It can be very hard for a stock to go up when there is a big seller.
The market knows this has been the case for Petromanas Energy (TSXV:PMI), a high potential oil and gas explorer partnered with Royal Dutch Shell to look for oil in deep tanks on shore in Albania.
Petromanas acquired its Albanian assets from DWM Petroleum, a subsidiary of Manas Petroleum, in February 2010 for C $11.5m cash plus 200 million shares of Petromanas and 50 million performance shares subject to certain milestones.
DWM has been unloading its position ever since to raise cash for its overhead and central Asian oil and gas assets.
In August 2012 DWM sold 90 million shares at $0.115 per share to a group of investors led by Frank Giustra, a well known natural resources financier who is also a director of Petromanas.
In November 2013, the very same day Petromanas announced successful results at its first well, Shpirag-2, DWM unloaded approx 46 million shares into the market, crushing the positive momentum of PMI's best news to date.
The market has known that DWM could unload its remaining 50 million share position at any time.
However yesterday morning, the institutional team at Haywood Securities in Vancouver facilitated the purchase of 40 million of DWM's remaining shares at $0.20 per share.
Frank Giustra bought 10 million shares as part of the transaction, insider filings show.
DWM advised Petromanas that they still hold a more palatable 8.5 million shares.
Haywood upgraded their target on Petromanas from $0.25 to $0.35 this morning following the overhang eliminating trade yesterday, with analyst Darrell Bishop advising clients to "Do their homework on PMI in 2014."
Haywood expects Petromanas to publish a drilling update for their Molisht-1 well, a follow up well 18km south of Shpirag-2, any day. This should not be a material news release.
They think PMI will publish an updated resource estimate in early Q2 which could see the potential resource grow based on newly acquired seismic data and a thicker than expected pay column at Shpirag 2.
Molisht-1 results are expected in late Q2 or early Q3.
Game changers for the company, according to Haywood, would be if the Molisht-1 well flows at rates comparable to those seen at the analog Val d'Agri field in Italy. Additionally, both the Molisht-1 and Shpirag 2 targets could prove to be one massive field rather than two independent structures.
Haywood's bottom line: "We continue to see Petromanas as potentially being a big winner for investors in 2014."
Here's the weekly chart:
Disclosure: We have a long position in Petromanas Energy which makes us very biased. This is not investment or professional advice. Always do your own due diligence. Thank you.