likes Like |Link to Comment
  • Brazil's OGX Petroleo Outlook As The Nation's Largest Private E&P Operator [View article]
    If you go to this page: http://bit.ly/ZnMaDw?idCanal=gtwTnJ1MEW912...

    Then look for the last item in list:
    Valores Mobiliários negociados e detidos (art. 11 da Instr. CVM nº 358)

    Click on that, then click download on the February report you will see Batista shareholdings. A BOVESPA listed company can't have more than something like 75% of its shares held by insiders. There has to be at least 25% free float for company to be listed.

    Also, from the Q32012 ITR, page 88:
    Centennial Asset Management [Batista]: 61.19%
    Others (shareholders with under 5%): 38.81%
    Mar 25, 2013. 04:09 PM | Likes Like |Link to Comment
  • Brazil's OGX Petroleo Outlook As The Nation's Largest Private E&P Operator [View article]
    Updated my info on shareholdings for Batista/EBX. Based on OGX CVM filing for Feb 2013 the controlling shareholder (batista/ogx) owns 62.6% of the 3,236,002,290 shares outstanding.

    There's a chance this may have changed since lots of speculation in press (see Bloomberg) that he has pledged stock to banks in the past and is now facing collateral calls. Interestingly last year he purchased on open market roughly 17,000,000 shares at prices ranging from Br 5.85 to Br 6.65. The US$1 billion put he has given the company has a price of Br 6.30 (currently represents about 9.9% increase in shares or shareholder dilution but at a value equal to 1/3 of current market cap).

    Obviously, at least last year, he felt something in the 6.00 Br was a good deal.

    Fascinating to watch all this play out. Would be more so if it wasn't so punishing to my balance sheet!
    Mar 24, 2013. 01:19 PM | Likes Like |Link to Comment
  • Brazil's OGX Petroleo Outlook As The Nation's Largest Private E&P Operator [View article]
    Thanks, look forward to your thoughts when done traveling. Very helpful to hear that cash squeeze re capex is pretty typical. Here are some updates:

    1) royalty battle, today Supreme Court justice suspended implementation of new royalty law until court can here issue. Presumably thus defers any risk of shut down for now.
    2) Paranaiba gas plant (mpx) commenced commercial production in January. First turbine fully synced with national grid. Second turbine came online in Feb. OGX reported about 2,300 boe gas production for this complex.
    3) offshore, while well #3 seems to be producing at 4,500 bpd first two wells seem to have fluctuating production freaking out market.
    Mar 20, 2013. 12:13 AM | Likes Like |Link to Comment
  • Brazil's OGX Petroleo Outlook As The Nation's Largest Private E&P Operator [View article]
    You might also be interested to see:

    http://bloom.bg/14b6aBj
    Mar 20, 2013. 12:12 AM | Likes Like |Link to Comment
  • Brazil's OGX Petroleo Outlook As The Nation's Largest Private E&P Operator [View article]
    Richard:

    Found your take on OGX interesting but a little confusing. My understanding is that the free float on OGX is more like 38% not 2.4% as you state in point 1. Given most recent articles that Batista may be undergoing margin calls on his stock there is a chance also those float numbers might revise.

    There seems to be a mixing of past information that is out of date. You refer to production to begin in Q3 2012 yet we are in Q1 2013.

    That said, very helpful as I follow this company, and associated X companies closely. Given your background in O&G industry I'm wondering if you have any insight into the problems OGX is having with its first field. Production from its first two wells, drawing on a hydrologically connected structure, have been problematic and all over the board. The third well surprised me in recent data in that it is pulling more than the market seemed to think (4,500 bpd). In my reading on development of Albian carbonate fields in Brazil it seems these structures can be tough to tackle. The market seems to assume that the problems in wells are permanent and unchangeable. I'm betting that will a lot more work (acidification, fracturing, water injection, et al) they may be able to substantially improve or at least stabilize output, perhaps in cooperation with a partner that has the right experience.

    Again drawing on your experience, in the bigger picture, it seems like the market is drawing a lot of conclusions from the first few wells of what will, if they can finance, be a many well, many year project over differing reservoirs. Do you agree? Is this typical of a company at this early stage of production?

    Any thoughts greatly appreciated.
    Mar 19, 2013. 09:44 AM | Likes Like |Link to Comment
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