88 Energy (EEENF) Stock Soars 35% in a Month: More to Come?
After having gone through a fair degree of volatility, the oil and gas company 88 Energy (OTCMKTS:EEENF) saw its stock make a strong move over the course of the past month.
The stock has come into the radars of many traders in a big way and over the course of the past month, it managed to clock gains of as much as 35%. The fresh momentum in the stock is something that investors need to look into closely before they make any decision one way or another. There are two main factors that drove the rally in the stock. Last month 88 Energy had announced that it had sold off its oil and gas credits from its Alaskan interests for a total of $18.7.
While that was a nice chunk of change for 88 Energy, the company decided to pay off the entirety of its debts amounting to $16.1 million. The company added at the time that the rest of the money from the sale was going to be used for working capital needs and also for strengthening its balance sheet.
The company’s operations are very small when compared to some of the other oil and gas companies, which is why it was such a major development and led to such excitement among investors. The other important development was 88 Energy’s decision to issue as many as 204 million fully paid-up shares in the company at $0.026 a share. The proceeds for the same was used to pick up a 50% stake in Project Peregrine.
88 Energy Ltd (EEENF) Stock Attempts To Recover: What Next?
The 88 Energy Ltd (OTCMKTS:EEENF) stock was in considerable focus among investors on Monday and it is easy to see why. Yesterday, the company announced that it signed an agreement with Alaska Peregrine Development Company by way of which it is going to acquire 50% working interest in Project Peregrine.
The project is located in Alaska. Although the stock plummeted after the announcement was made initially, it ended the day with gains of 8%. Considering the movement in the stock over the course of Monday, it might be a good idea for investors to take a closer look at the deal.
In this regard, investors need to note that once this acquisition is formally completed, 88 Energy is going to have working interest of 100% in the project. In a statement, the company stated that this agreement is going to allow it to continue to explore for oil at some point in the next winter.
As per the terms of the agreement, 88 Energy will be paying $14 million in the form of shares. However, there are going to be certain stipulations in this regard. Overriding royalty interest to the tune of as much as 1.5% is going to be given to Alaska Peregrine Development Company and milestone cash payments of $10 million has also been agreed upon.
The move in the stock came about after it had been trading flat for several weeks. In this context, it should be noted that in back in April the 88 Energy stock suffered a massive single day decline after it emerged that there had been a power outage due to equipment failure at two of its highest prospect zones.
That had led to panic selling in the stock. However, another announcement some days later with regards to the update about 88 Energy’s drilling activities in Alaska had resulted in a mild recovery.