Petar Ilievski

The Disastrous Free Fall of La Cortez Energy Inc. (OTC:LCTZ)

by Petar Ilievski June 24, 2011
After reaching an all-time high share price in March last year, La Cortez Energy Inc.(OTC:LCTZ, LCTZ message board) stock has seen a steady decline, which continues up-to-date. Of course, it has its reasons, yet there are also cases when nothing justifies the trading hype on a given day.

One of these days turned out to be this Thursday. While the total trading volume for the first three days of the week amounts to 35k shares, yesterday more than 180k exchanged hands. The result -  a 7% decline in the stock price, the session closing at $0.51 per share. Three months ago, the stock gravitated around $1 per share. Six months ago - close to $1.5 per share.

Now, as mentioned, there is no immediate catalyst that would justify the increased trading volume on Thursday. There are, however, several reasons which make up for this negative development over the last year. One of them is the lack of news related to this company. With the exception of May when two press releases came out, there is not much else to look into for recent developments in La Cortez. Which is strange, especially considering the field of operations. La Cortez Energy is an exploration-stage energy company focusing on the oil and gas industry in South America. Most penny stocks in the same industry tend to issue press releases even when there is nothing particularly important to say to shareholders. The fact that the company is headquartered in Columbia should also not go overlooked.

It is also interesting to notice that the financial statements of the company do not exactly match the negative trend on the stock market. According to the latest 10-Q for the first 3 months of 2011, the company had:

  • $7.4 million in cash;
  • $7.5 million in total current assets;
  • $4.8 million in total current liabilities;
  • $15 million in accumulated deficit;
  • $363k in oil revenues;
  • $2.2 million in net loss;

Of course, the net loss is a number to consider, but the ratio assets-liabilities should also be noticed. All in all, it seems that it is yet to see what the potential of this company could be. Whether it would bring value to shareholders, or the free fall of the share price would continue, would probably be clear in the next few months.

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