PILGRIM PETROLEUM COM STK USD1 (OTCMKTS:PGPM) Too Cheap To Ignore

PILGRIM PETROLEUM COM STK USD1 (OTCMKTS:PGPM), the oil and gas exploration-development (E&D) company, has recently drawn the attention of the market, as the company share price exploded up the charts on high volume.What happened?On April 27, 2017, the company released that it would proceed with its reorganization plans including filing of all disclosures required by OTC Markets, FINRA and SEC. Additionally, the CEO sent a letter to shareholders in May stating the company's objectives for the future. We believe that both press releases were responsible for the share price jump, thus we will assess them in this article along with the financial condition of PGPM.Have a look at the market reaction.SourceBusinessPGPM is a Delaware corporation, founded in 1998. Its business objective is the acquisition of working interests and oil and gas leases throughout the United States. The amount of assets and reserves is outstanding. This is the main reason behind writing this article. The amount of reserves as of March 31, 2017 is noted to have a NPV of $7,259,867. Here are some more numbers:

• 800,000 barrels
• Market price: $47.87 per barrel
• Extraction costs: $2,000,000
• Recovery rate: 20%

Incredible hidden balance sheetThe most amazing thing in this company is its balance sheet, which investors cannot find on Yahoo Finance, but in this recent document. As of March 31, 2017, the company has approximately $48.8 million in investments, while only showing approximately $7.2 million in total liabilities. Some other market participants noted this fact in financial forums. Have a look at this page in the finance forum of investorshub. Additionally, in the same report, it was noted that there are approximately 1,152 million shares outstanding. It means that the total net asset value per share is about $0.03. Let us remind the market price as of May 23, 2017: $0.014.Recent DevelopmentsOn April 27, 2017, the company noted that it would start filing documents required by the OTC Markets, the OTC Markets, FINRA and SEC:

"Addison, Texas April 27, 2017 Pilgrim Petroleum Corporation (PGPM), an independent oil and gas company and parent of Pilgrim Petroleum PLC, is pleased to announce that the company will be filing initial Information Disclosure as Q1 2017 operations and proceed with reorganization plans including filing of all disclosures required by OTC Markets, FINRA and SEC." Source

The most important information contained in this press release is that the company will start reorganization of the business. In our opinion, it was this fact what excited the market. The only way for companies to commence a turnaround is through the reorganization of the operations and the assets of the firms. Getting current on all filings will go a long way to restoring market confidence and expand the company's shareholder base.On May 10, 2017, the CEO put out a letter, wherein the company's strategy was explained. We were glad to see that the company will be executing more or less the M&A plan that we had thought would best suit the company's balance sheet:

"The board of directors believe the current transitional period in petroleum E&P provides exceptional opportunities to apply our M&A and operational expertise to acquire and operate quality assets at low prices. As we have done in the past, our focus on reserve value creation and asset divestiture to other entities who will pay premiums for reliable and optimized production, such as Master Limited Partnerships (MLPs)." Source

The market is anxious to see what M&A developments occur. This strategy will surely affect the share price in the future.Caveat EmptorSourceWe could find, on the OTC Markets website of PGPM, that the company had been flagged with the "Caveat Emptor" sign. What does it mean? It means that market participants need "to exercise additional care and perform thorough due diligence before making an investment decision in that security". This is most likely due to the company's late filings. Once it becomes current again, we expect this warning to be removed.ConclusionPilgrim Petroleum surprised the market recently by disclosing that it would file the necessary documents required by the OTC Markets, FINRA and SEC. In addition, the restructuring of the business was announced. In our opinion, this was the most substantial news to justify the recent share price jump. But, there is more; the market should have appreciated the new M&A strategy stated in a letter put out by the CEO. Additionally, a quick review of the balance sheet showed that the company has large amount of assets and the net asset value per share is much larger than the current share price. Overall, the company is heading in the right direction and with it, in our opinion, a much higher share price. We will be updating our subscribers as soon as we know more. For the latest updates on PGPM, sign up below!Disclosure: We have no position in PGPM and have not been compensated for this article.