PetroKamchatka Plc (CVE:PKP) (PINK:PKPZF) stood out among the top gainers yesterday, but the traders lured in for profits could get easily scared away by the poor liquidity stock.
PKP share price gained 66.6% on Wednesday during a volatile price jump which carried along 5.13 million trading volume – nearly 7 times the average. However, the move didn’t stand out that much in the context of a generally volatile price performance.
It is noticeable that this rally broke the downtrend that was in play since the beginning of 2011. Still, no news helped the price to move and thus a reversal for uptrend is not very likely due to the lack of catalysts. Historic price action also shows that PKP is prone of sudden and unpredictable rallies, rather than stable appreciation.
Despite the poor price performance, the financial situation is quite appealing:
- Barely $1.98 million in debt;
- Net tangible worth $33.6 million;
- Market cap is only $12.26 million, putting a P/B ratio as low as 0.357;
The troublesome part of it is dilution that occurs at random periods, for example when the company pays out stock to directors for their services. Over the last year PKP investors’ holdings were diluted 21%.
Another worrying issue is cash. The company spent most of their capital on equipment and runs nearly dry on liquid assets.
PKP is a comparatively young exploration-stage company engaged in oil discovery. It owns properties in Kamchatka Peninsula of Russian Federation and holds seven onshore exploration licenses. The company has no producing wells to date.
