For some time the shares of Longford Energy Inc. (CVE:LFD), (PINK:LFDEF) have been moving up, slowly but festively, on lack of any fresh news. Maybe it is more prominent that the advance is accompanied with high trading volumes on the TSX Venture Exchange (CVE).
Over the past several sessions, the stock has been more than ferociously traded on the CVE. After setting a volume record of 9.17M shares last Friday, LFD continued to be greatly demanded by investors. Yesterday’s turnover was about four times the average for the company. At the same time, the price has climbed by almost 30% within a week, noting a new 52-week high on Wednesday.
Currently Longford holds a 40% working interest in the Chia Surkh Block Production Sharing Contract. The first exploration period on the property is expected to expire on June 11, 2012. The company anticipates to spend approximately $44M related to the drilling of two wells and other various payments.
Early in November, Longford announced to have successfully completed 307 kilometre of its 2D seismic acquisition program on the Surkh Block. The first well is planned to be spud during the second quarter of 2011 at a location proved to secure 4800 barrels (!) of oil per day.
This looks more than promising, an opinion shared by the majority of people that discuss the stock performance on the forums. After all, there are not so many companies traded below $1 which have already discovered almost 5000 barrels a day. Perhaps this is one reason for the current stock surge. The other possible explanation remains the speculative interest in company’s shares.
There is certainly some positive mood towards Longford Energy at present. Whether the run-up can hold for a longer time, however, is a completely different matter. The company’s financial fundamentals do not seem to be solid enough. As at Sep. 30 2010, Longford had a negative working capital of $7.3M. The company has reported a net loss of $387K and cash of $5.16M, which is 37% lower than the year-ago figure. For now, Longford obviously does not have sufficient funds to secure the fore-mentioned planned expenditures on the Chia Surkh Block.
