Pyramid Oil Shares Set to Spike Again?

  

Pyramid Oil Company (PDO)?  Who are they?

Before May 15, 2008, not many people on Wall Street had heard about this tiny oil company whose shares are up a whopping 422% year to date.  PDO shares are up 96% since May 15th.  But why?  Earnings.

Pyramid Oil Company engages in the exploration, development, and production of crude oil and natural gas. It holds oil and gas property interests primarily in California, as well as in New York, Wyoming, and Texas. The company sells oil and gas primarily to crude oil purchasers, refineries, or pipeline companies. Pyramid Oil Company, whose shares trade on the AMEX, was founded in 1909 and is based in Bakersfield, California.

Pyramid Oil Company reported strong revenue and net income growth for the first quarter.  Revenue increased 92% to $1,589,896 versus $826,180 in last year's first quarter as well as net income rising to $834,271, or $0.22 per diluted share, from $57,929, or $0.02 per diluted share, in the comparable year-ago quarter.

"The sales and earnings momentum we carried at the end fiscal 2007 continued through the first fiscal quarter, and in light of the opportunities we are pursuing to increase our oil and gas production, we are optimistic about our prospects for continued financial growth during the remainder of the year," said John Alexander, president and CEO.

"Important progress has been achieved on our natural gas joint venture in Texas, where the operator recently executed a gas sales contract," Alexander said. "We anticipate construction of the 3.8-mile gas pipeline will begin shortly, and are anticipating that sales will commence sometime this summer."

The main thing you will want to watch is oil prices as 81% of their revenue increase was to due to the rise in oil during the quarter.  A fall in oil prices will most likely cause a decline in PDO shares.

Technically, if PDO can close above $20 again, I think it could make another run toward its 52 week high of $29.88.  Be cautious though.  This stock is extremely volatile both ways.

Disclosure: none

Comments

[Tim Eriksen:]

Of course if you spend just a couple of minutes actually looking at the income statement you would find that PDO had a tax credit in the March quarter. True earnings were closer to 15 cents. Their earnings growth is all due to higher oil prices so it is only sustainable if oil continues to go up.

PDO will beneift in the coming quarters from a natural gas find in Texas, but even with that additional production they will have a hard time hitting 25 cents in quarterly EPS.

Why in the world should PDO make anew run at $30 per share and thus trade at 30 times earnings? It shouldn't.

2008 Jun 02 10:01 AM

[Edward Janeck:]

So many different things can go wrong with different stock. Study say it is better to invest in the commodities. Oil is going a lot higher. I write about it @ theinvestingspeculator...

2008 Jun 02 11:25 AM

[The Stockac...:]

A far better play, safer by far, would be SWN (Southwestern Energy) or Questar (STR) and (NE) Noble Corp... Both are doing amazing and will continue to do great the rest of this year. Proven movers. Great profit growth and story behind these three (read about them) and they are real companies with huge proven quarter after quarter numbers. PDO is a strange choice of one's money. Buy SWN, STR and NE, before it is too late... price is moving today and will tommorrow on all three, especially STR.

2008 Jun 02 04:05 PM

[The Stockac...:]

STR and SWN are great movers with a real history. PDO may move, buy STR and SWN will keep moving up, most assuredly. Like money in the bank. Great history and demand for these two stocks.

2008 Jun 02 04:08 PM

[Ed Man:]

Speaking of small Oil companies, UPL has been a fairly consistent riser.

2008 Jun 05 02:22 PM

[Trader Tim:]

Well, there you have it.....a close over $20 last week and a run to $29 so far today

2008 Jun 18 09:53 AM

[Trader Tim:]

Well, there you have it....a close over $20 last week and a run to $29 so far today

2008 Jun 18 09:53 AM

[LoveShorting:]

yes, and now ... a great short ... company is a joke .. oil $ will fall and PDO will fall harder.

2008 Jun 22 08:54 PM

[rteer:]

All I can say is that if I had only traded my shares of GE ($21,600) in March for this stock, I would have profited more than $200,000. I am only sorry that I didn't know about this stock until today!!

2008 Jun 23 01:35 PM