Canadian Energy Exploration Inc. exploring but not finding

Mar 25th, 2011 – Comment

If there is no other lesson to be learned from this case study its that your first loss is often your best loss.


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What is your take on “XPL” Canadian Energy Exploration. I have heard through my industry of heavy oil that this companies management (part of Petrobank in 2005 era) is a good one and will make this a winner company. It seems to be on a downward trend (drilling results) but maybe only on the trend due to inexperienced traders. Please tell me your opinion on them.

Harry

 

Hi Harry,

Every picture tells a story and right now the picture for Canadian Energy Exploration Inc. (XPL TSXV) is no oil painting! When you drill three exploratory wells and none of them hit a gusher you will always get investors heading for the exits. Its just the nature of the beast and its the experienced traders who cut their losses and get to their next trade.

 I agree that management has experience, and they intend on driving their bottom line by increasing production from 22 barrels of oil equivalent per day to 300 boepd by Q4 of 2011. Management has identified 120 drillable locations that they intend on spudding over the next 4 years. Lets consult the charts for a sense of direction.

The two year chart provides a view of the breach of the uptrend that took the stock to the recent high of $0.60 in December of 2010. The run up was fueled on anticipation of  all the activities that management intended to activate. Unfortunately although the company has been in motion it has yet to make any progress.

The six month chart depicts the aggressive selling that has come into the market. Investors really had to be on their game to avoid this haircut. Having said that, the first hit that saw the stock melt down to $0.30 was a vivid call to preserve capital. If there is no other lesson to be learned from this case study its that your first loss is often your best loss. The stomach churning sell off to $0.16 screams volumes.

If you like the XPL story watch for news on how management plans to proceed towards their goals. From a technical perspective I would want to see the selling reversed before thinking about getting on this ride. The best time to buy a stock is when its going up.

MAKE IT A MASSIVE WEEKEND AND HAPPY CAPITALISM!

Categories: Energy
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