88 Energy (OTCMKTS:EEENF) stock is having a bad day, as shares plunge more than 60% on news the company is walking away from a key well. So what else do you need to know?
Well, 88 Energy is one of the more interesting oil and gas companies in the market. Based in Australia, investors in the U.S. can access it on the over-the-counter exchange. Right now, the company has a market capitalization of $160 million.
This puts the company squarely in the higher-risk, higher-reward category for energy investors.
With oil and gas prices surging, one might expect to see impressive upside here. After all, companies like 88 Energy that focus on the exploration of oil and gas properties in the U.S. have much higher leverage to oil prices. If they make a discovery, these companies can see their market capitalizations take off in short order. Of course, the inverse is also true.
Today, 88 Energy unfortunately made an announcement that would fall in the latter category. Let’s dive into what investors are watching with this stock right now.
Today’s Key Catalyst Driving EEENF Stock Lower
Today, 88 Energy announced unsuccessful test results for one of the company’s key potential wells. The company’s Merlin-2 appraisal well in Alaska failed to show significant reservoir quality and therefore will be plugged. This has provided investors with a big let-down today.
Indeed, 88 Energy is a company that is intent on developing some rather key assets in the Alaska region. One of the more enticing projects that has driven speculative interest in this stock of late is the various oil wells, including Merlin-2, located in the Peregrine project in the North Slope region of Alaska. This project encompasses almost 200,000 acres of land, an area the company has hoped contains significant energy resources which could be tapped into.
These unsuccessful results are undoubtedly frustrating for investors. While there may still be resources to be discovered in this region, the market appears to be taking a seriously negative view of 88 Energy relative to other stocks in the market today.
On the date of publication, Chris MacDonald 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.