Novus Energy Inc. (CVE:NVS) (PINK:NOVUF) stock has been slowly breaking out for the last three trading session and it seemed to have finally succeeded.
Capital budget and production guidance published by Novus last Thursday clearly provided a boost in market valuation. The key highlights included:
- $60 million budget for exploration and development activities in 2011;
- Expectations to achieve an average production of 2.4 thousand boe/d for the year 2011;
- 60 wells planned to be drilled under the newly confirmed budget;
- 79% of the budget will be committed to Viking light oil resource play;
- Novus stated they retain undrawn credit lines of $28 million;
- $34 million of the planned budget should come from internal operations.
Share price went nearly flat today after a gapping opening in continuation of the previous buying pressure. Trading volumes need to keep up for the day if the price is to continue, but from the looks of it the stock might actually be getting ready to consolidate at these levels.
Trading volumes were 5 to 8 times the average for the past few days, but the heavy trading failed to transit into share price gains – only 11% were added to the share price on what seemed to be promising a massive rally.
Further price gains are possible since the current valuation puts the market cap just over $226 million. That is only twice the underlying net worth of the business. Such low valuation ratios are usually held by non-producing exploration stage companies, which is not the case here.
