Camber Energy, Inc. (NYSEAMERICAN: CEI) looks to be having an incredibly strong day in the market today. While the company has released news surrounding an asset acquisition, the gains that we’re seeing on Yahoo! Finance and other charts are not true gains as the result of a reverse split. Nonetheless, we’ll talk about the asset acquisition, why the reverse split is leading to misleading charts suggesting gains that don’t exist, what we’re seeing from the stock today, and what we’ll be watching for ahead.
CEI Announces Acquisition News
As mentioned above, Camber Energy is having what seems to be an overwhelmingly strong start to the trading session this morning. While the gains that we’re on the charts aren’t true gains, there was some news released by the company this morning. In a press release issued in the pre-market hours this morning, the company announced the execution of a letter of intent surrounding the acquisition of assets. CEI said that the assets are located in the Texas panhandle and the deal comes a a price of $250,000.
While the closing of the transaction is still subject to customary closing conditions, if the transaction does close, CEI will acquire about 500 net leasehold acres in Hutchinson County, Texas. The acreage included 49 non-producing wellbores as well as 5 saltwater disposal wells and the required infrastructure and equipment necessary to support future hydrocarbon production.
In the release, Camber Energy announced that it is currently evaluating the hydrocarbon production opportunities across all acreage, including the existing non-producing wellbores. The company said that it intends to begin the process of reestablishing production from some of the wellbores in the weeks following the closing of the transaction. In a statement, Richard N. Azar II, CEO at CEI, had the following to offer:
This acquisition will provide opportunities for the Company to increase its reserve base and cash flows. We estimate that production from some of the non-producing well bores will be restored within a few weeks of closing.
This is all part of Camber’s plan to add similar acquisitions intended to provide an inventory of lower risk opportunities which increase both our reserve base and cash flow.
What We’re Seeing From The Stock
As investors, one of the first lessons that we learn is that the news moves the market. In this particular case, the news was overwhelmingly positive. So, it’s no surprise that we’re seeing gains in the value of the stock. However, while the charts are showing gains, the truth is that gains really aren’t there. At the moment (8:32), charts are showing CEI as trading at $1.83 per share after a gain of $1.7317 (1,761.65%) thus far today.
However, it’s important to understand that this isn’t the true growth we’re seeing today. In fact, the stock is actually declining. Today, a reverse stock split at a ratio of 1 to 25 went into effect. So, when we divide the total price of the stock by 25, we find that the share price without the split is actually $0.0732 per share. That’s actually a pretty steep decline from Friday’s closing price of $0.0983 per share.
Stop wasting your time! Start finding winning trades in minutes with Trade Ideas!
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 the acquisition that was announced today and the potential of the acres under contract. Nonetheless, we’ll continue to keep a close eye on the news and bring it to you as it breaks!
Never Miss The News Again
Do you want real-time, actionable news delivered to your inbox? Join the CNA Finance mailing list below!