Open Range Energy Corp. look for an entry point at $5.50

Jul 29th, 2011 – Comment

The company expects to exit 2011 with production of 6,200 barrels of oil equivalent per day and 10,000 BOEPD by the end of 2012. That in conjunction with the growth at the Poseidon unit offers an interesting opportunity


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What is your opinion on Open Range Energy.
Thanks,
Joe.

 

Hi Joe,

Thanks for the assignment. Open Range Energy Corp. (ONR TSX) is an interesting case of an exploration and production company that has surfaced value from their internal innovation. Some of the field operations undertaken by the company involved handling fracturing fluids for their own wells.

 A eureka moment occurred when a better way to handle the fluids was developed. Under the Poseidon Concepts banner the company now has one hundred twenty five systems deployed for clients in the United States and Canada. If you look at the results for Q1 released on June 17, 2011 you will observe that revenue from Poseidon Concepts rivals that of hydrocarbon production.

The charts for ONR will provide a number further insight into this opportunity.

 

The three year chart provides a classic example of a hockey stick advance creating a tremendous amount of wealth. The shares were trading at $1.12 in November of 2010 and advanced to a high of $7.00 in July of 2011. A healthy five bagger in eight months.

This isn’t the first time ONR has gone on a run. Back in 2007- 2008 it took off like a rocket but then gave it all back.

 

 

 

The six month chart indicates that the shares are currently overbought and the MACD is bending to the downside. The stock has been pulling back from the spike high near $7.00.Support comes in at $5.50 and below that at $5.00.

At this point ONR has not breached its uptrend line and has tested support along the 50 day moving average several times. What seems to be developing is a pullback which will give it some breathing room ahead of its Q2 results scheduled for release August 10, 2011.

The company expects to exit 2011 with production of 6,200 barrels of oil equivalent per day and 10,000 BOEPD by the end of 2012. That in conjunction with the growth at the Poseidon unit offers an interesting opportunity.

Buy on a pull back and let this horse run.

 

Make it a profitable day and happy capitalism!

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