First Titan Corp. (OTC:FTTN) has just provided an update for its recently acquired Alabamian oil well which is expected to give FTTN stock a boost in the current market session. Is it likely to happen, though?
Last Friday, FTTN closed trade at $0.67 per share, up 5% from its Thursday close. The company’s stock enjoyed increased investor interest shifting more than 246 thousand shares, which is 123% improvement over FTTN’s average trading volume.
A couple of hours ago, FTTN announced that its latest acquisition, the Alabama-based oil well, has been granted permission and rigging up would commence within the next three weeks. The company acquired a working interest in the well last week when it also pointed out its location. Based on the fact that there are currently as many as eight producing oil wells surrounding the property, the company’s managers expect to produce between 400 thousand and 800 thousand barrels a day when the well is ready for exploitation.
While the news mentioned above will most probably attract investors’ attention, it is FTTN’s financial state that casts doubts as to whether the company will actually be able to implement its business plans. As seen on its last four quarterly periods, the company’s sole assets are its minuscule cash reserves. As of Dec. 31, FTTN only had $1,000 in cash (and total assets), while its working capital gap had widened to $78 thousand. The net loss of $69 thousand also adds up.
To get the ball rolling, FTTN will have to raise additional capital. Provided that the Alabamian well turns out to be lucrative in oil reserves, this will hardly be a difficult task to do.
