- Back in March, a spike in crude oil prices led to a spike in prices for small-cap oil and gas stocks, like Camber Energy (CEI).
- With crude oil pulling back below $100 per barrel, enthusiasm for Camber has cooled as well.
- However, as it moves out of its legacy business, into clean energy and related areas, CEI stock is still one to keep an eye on.
As you may recall, shares in Camber Energy (NYSEAMERICAN:CEI) sprung back to life early last month. As the economic sanctions resulting from Russia’s invasion of Ukraine sent crude oil prices soaring, traders jumped into small-cap oil and gas stocks, including CEI stock.
This resulted in this stock to soar from around 64 cents per share on March 1, to nearly $2 per share on March 8. However, this mad dash back into small energy stocks didn’t last long.
Crude oil prices have pulled back. They’re again below $100 per barrel. In turn, enthusiasm for this and other oil-related penny stocks has cooled off.
So, does that mean it’s time to move on? Not so fast. This company may have historically been in the oil and& gas business. But its future lies with its pivot into clean energy and related areas. That’s what will drive its next breakout move.
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CEI Stock at a Glance
If you have just cursory knowledge about Camber, you may think of it as an independent oil and gas exploration and production (E&P) company. Admittedly, up until 2021, that’s largely what it was. Through its majority owned subsidiary, Viking Energy Group (OTCMKTS:VKIN), it has ownership in a portfolio of oil and gas properties.
But since last year, CEI stock has become more of a green wave play. In past coverage, I’ve talked about the two deals the company (via Viking) has made that have given it high exposure to the move from fossil to renewable fuels.
Deal one was its purchase of Canadian industrial engine/power generation products company Simson-Maxwell Ltd. The game plan with Simson-Maxwell is to use it as a vehicle to commercialize carbon capture technology, selling products that help Simson-Maxwell’s customers comply with Canada’s carbon emissions regulations.
Deal two was its deal to buy a renewable diesel plant project in Reno, Nevada. Once online, it could produce as much as 43 million gallons of this product per year. More recently, Camber’s Viking unit has entered another deal. While not fully a clean energy deal, it could be one that results in materially stronger results down the road.
Camber’s Latest Deal, and the Possibility for More Deals
On Feb. 15, the company announced that, through Viking, it has acquired majority interest in two entities that hold the rights to market an electric transmission open conductor detection system. In other words, a product that can detect a break in a power line, cutting off power to the line before it hits the ground.
Again, not directly related to clean energy, but you can argue that there is an environmental angle to this. This technology could help bring an end to the downed power line wildfires common in areas with drier climates like California. This technology could go a long way to reduce the environmental, financial and human toll resulting from wildfires.
In other words, once rolled out, it could see high demand. It could be a game-changer for the operating performance of Viking, and in turn, for Camber Energy. The company is spending up to $21 million (if you factor in future milestone payments) for this technology. But it has plenty more dry power to pursue other high potential deals.
An institutional investor is providing it with as much as $100 million in financing. This arrangement provides it with the flexibility to pounce on opportunities as they emerge.
The Verdict on CEI Stock
Earning a “B” rating in my Portfolio Grader, there is one key caveat with Camber stock. Although it’s a small company with big potential, the counter is that it’s a very risky and volatile stock.
It could continue to make wild moves, like the one seen in March. Still on the radar of short-term traders, it could continue to see big spikes, followed by equally large drops in price.
If its aforementioned ventures fail to deliver? The stock could fall back to its 52-week low (33 cents per share), and languish there. In short, you should only make this a small, speculative position in your portfolio (if you choose to buy).
Still, even with its high amount of risk, this nonetheless remains one of the more interesting clean energy plays out there. Bottom line: It makes sense to keep CEI stock on your radar.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.