It's Tuesday, Feb. 19 - just days away from the advent of March, when Zacks Small-Cap Research projected that Duma Energy's stock would reach a price of $5. Now, less than 10 days from that deadline, Duma is currently at a price of $2.14, and the question is: Should investors race to buy Duma stock?
A domestic oil and gas developer, Duma Energy is currently performing work both on and offshore at its actively producing/revenue-generating assets in Illinois and Texas. The company has also secured a 39% working interest in an ample 5.3M-acre onshore petroleum concession in Namibia. Among factors currently making Duma a potentially enticing prospect by investment standards is the company's remarkably tight share structure, consisting of 13.2M outstanding and an additional 4.8M in options and warrants, with a full 8.3M held by the company's CEO and other insiders.
So far, more than 75% of capital investment has come exclusively from Duma's CEO and large insider commitments - showing inside confidence in the company's prospects, objectives, and operational vectors. With share structure control so tight, Duma's share price is poised to soar with the current hydrocarbon demand, and the company is right on track for its anticipated 2.5k BOEPD for the end of 2013.
Though shale gas and hydrocarbons are increasingly available thanks to recent advances in fracking technologies and analytical methods, it seems inevitable that oil prices will rise as the global economy slowly wakes up from a long economic winter and feels an empty stomach that is growling for energy. This year, a big emphasis for Duma will be improving its production output and cash flow - which is an underlying trend for the company that Zacks took notice of back in September 2012 with its initiation of coverage on the company, when it gave Duma an outperform rating and the aforementioned $5 price target. Duma's $2M Q1 revenue was in line with Zacks' projections, and the research firm's forecast of $1.1M in lease operating expense for the company was exact. Will Zacks continue its trend of accuracy with its price target at a greater than 100% gain from current levels?
In addition to Duma's successful domestic operations, the Namibian property came back recently with an updated source rock study from Hydrocarb Namibia, the operator, showing a P10 estimate as high as 1.1B barrels for the structural Oponono Prospect. Prime access to Huttenberg Formation - the primary target, which has very high porosity - will potentially make this project a significant producer. The primarily underexplored Owambo Basin, where the concession blocks are located, has the necessary characteristics to become a major new hydrocarbon province.
Successful drilling in Trinity Bay in March of last year (Fishers Reef Field) proved up the enormous 3-D seismic fault block that could hold more than 5M bbls of oil, and the targeted Tex II Sand interval in the lower Frio trend is a substantial goal due to the prolific/productive trend all along the Texas Gulf Coast. Shallow water targets in Galveston Bay and Trinity Bay (8k to 10k feet) signify a significant opportunity for investors to potentially profit on a company with all the proper risk-versus-reward angles.
Duma currently shines in its category and is a company to keep on close watch, with its strategic interest levels in properties that are truly transformational as well as a tight share structure, heavy principal commitment, and drive to produce. Does Zacks know something about Duma that investors are missing? Do Duma insiders know something we don't?
For further information on this company, visit www.duma.com
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