Petrominerales Ltd. (PMG) headed for its biggest weekly drop in more than a year as five of 11 analysts who had buy ratings on the stock changed their recommendations after the oil producer’s production plunged.
Shares declined 23 percent this week to 11,440 pesos as of 1:25 p.m. in Bogota. They dropped 4.2 percent today.
“We are growing less confident in Petrominerales’s ability to establish meaningful production improvements in 2013,” Jared Dziuba, an analyst at BMO Capital Markets Corp. in Calgary, wrote in a March 6 research note after the company said output fell 29 percent to an average 25,140 barrels a day in the fourth quarter. Dziuba cut the stock to the equivalent of hold from buy.
Production has further declined 11 percent in the first quarter, according to a March 6 statement from Calgary-based Petrominerales. The company said proven and probable reserves at the end of 2012 declined 20 percent from the prior year to 41.3 million barrels.
Petrominerales started this week with 11 buy ratings, 10 holds and two sells. Today it has six buys, 14 holds and two sells, according to data compiled by Bloomberg.
“We’re not going to pretend that we’re happy with the results we’ve generated on an exploration basis,” Chief Executive Officer Corey Ruttan said on a March 6 conference call. “We’re being a bit more balanced with our capital program between developments, our core exploration and positioning plays for the future.”
The “most meaningful” exploration and development catalysts are later in the year or in 2014 and may be delayed by funding challenges, according to Dzuiba.
The company “has not been able to grow or maintain reserves despite a hefty capital budget in 2011 and 2012,” Ian Macqueen, an analyst at CIBC World Markets Inc. in Calgary who rates Petrominerales the equivalent of hold, wrote in a March 6 research report. “Unless management truly believes that it can materially improve its success rate it should not drill any more exploration wells.”
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