Good news already baked into the price

Nov 11th, 2009 – Comment

With $5.77M in new cash to further develop its prospects, no debt that needs to be managed, and a reasonable track record of finding hydrocarbons in its theatre of operations DXE has a reasonable prospect of moving higher.


About the Author

Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


Read the author's full profile.


Further Research

Read more about Energy.


dualex

Lou,

DXE is carrying out a drilling program that includes Hungary, Syria and Tunisia. It appears that the company has some good prospects ahead of it. What’s your opinion?

Thanks,

Nick

Click to Zoom

Click to Zoom

Hi Nick,

DualEx Energy International Inc. ( DXE TSXV) is another example of a Canadian company with energy expertise chasing opportunity in foreign jurisdictions. DXE reported Q2 production of 150 barrels of oil per day with most of the output coming from their operations in Hungary. Clearly with the land position that they hold in Hungary, Syria, and Tunisia they have opportunities to move production higher.

On November 10, 2009 the company reported the closing of a $5.77M financing to further their corporate objectives which include connecting 2 -4 wells in Hungary to the gathering system, testing a well in Syria, and starting exploration in Tunisia. The tie in of the wells in  Hungary will help boost cash flow and provide investors evidence of management’s skills in growing production using 3d seismic to identify targets.

The three year chart provides a clear view of the resistance the DXE has not been able to break above at $0.475 as it mounted a great recovery from the late 2008 lows.

The three month chart provides a closer look at the struggle with $0.475.  The RSI indicated that DXE was overbought in September and the MACD generated a signal that the upward momentum was weakening in October. The retreat to November 11th’s closing price of $0.365 represents a 23% loss from the high.

Click to Zoom

Click to Zoom

With the stock trading below its 50 day moving average it puts a caution flag on the track. The pull back  suggests that all the good news has been baked into this play and now the market needs another jolt of positive results from its operations to get the stock back into an uptrend.

With $5.77M in new cash to further develop its prospects, no debt that needs to be managed, and a reasonable track record of finding hydrocarbons in its theatre of operations DXE has a reasonable prospect of moving higher. But at this point I think it would be prudent to confirm a bottom before getting on the ride.

Happy Capitalism!

Categories: Energy
Content © Relentless Economics - Charts courtesy Stockcharts.com - Employees Entrance - Optimization Media