Oil and gas play Camber Energy (NYSEAMERICAN:CEI) has languished in the penny stock territory for a while now. After its price topped $4.85 per share last September, CEI stock has shed over 85% of its value. It is now back where it belongs, trading in the penny stock territory after the Reddit-fueled enthusiasm. Though penny stocks can potentially offer long-term value for investors, CEI stock is unlikely to tickle your fancy.
A few catalysts have driven Camber’s share price. Firstly, surging oil and gas prices have positively impacted the industry’s stocks. Moreover, it gained immensely after entering into a carbon capture system agreement. Perhaps the biggest growth driver for CEI stock was its surging popularity among retail investors. With over 20% of its stock sold short, it became an ideal candidate for a short squeeze.
However, investors looking to scoop up the stock now should be wary of how quickly it can shed its value. Moreover, there is plenty to worry about with Camber Energy’s business and regulatory troubles.
Delinquencies Are a Major Concern With CEI Stock
Camber Energy’s continued noncompliance with NYSE’s listing standards raises questions over its reliability. My fellow InvestorPlace contributor, Stavros Georgiadis, recently talked about how the company has failed on multiple occasions to file its U.S. Securities and Exchange Commissions (SEC) disclosures. Hence, the lack of financial transparency is frustrating and is a major cause for concern for investors.
The company also failed to hold an annual meeting for its last fiscal year for the fiscal year ended Dec. 31, 2020. Moreover, it hasn’t released a 10-Q report since December 2020. It recently released a restated version of its third-quarter report for 2020. Camber announced it would be holding an annual meeting and filing the necessary SEC filings.
Nevertheless, as my colleague states in his article, these developments show a total disregard for the rules of publicly traded companies. Moreover, its financial information’s lack of transparency and reliability limits CEI stock’s long-term attractiveness.
Restated Third Quarter Results
Camber recently released its restated third-quarter results for 2020. The most noteworthy change was a massive $30.9 million bump in liabilities due to its Series C shares. The SEC had objected to recording these shares as equity.
Furthermore, there is the curious case of Viking Energy, Camber’s majority-owned subsidiary, which it has been looking to merge with since February of last year. Viking Energy’s oil and gas business was a flop during the third quarter last year, which showed minimal profits and over $9 million in net income losses.
More importantly, Viking’s primary subsidiary in Elysium Energy was transferred in October of last year. Therefore, Camber is left without much of an oil and gas business at this point. Hence, its primary catalyst is its carbon capture system agreement as we advance.
The growing interest from the investing community toward clean energy companies has benefitted Camber stock. Its agreement with ESG Clean Energy will enable Camber to use ESG’s carbon capture system in Canada and over 25 locations in the United States. How much this will benefit Camber stock remains unclear. However, the deal is likely to drive the narrative forward for Camber as it looks to fix its delinquencies.
Bottom Line on CEI Stock
Camber Energy hasn’t posted financials for a long time now, and it is safe to say that most of its operations will be financed through its dilutive preference shares. With its subsidiary transferring most of its oil and gas assets, it is now left with its carbon capture agreement as its main growth driver. It is unlikely to account for much, though, which is why it is best to avoid CEI stock.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
