Over the last week, the price of CNE has remained virtually unchanged. However, in the long-term the price movement is negative – since the beginning of November the shares have lost 14% of their value.
The future alteration in the price seems vague. The stock performance suggests that CNE might meet resistance at $1.64 and $1.63 and find support at $1.53 and $1.50
The company recently announced a $106M capital budget for the 2011 calendar year for exploration activities in Colombia, Guyana, and Brazil.
At the end of last year, it had a solid cash position of $67.3M. To this sum, we must add the $57.6M raised through a bought deal offering only a week ago. This makes $125M – enough to fund the 2011 exploration program. It is a positive outlook.
Of course, Canacol has to deal with several problems too. They could really undermine the future performance of the shares on the market. Last Monday, the company released its financial statements for the last quarter of 2010, which present several very contradictory results:
- Canacol reported a 275% rise in revenue over the same period in 2009. Gross profit has jumped by 1143%;
- The corporation announced increased worldwide net production of oil barrels per day (bopd) for February 2011. Canacol’s target is to achieve 11,000 bopd net average production, as stated in its February investor presentation;
- The net loss for the quarter is more than striking – $13.835M. This is a 233% increase from the same quarter in 2009. Accordingly, expenses have flown up by 240%.
The conclusion is that the better revenues cannot compensate the expenses and that Canacol is incurring huge losses. The last one of $13.8M is unprecedented. If this continues, the company will really have something to worry about. In addition, Canacol has a huge long-term debt of about $18M, which looks embarrassing too.
