Ekaterina Zelenkova

Precision Petroleum Corporation (OTC:PPTO) Stock Is on the Verge of New Promotional Psychosis

by Ekaterina Zelenkova May 2, 2011
PPTO_price_chart.jpgToday, it is expected for Precision Petroleum Corporation (OTC:PPTO, PPTO message board) stock to be fired by a new promotional campaign.

Being on the list of the strong volume decliners, PPTO is well "cooked" now for a new promotional psychosis to evolve. Additionally, the recently announced news about the sale of the company's "ownership" may also improve the shares' performance.

This February, thanks to a stock promotion the shares of Precision Petroleum gained volume and price in short. Such action was never seen before since the shares are traded on the OTC market.

Unfortunately, shortly after the event PPTO returned to the weak performance and for a long time now closes the market at $0.05 per share. On Friday, the scenario was even worse. At an average trading volume, PPTO rolled down further by precisely 11.11% between the sessions to close at $0.04.

Yesterday, as if to exhilarate the strong bearish mood, a stock promoter sent to many investors an e-mail full of hope in PPTO. It is written by a member of the promoter's team. Along with sharing with investors the news that he has a broken heart, he also announced the perfect time for making "sweet trading" on PPTO.

Hopefully, his heart is broken only by a girl and not by huge losses on PPTO during the last stock promotion.

In addition to the investor awareness campaign aimed to revitalize the shares' performance, the company released news about the next in row property sale. This will surely raise a lot of questions among investors. As a result, as opposed to the expected by the company profitable deal and short-term share price spike, for some holders of PPTO the news may become a strong selling signal.

PPTO_from_the_site.pngOn Friday, Precision Petroleum Corporation released the agreement with CAVU Resources Incorporated to sell 50% ownership in its Montana prospect in the Powder River Basin. It is expected that the deal would bring the following benefits to the company: $150K in cash, a 1.6667% ORRI in the 1,600 acre lease, and 2,500 free trading shares of CAVU Resources, Inc.

From a "cash" point of view, Precision Petroleum Corporation maybe negotiated a reasonable price. As known, in 2009 the company enters into a Participation Agreement with Nitro Petroleum Incorporated (Nitro). According it, PPTO obtains from Nitro the right to participate in Phase One of Nitro's Powder River Basin Project in Montana. PPTO has the right to acquire a 37.5% working interest in Phase One of the Powder River Basin Project in exchange for an agreement to pay 50% of the expenses of the project's Phase One. As of the end of last year, PPTO has paid $57.5K under the Participation Agreement with Nitro. This may be considered a decent profit if PPTO spent $60 K and expects to receive $150K.

Unfortunately, the question arises about the ownership and the future potential of PPTO to make profits from operations and not from selling shares. As opposed to the released by the company sale of the 50% ownership in its Montana prospect, all above presented is not the sale of ownership but of the right to participate in a project. As the company states in its financial reports, it is Nitro that acquired certain oil and gas leases in the Powder River Basin in Montana, not PPTO.

Further more, the statement that "The Company has sold interests in oil and gas leases that it presently owns" really initiates questions on how PPTO plans to operate in the future.

Precision Petroleum Corporation sold also 43.5% of the Thompson 2-18 in November 2010 for $8.9K and 19.003906% of the Ward McNeil in December 2010 for $19.4K.

Maybe, it is really good that these days the e-mail of the "writer with a broken heart" will give investors bullish mood, which however, may be only for a short period of time.

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