Wednesday was a good day for struggling energy stocks. PEDEVCO Corp. (PED) rose an incredible 660% after a strategic investment was announced on June 26 that saw over $75 million in debt erased from its books. In addition to PED's strong move, Camber Energy, Inc. (CEI) moved up 79%, Houston American Energy Corp. (HUSA) increased 33% and Yuma Energy, Inc. (YUMA) increased 95% as "sympathy plays". While we agree that HUSA and YUMA could be called sympathy plays since they have had no news of note this week, this is NOT the case for CEI. CEI had its own bit of excellent news that is well deserving of a move like PED. Now that PED has garnered some attention for these beat up energy stocks, we think CEI is a prime target for a huge move as well, into the $1-$2 range. We are up to 615 followers despite not giving out a lot of alerts, a fact that we think is indicative of a diligent and prudent stock picking history. If you like our picks you can follow our blog by clicking the follow button on the top of the left hand panel. You can also follow us on Twitter @StockTradePicks. We are closing in on 3,000 followers on Twitter as well.
On June 26, CEI had news similar in tone to PED's news. It announced an LOI for the sale of some assets in exchange for extinguishing all of its debt:
"In the event the parties enter into definitive documents, the transaction is approved by the Company's shareholders and closes, the Company will retain its assets in Glasscock County and Hutchinson Counties, Texas and will also retain a 12.5% production payment and a 3% overriding royalty interest in its existing Okfuskee County, Oklahoma asset. Camber is also evaluating additional acquisition opportunities which will further enhance the Company's growth plans, funding permitting.
Additionally, if the Closing occurs, it will extinguish all of the Company's existing bank debt, which should significantly enhance the Company's balance sheet."
While the deal is at the LOI stage, none of the conditions of closing the deal sound all that onerous. As in other words, there is a very likely chance that it gets done. Look at CEI's balance sheet to get an idea of how lucrative this deal is to the company:
CEI had total property and equipment of $14.9 million on the books as of December 31, 2017. Not all of that was sold as assets in Glasscock County and Hutchinson Counties, Texas were retained and the company will receive a 12.5% production payment and a 3% overriding royalty interest in its existing Okfuskee County, Oklahoma asset. In fact, this can be even better for the company since it was obviously struggling to survive over the years. A royalty guarantees that CEI will be cash flow positive on this deal instead of having to undertake the costs of exploration and extraction.
But the big part of this deal is the extinguishing of over $36 million in debt. Since the company has given up substantially less than all of its long-term assets and there is only $14.9 million on the books, this deal nets a profit of over $22 million for the company. This is non-recurring profit obviously, but anything that can alleviate the threat of bankruptcy - which based on that balance sheet was a very real threat - needs to be viewed as a very positive step for CEI. Despite the increase in price since the news, CEI is still down over 95% from a year ago even with an improving oil price. It was down that much mainly due to the threat of bankruptcy. With that threat alleviated, one should expect a significant rise in CEI. It is unlikely to go anywhere near its 52-week high because it has sold a very significant asset as part of the deal to get rid of the debt, but we think $1-$2 is reasonable and attainable. With 12.9 million shares outstanding according to the latest SEC filing, that puts it into the $13 to $26 million market cap range, which is still less than the $36 million in enterprise value it had prior to this deal.
Disclosure: We are long CEI
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On June 26, CEI had news similar in tone to PED's news. It announced an LOI for the sale of some assets in exchange for extinguishing all of its debt:
"In the event the parties enter into definitive documents, the transaction is approved by the Company's shareholders and closes, the Company will retain its assets in Glasscock County and Hutchinson Counties, Texas and will also retain a 12.5% production payment and a 3% overriding royalty interest in its existing Okfuskee County, Oklahoma asset. Camber is also evaluating additional acquisition opportunities which will further enhance the Company's growth plans, funding permitting.
Additionally, if the Closing occurs, it will extinguish all of the Company's existing bank debt, which should significantly enhance the Company's balance sheet."
While the deal is at the LOI stage, none of the conditions of closing the deal sound all that onerous. As in other words, there is a very likely chance that it gets done. Look at CEI's balance sheet to get an idea of how lucrative this deal is to the company:
CEI had total property and equipment of $14.9 million on the books as of December 31, 2017. Not all of that was sold as assets in Glasscock County and Hutchinson Counties, Texas were retained and the company will receive a 12.5% production payment and a 3% overriding royalty interest in its existing Okfuskee County, Oklahoma asset. In fact, this can be even better for the company since it was obviously struggling to survive over the years. A royalty guarantees that CEI will be cash flow positive on this deal instead of having to undertake the costs of exploration and extraction.
But the big part of this deal is the extinguishing of over $36 million in debt. Since the company has given up substantially less than all of its long-term assets and there is only $14.9 million on the books, this deal nets a profit of over $22 million for the company. This is non-recurring profit obviously, but anything that can alleviate the threat of bankruptcy - which based on that balance sheet was a very real threat - needs to be viewed as a very positive step for CEI. Despite the increase in price since the news, CEI is still down over 95% from a year ago even with an improving oil price. It was down that much mainly due to the threat of bankruptcy. With that threat alleviated, one should expect a significant rise in CEI. It is unlikely to go anywhere near its 52-week high because it has sold a very significant asset as part of the deal to get rid of the debt, but we think $1-$2 is reasonable and attainable. With 12.9 million shares outstanding according to the latest SEC filing, that puts it into the $13 to $26 million market cap range, which is still less than the $36 million in enterprise value it had prior to this deal.
Disclosure: We are long CEI
Bitcoin has gone from a concept worth pennies a few years ago to worth thousands of dollars. It may appear to some who are late to the game that the opportunity to get rich is gone. However, there are still plenty of ways to make some money trading in bitcoin and other cryptocurrency. Here are some links to valuable reports and strategies:
The Cryptocurrency Codex from the Cryptocurrency Institute
Secrets To Unlimited Free Bitcoin
The Crypto-Currency Evolution eBook
Bitcoin Complete Guide for Dummies
The Bitcoin Miracle Guide
The Bitcoin Cheat Code Book
The Crpytocurrency Course
Bitcoin Investing Live
If you're interested in making money investing or trading the stock market, here are some good resources to assist you. This includes technical analysis, investing in the weed sector, dividend stock investing, gold and commodities, sector rotation, options trading and microcap trading strategies.
Microcap Millionaires Free Video: Cheap Gold Miner Set to Soar in Fall 2017
The dividend stock report from dividendstocksonline.com
The dividend stock report from Dividend Stocks Rock
Top rated signals for binary options from binaryoptionsprosignals.com
Goldmasterinvesting.com Ocean Of Gold Report for the top 15 gold mining companies
Trader Review shows how to time the market with its "Percent of X" indicator
The Trader's Academy Club
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MyBB: A Forum For Investors and Traders
Spartan Trader Forex Academy Live Daily Trading Room
Try the Z Code System if you're looking for other ways to make money systematically outside of the stock market.
Top rated signals for binary options from binaryoptionsprosignals.com
Goldmasterinvesting.com Ocean Of Gold Report for the top 15 gold mining companies
Trader Review shows how to time the market with its "Percent of X" indicator
The Trader's Academy Club
The Wealth Builder's Club from beatthemarketanalyzer.com
MyBB: A Forum For Investors and Traders
Spartan Trader Forex Academy Live Daily Trading Room
Try the Z Code System if you're looking for other ways to make money systematically outside of the stock market.
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