Eagle Oil Holding Company, Inc. (PINK:EGOH) share price jumped up more than 1100% after the company announced it has signed a letter of intent for the further development of the W. H. Siler oil and gas lease.In the stock price stir many traders have already taken hefty profits and further appreciation seems to be plotting early into trading today. However, shorting opportunities should be accounted for as well. The new LOI might keep the price inflated for a while, but sustaining the uptrend will require a real deal to pass and thus the current rally is risky for newcomers.
The letter of intent is not a final agreement and allows for penalty free cancellation. A promise was made to finalize the actual agreement by mid January 2011 and the first development should begin by the end of the month.[BANNER]
According to the letter of intent, a new field operations partner will be pouring up to $2 million into the project for a shared working interest. This might get things going on the project, but doesn’t affect the company’s poor financial situation. Thus, its ability to make money remains limited.
The company is delinquent with the most recent SEC filings, so no up to date financial information is available. Quarterly report for the period ended January 31, 2010 depicted lack of liquid capital and rapidly growing liabilities. The company has not generated a single dollar in revenues since inception and relies heavily on sales of convertible notes to keep the business going.
