Zodiac Exploration Inc (CVE:ZEX) (PINK:ZDEXF) hit a new 52-week high yesterday, but didn’t stick to the achievement due to the lack of catalysts.
Tuesday’s price rally ended up with a nearly 5% gain even though it had hit $1.18 during the day. ZEX went down by the end of trading session, back bellow the resistance at $1.10. Trading volume was 2.69 million, or 5 times the average value. The price struggles as it comes close to the resistance at 1.10 and will require this humongous volume to be retained and to pass further up.
The price remains in consolidation, which followed a huge price rally from March. Back then, Zodiac said they set production casing in 4-9 evaluation well on Jaguar prospect in California, and reported to have reached a total depth of 14961 feet with a 7 inch production linear.
Yesterday’s rally shows that traders are still fixed on this development, awaiting more news as the company intends to do further tests with the well. This is the first deep test well to be drilled in Kettleman City area over the past 25 years and provides valuable geological and engineering data on light oil resources targets in the underlying formations.
The company hasn’t yet reached production, but is well prepared for the necessary steps towards it:
- Well capitalized with over $51.3 million in cash reported for the quarter ended December 31, 2010;
- $4.8 million spent on development in the first fiscal quarter of 2011.
With steep progress in the property development, the main factor limiting the share price growth is the market cap of 353.4 million. It is five times the net tangible assets of the company. With no production this is a comparatively high valuation, which will require constant reporting on progress to be sustained.
