GASFRAC Energy Services Inc. facing flex point on March 10

Mar 7th, 2011 – 1 Comment

Watch the action as we approach March 10, 201. It could give us an indication of how to proceed after the rumours become news.


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.


Hello Lou.

Re : GFS Gasfrac.

Could we have your thoughts on this
fracking company over the next year.

Please and thanks.

 Doug and Irene
 Kelowna BC

Hi Doug and Irene,

Good to see that you are living the dream in beautiful Kelowna! GASFRAC Energy Services Inc. (GFS TSXV) has taken off like a rocket since it started trading on the Venture Exchange in August of 2010. The company is using gelled liquefied propane gas (LPG) as the  fracturing  solution to open up  geological formations where oil and gas is found. 

The use of LPG has caught the attention of oil and gas producers who are always looking for new and better ways to bring production to an energy hungry world.  The company has ramped up its capital spending to bring new capacity on stream to meet industry demand which has exceeded their current facilities. The forecast is that GFS will fracture between 1,000 and 1,100 wells in 2011, up from 136 in 2010.

GFS is a classic case of a company with disruptive technology enjoying accelerating market acceptance. This may seem like an overnight success but when you look at the history of the company they got on the ride back in 2006 when they first sold shares at $1.00. Their last financing which closed in December of 2010 brought in close to $110 million at $8.45 per share. Lets consult the charts for some indication as to future direction

The one year chart illustrates the huge gains investors have enjoyed since the shares started trading in August of 2010. The next flex point for the company will come on March 10, 2011 when it reports its Q4 results. As always if it meets the street forecast it trades sideways or slightly lower. If it beats the street the shares continue to climb. If it misses the street investors get a haircut.

At this point I think that GFS has gotten ahead of itself and might need to pull back a bit. The bought deal that raised close to $110 million is already in the money.At some point investors are  going to want to monetize some of those early profits of 65.79% that they have earned in less than 90 days.

 

 

The six month chart depicts the buy signal generated by the MACD in mid February when the stock was trading at $10.00. Hard to not see the 40% gain in three weeks and ask do trees grow to the sky?

I think that the GFS story is a solid one and that 2011 will be an exciting year. But at $14.00 it would seem  that all the good news has been baked into this cake and that there will be some money coming off the table in the short term. Watch the action as we approach March 10, 201. It could give us an indication of how to proceed after the rumours become news.

Happy Capitalism!

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