Borislav Tonev

Grid Petroleum Corp (OTCMKTS:GRPR) Going Through A Renaissance

by Borislav Tonev August 2, 2013
4GRPR.pngAt the beginning of 2011 Grid Petroleum Corp (OTCMKTS:GRPR, GRPR message board) was a small cap oil and gas company in the exploration stage and its price was hovering around $0.20 per share. Then the pumpers came along. The emails started flying around on March 21, 2011, there was another campaign towards the end of May 2011 and the ticker was squashed further by some more emails in September 2012.

The end result is pretty disappointing, but in the interest of fairness, there are some other factors that played their role in the huge price depreciation. Like, for example, the tremendous dilution. If you have a quick look at one of our older articles on them, you will see that in September 2011, they had issued around 135 million shares. In June 2013, the number of outstanding stock exceeded 700 million shares, 245 million of which saw the light of day between February and June. The colossal share issuance could be attributed to some of the financing deals that GRPR have been closing throughout the years. We checked their filings and we saw a familiar name - the one of Asher Enterprises. If you've been around small cap ventures for some time, you would probably know that Asher are often flagged by investors as providers of toxic financing. We've seen their name in the filings of quite a lot of penny stocks like Greenestone Health (OTCBB:GRST), Dewmar International BMC Inc (OTCMKTS:DEWM) and Q Lotus Holdings, Inc. (OTCMKTS:QLTS) and if you take the time to check out the charts of these companies, you will see that their performance is not exactly brilliant.

Another thing that might have pushed GRPR down throughout the last couple of years is the fact that they've yet to show us any signs that they can actually extract oil and gas out of the ground. Quite a lot of acquisitions have been done over the years but for one reason or another, the zero under the revenues section still stands strong. The rest of the figures found in the latest 10-K look pretty gloomy and for your convenience, we have summarized them below:

  • current assets: $573 in cash
  • current liabilities: $1.5 million
  • no revenue since inception
  • yearly net loss: $5.8 million

A disturbing financial statement, you would agree, but despite it and despite all the facts above, GRPR has been moving up in the last couple of sessions. There are two reasons for this.

The first one is a press release that went online on Tuesday according to which GRPR has acquired 25% working interest and 16.5% revenue interest in a new prospect located in the San Joaquin Basin. There are no details about the transaction and there's no deadline for its completion, but despite all this, the management team seems mightily optimistic.

7GRPR_logo.pngAnother thing that pushed the price up yesterday was an 8-K form filed with the SEC according to which the DTC Chill has been lifted. In plain words, this means that all the trading restrictions imposed by the Depository Trust Company back in October 2012 have been removed which should explain the rather huge volume we saw yesterday.

That's all well and good, but we still think that GRPR have failed to provide us with proof that 52% jump from yesterday can be translated into a sustained growth. Sure, they do say that the newly acquired interest will finally get the ball rolling, but they were saying exactly the same thing for the rest of the properties and if they do want to boost the potential investors' confidence, they will need to show us some figures in the next financial statement.

They might also want to think about changing the address of their company headquarters since at this point, it appears to be nothing but a virtual office. Not surprisingly, two other small cap ventures, Sentry Petroleum Ltd (OTCMKTS:SPLM) and our old friends Great American Energy, Inc. (now known as Sovereign Lithium Inc (OTCMKTS:SRBLD)) use the same exact location as a business address.

Make sure you consider the risks carefully and perform the necessary due diligence before investing any money in GRPR.

Comments 5

1. Guest
August 09, 2013, 05:57PM

Quotes Drilling start the 1st week of Oct. Sorry, cant reveal the source.

2. Guest
August 09, 2013, 05:56PM

Quotes Drilling start the 1st week of Oct. Sorry, cant reveal the source.

3. Guest
August 08, 2013, 10:48AM

Quotes I see SPLM eventually going to $8.00. It's good to hear from some other investors.

4. Guest
August 08, 2013, 10:45AM

Quotes I've heard that news as well. It's about time. That may account for large block trade.

5. Guest
August 08, 2013, 10:43AM

Quotes SPLM is very close to the inception of actually drilling.

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