Some of the reasons I think the price of the stock is still low:
1) Output: The output of the wells that they actually have has always been relatively low. They are just starting to ramp it up (I have heard), but I think a lot of people are taking a wait and see attitude. Oil in the ground does you no good if you can't get it out.
2) Selling: They have traded a lot of shares for the land and wells that they do have and I feel that some of the companies will sell their shares into some price increases. Last fall, there was talk that some people where selling, and that drove the price down quite a bit. I think that it was helped by the MM's knowing what was happening and taking advantage of it. I can't prove that however. One other thing that adds to the overhang is now the shares that they used for the acquisitions only are restricted one year instead of two. So, this summer is when most of them will be free tradable.
3) Unknown Company: This company is relatively unknown and Geronimo is also unknown (since it was a private company). Geronimo is/has taken over the day-to-day operations of OLEX and they are an unknown entity. I feel that most people would want to see a quarter or two of increasing earnings/revs before investing in this company.
4) Non-Reporting: The company is still NR. They have to redo most of the work that they did last year, because they have acquired so many more leases and wells. That makes the last 3 year audit moot. Once they get the reporting status and make a couple of quarters available, more people would be comfortable getting in.
Well, those are the big ones that I can think of. Don't take this as I am very negative on the company. Quite the opposite. I have followed this company for about a year and a half. I think that they have a good potential, but things that they need to work on.
Good luck with your investments,
Eric
P.S. Check out my site geocities.com It has some information, links that you might find helpful. It also has a TA chart. |
