Today, financial traders are getting wind of an important Form 8-K filing from Camber Energy (NYSEMKT:CEI). Evidently, the company is spending millions of dollars to purchase interests in private oil and natural gas businesses. That sounds like an expensive proposition, but CEI stock investors are clearly pleased with this development.
Texas-based Camber Energy is a relatively small company in the energy sector. Its market capitalization is around $35 million. Yet, Camber Energy could be growing into a much bigger business.
The aforementioned Form 8-K states that Camber Energy has acquired a 100% ownership interest in unspecified “Acquired Companies and their respective assets.” Camber made this purchase through its subsidiary company, Viking Energy Group.
Granted, we don’t have specific details on the acquired energy businesses. Still, we do know from the Form 8-K that Camber Energy is paying $69 million in total to purchase the interests in those oil and gas businesses. That’s a substantial outlay, especially for a small company like Camber Energy. So, how did Wall Street react to the news?
What’s Happening with CEI Stock?
CEI stock shot out of the gate this morning, moving up 15% and piercing the $5.70 level. However, the rally faded somewhat during the first hour of the trading session.
Nonetheless, it’s undeniable that the market’s initial response was positive. It seems that investors are considering the potential for substantial revenue generation, as the purchased properties involve “working interests” in approximately 169 proved producing oil wells, with net production of about 2,000 barrels of oil per day.
This would significantly augment Camber Energy’s production capacity, so perhaps investors envision an excellent return on investment (ROI). An AccessWire press release from Camber Energy suggested the acquired oil companies would provide approximately $55 million in annual gross revenue. However, this particular figure wasn’t found in the Form 8-K document.
In any case, Camber Energy is certainly stepping up its presence in the conventional energy industry. Traders are still deciding where CEI stock will land today, but chances are pretty good that it will be in the green.
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On the date of publication, David Moadel 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.
