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Pledge Petroleum Corp (OTCMKTS:PROP) Has Billionaire Backing

Pledge Petroleum Corp (OTCMKTS:PROP) Has Billionaire Backing
Written by
Jarrod Wesson
Published on
July 11, 2017
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Pledge Petroleum Corp (OTCMKTS:PROP) , the oil exploration and production company, jumped on large volume this month. Why? On the investment site iHub, the market participants stated that Roman Abramovich, Russian billionaire, owns 216 million shares of the company. The web huffingtonpost.com released an article long time ago, wherein the stake in the company was assessed. In the article, it was also noted that the billionaire may have many more millions invested. In this article, we will assess this information and review the company.SourceHave a look at the market reaction before we provide more information. Don't forget to remark that the exchange moved more than 5 million shares some days. There seems to be a lot of people interested in this stock:SourcePledge Petroleum Corp. - M&A and Plasma pulse technologySourcePROP is focused on the "acquisition and growth of a base of producing assets by leveraging M&A and operational expertise" in the oil industry. According to the last annual report released in 2016, after a new private placement of Series C Preferred Stock and an additional $9,750,000, the company changed the business objective. Previously, the company was also involved in the same sector, but provided well services based upon plasma pulse technology.What happened to the plasma pulse technology? The license was retained and transferred to a subsidiary:

"As a result, in August 2015, our board of directors and shareholders approved the exclusive sublicense to our majority owned subsidiary Novas Energy North America, LLC (“NENA”) of our rights to use certain plasma pulse technology that we had licensed from Novas Energy Group Limited (the “Licensor”) pursuant to the terms of an exclusive license agreement (the “License Agreement”), for treatment of vertical wells in the United States (hereafter, the “Licensed Plasma Pulse Technology”)." Source

Why is the Plasma Pulse Technology interesting for the market? Because the company owns its patent, which may not be very valuable right now with the oil price trading at low levels. However, if the oil price goes back to over $100 per barrel, the patent will become very valuable again. In addition, the company could use this know-how in the future. Recent Developments - Roman Abramovich On August 10, 2016, the last news was put out. Propell announced that it would treat 15 wells for Pemex; Mexico's state-owned petroleum company. This was good news as it shows that the company is able to work for serious clients, such as this big industry player. Propell CEO, C. Brian Boutte, stated:

"We're excited to move forward with Pemex and have recently completed maintenance and operational training on the Gen 2 tools for the engineering personnel of Pozotech/Grupo Industrial RJP. We expect that this initial well treatment program should net approximately $375,000 for the Company." Source

After this news, the company did not put out anything new. Thus, we needed to check the reasons for the share price jump in sources different from the company's website. On the Investors Hub website, we found what seems to be the solution.Billionaire investor “Roman Abramovich” owns preferred shares in the company, which could be converted into 216 million shares. He invested $15 million in PROP using a company called Ervington Investments Ltd:SourceThe following is the assessment made by market participants in Investors Hub website:

If all of his preferred shares are turned into commons, he would have 216million commons. Giving him 51% control of the company. This control gives him the right to choose a CEO, which is why he just put Ivan Persinayov in charge. In order to get his $15million investment back he would need to sell all 215mill shares at a rough price of .07. Source

Why did the share price jump if the information was known? This is a sharp question. We believe that some market participants could react to the following post in iHub:huffingtonpost.comThe newspaper says that the billionaire would not only invest $15 million in PROP. He could invest "Hundreds of millions".Short salesTh information released about Roman Abramovich was surprising and may have moved some shares. However, the share price movement looks also a lot like a closure of short positions. We checked the amount of short positions in the stock in 2016 and compared it with the amount noways. We found a large decline in the amount of short sales. Have a look:DateShort Interest% ChangeAvg. Daily Share VolumeDays to CoverSplitNew IssueMay 31, 20174,36421.76111,2461.00NoNoMay 15, 20173,584-48.81135,4431.00NoNoApr 28, 20177,002203.121,298,9611.00NoNoApr 13, 20172,31055.8720,5721.00NoNoMar 31, 20171,482100.0068,4691.00NoNoFeb 28, 20179,269-28.80240,5881.00NoNoFeb 15, 201713,019623.2890,4611.00NoNoJan 31, 20171,800-5.26117,1361.00NoNoJan 13, 20171,900-93.34114,9181.00NoNoDec 30, 201628,514-27.63344,8141.00NoNoDec 15, 201639,398539.68153,2081.00NoNoNov 30, 20166,159-89.22249,1761.00NoNoNov 15, 201657,128107.09875,5391.00NoNoSourceBook value per shareAnother interesting fact in this stock is the amount of cash on the balance sheet and the book value per share. Have a look at the following financial figures reported by Yahoo Finance:

  • Total cash: $9.5 million
  • Total debt: $3,000
  • Cash per share: $0.04
  • Book value per share: $0.04
  • Share price in the market as of July 11, 2017: $0.0405

What does it mean? It means that almost 99% of the share price is cash in hand. If this company is liquidated shareholders would obtain almost the same amount of cash that they own in stock.ConclusionThere are a few things that we appreciate in this company. First of all, the fact that Roman Abramovich bought a large block of shares in PROP is quite interesting. Additionally, the amount of short interest declined in 2017. Short sellers could be responsible for the share price movement. Finally, the company's balance sheet is full of cash and it has no debt. The share price is trading close to its cash per share. The share price is almost 99% cash, so some investors may be buying at this low price. Investors can buy the stock and get the company for free if a cash dividend was paid out. To sum up, there are many ways to explain the jump in the share price. Mostly, anytime a billionaire gets involved, it's a sign smart money sees value and that's what we believe is happening with PROP. If PROP becomes Abramovich's US acquisition vehicle, big things are going to happen.We will be updating our subscribers as soon as we know more. For the latest updates on PROP, sign up below!Image courtesy of muscapix via FlickrDisclosure: We have no position in PROP and have not been compensated for this article.

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