Within the last two trading sessions, DUNR looks like it is headed to the top and technically has formed a bullish chart. The shares have become overbought and have added in the last day of trading 18.33% more to their value. The closing price was $0.284 and the trading volume of 458,000 shares was almost twice the average for the stock.
The market does not look consolidated, and it seems that some traders are trying to speculate on the reaction of the share price to the expected news from the company. A couple of weeks ago, the CEO of Dune energy stated that the closing of the two announced in October joint ventures is anticipated by the end of the month. One of the project concerns the drilling of a 19,500 feet exploratory subsalt well in the Garden Island Bay Field to test potential Miocene pay sand, the second one is Dune’s LOI to sell 60% of its non-productive leasehold interest within the Leeville Field for $5 million. The company intends to retain a 40% working interest and to form a joint venture to exploit the undeveloped opportunities within the field.
The new projects could add some new reserves and increase the production, but still Dune Energy’s financial condition as of end-September shows that the company has more debts than it can bear and severe short-term liquidity problems.
On that background, CEO’s statement that the partial sale of certain assets to provide liquidity to pay the interests on the $300 long-term debt does not sound really encouraging. With such a capital structure, Dune gives little hope to get profitable soon as the interest expenses were much higher than the direct costs of the operations in the third quarter of this year.
