Stock markets are pretty unpredictable, and we often witness sudden ups and downs with no reasonable or obvious explanation. Such is the current case with Enhanced Oil Resources (CVE:EOR), (PINK:EORIF) on the Canadian market. Last Friday, on no new company announcements, the stock added a quarter to its value on a very large volume.

The total buyers’ domination led to the formation of a white opening marubozu on the chart and to a 25% rise in the share price. In case you do not find this impressive enough, then look at Friday’s turnover. You will see a 5.2M trading volume, surpassing more than 34 times the average and representing a record for the last 14 years. In addition, EOR noted a 10-month high of $0.29 during the session.

Such a good performance by the shares must have its explanation. Unfortunately, it is hard to be found. Enhanced Oil has issued no new releases since last Tuesday. Then, the company filed its 2010 Oil and Gas Reserves Report (NI 51-101F1). It showed total net proved oil reserves of 2.88 Mmbbl (million barrels) on the company’s deposits in the Permian Basin in New Mexico as of Dec. 31, 2010. This does not sound bad at all.

Enhanced_Oil_-_Chart_18_Apr_2011.jpgAs seen from Enhanced Oil’s presentation, published also on Tuesday, the average net daily production has jumped from 200 Bopd in 2009 to 350 Bopd for the nine months of 2010. For the first quarter of this year, the crude oil production has already bumped up to 410 Bopd.

As the company informed in early-April, its efforts in 2011 will be focused on the development of the reserves at the Milnesand, Chaveroo and Crossroads oil fields. Additionally, it will continue the evaluation of a helium project and a geothermal project in St Johns field. The production enhancement program is scheduled to finish in the end of 2013.

Perhaps, all these favorable developments accumulated some bullish potential that burst out on Friday and facilitated the shares’ surge. The future performance of the stock, though, is not very clear.

The current progress made EOR overbought, as the RSI index shows. Besides, Enhanced Oil had only $1.15M in cash at the end of 2010. That is why, it decided to enter into a credit facility with Regions Bank in Texas for up to $25M. This, however, means a large increase of the company’s debt.

Enhanced_Oil_-_Logo.jpgOn the other hand, Enhanced Oil is presently underestimated by traders. Its market value of $44M is considerably below the $122M net worth of business. This suggests that further rise of the share price is, perhaps, possible.