Camber Energy Inc (NYSEAMERICAN: CEI) is a company that has struggled for some time, seeing relatively consistent declines over the past several years. However, yesterday and today, the stock has been on a dramatic run for the top. The gains are ultimately the result of a struggling company selling off assets and getting rid of debt. Of course, investors are excited that, following the sale of assets, the company will be on more solid footing, and they’re sending the stock toward the top. Today, we’ll talk about:
- Asset sale plans at CEI;
- what we’re seeing from the stock as a result; and
- what we’ll be watching for ahead.
CEI Announces Asset Sale
As mentioned above, Camber Energy is having yet another strong day in the market today, following up on the tremendous gains that we saw on the stock yesterday. The gains came following news of a potential asset sale. In a press release issued yesterday, CEI announced the execution of a non-binding letter of intent in connection with the disposition of a substantial portion of its assets. In exchange for the assets, the buyer will assume all of the company’s debt with the International Bank of Commerce.
In the release, CEI said that the letter of intent is between the company and Richard N. Azar II, former CEO and Director of the company and Donnie B Seay, current Director of the company. If the transaction, which is subject to customary closing conditions, does indeed close, CEI will retain its assets in Glasscock County and Hutchinson County in Texas. The company will also retain a 12.5% production payment and a 3% overriding royalty interest in its existing Okfuskee County, Oklahoma asset.
In the release, the company said that it is currently evaluating additional acquisition opportunities with a goal of further enhancing its growth plans and funding permitting. In a statement, Louis G. Schott, interim CEO at CEI, had the following to offer:
This transaction will position the Company to improve its balance sheet by substantially reducing or eliminating its long-term liabilities. Once this occurs, the Company plans to pursue growth in its remaining assets as well as additional acquisition opportunities.
This should also help the Company to regain compliance with the continued listing standards of the NYSE American.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news causes moves. In the case of Camber Energy, the news proved to be overwhelmingly positive. While the company has struggled for several years, it has amassed several valuable assets, which will be sold to reset the slate and put the company on a solid financial foundation. So, it’s no surprise that excited investors are sending the stock on a run for the top. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (8:36), CEI is trading at $0.70 per share after a gain of $0.23 per share (49.64%) thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on CEI. In particular, we’re interested in following the story surrounding the company’s continued work to restructure and set itself on a solid foundation. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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