Since New Year, PDQ has been floating between the $0.65 and $0.75 levels. Now the stock left this trading channel. To the dislike of company’s managers, it did so by losing the important support at $0.65.
On Wednesday, PDQ fell to $0.64 on the CVE, on a huge turnover of over 7.6M shares. Yesterday the decline continued. There are no negative announcements to explain the fall of the and the large volume. Just the opposite – one week ago, Petrodorado informed about its agreement with Canaccord Genuity Corp. to sell about 54M company shares on a bought deal basis. The proceeds from the offering, expected to be about $35M, will be used to fund the development of Petrodorado’s petroleum assets in Colombia, Peru and Paraguay.
In spite of the announced financing, the shares began to decline. There are other negative data about the company that raise doubts whether a significant appreciation of the stock is possible. Petrodorado’s financial reports for the third quarter of 2010 reveal several not so pleasant results:
- The company has reported a net loss of over $1.28M for the quarter;
- At the end of September 2010, the weighted average number of outstanding shares was over 395M, compared to only 47M one year before that. This means a serious dilution risk for shareholders;
- The company lost more than $15.4M in cash over the period.
Nevertheless, Petrodorado has nothing to panic about. The company looks stable, especially with the above-mentioned bought deal financing. Maybe it all depends on whether its numerous properties, dispersed in three countries, will clearly prove to have the potential that Petrodorado claims they possess.
