Skip to content

Camber Energy Bounces 100% On Refinancing – Why Are We Not Convinced?

Tim Worstall
Tim Worstall trader
Updated 24 Feb 2022

Trade Camber Energy Shares Your Capital Is At Risk

Key points:

  • Camber Energy Has Bounced as much as 100% in two days
  • It’s possible to be less than convinced by this
  • Conviction would require a detailed examination of the deals
  • Oil Trading Guide – How To Trade Oil

Camber Energy (NASDAQ: CEI) stock has been on most peoples’ lists of complete dogs for some years now. The recent bounce in the stock price, up 30% yesterday, as much as another 50% premarket today, might change that view. Certainly, it changes the volatility of Camber Energy stock but whether it does anything else is uncertain.

The last big jump in Camber stock was back in September when they announced that they’d got ahold of a carbon sequestration technology. That did drive the stock price well over $3 but that effect quickly faded. Possibly on the grounds that no one really does have a useful – in the sense of actually being economic – carbon sequestration technology as yet and if one did exist it wouldn’t end up inside a company like Camber Energy.

There was a minor price bounce back in December when Camber revealed that it had gained financing. That pretty much faded away again as it became obvious the price that was being paid for that financing – rather a lot of dilution was on the cards as a result.

Also Read: What To Do During A Market Sell-Off

This latest bounce – and it is a useful one that might be worth trading of course – comes with announcements that the financing deals have been modified. Exposure to dilution through the preference shares has been cut and things are much better.

Well, yes. Except we still can’t see any particularly useful nor wondrous business within the company. It’s not that there’s a fragile capital structure so much, it’s that there’s no particular business being smothered by a capital structure. So, sorting out the capital structure doesn’t, in fact, deal with the corporate problem. Or at least that’s one view that can be held.

We might even want to go further. That preference shares structure was incorrectly described on the company’s report to the SEC. Which has meant they’ve had to go back and revise several such reports- something they’ve not managed to do as yet. This doesn’t generate a huge amount of excitement really. It is potentially possible that accounts take a long time simply because there’s so much money to count. But that’s not normally the way it does work now, is it?

A reasonable view would be that this Camber Energy stock price bounce is going to fade away, as with the last one. We cannot be sure, of course, so as ever with microcaps like this the risk is extreme. But the feeling in our water is that we’d like to see the details of this interesting capital reconstruction. Which we can’t – there’s nothing on the Camber Energy investor website for example. Given the late filing of other SEC documents it seems unlikely it will be on Edgar. In fact, the only current source of news on what those details are that we can find is some vlogs from the CEO. Which are then being touted through sponsored content on a stock market-related site.

Sponsored blog posts as the method of announcing a capital transformation? Really?

Tim Worstall
Tim Worstall is a freelance writer specialising in economics and the financial markets.