Duma Energy is a remarkable domestic oil and gas developer doing work both on and offshore at their actively producing/revenue generating assets in Illinois and Texas, which has also managed to secure a 39% WI in a sizeable, 5.3M-acre onshore petroleum concession in Namibia. An exceptionally tight share structure consisting of 13.2M outstanding and another 4.8M in options and warrants, with a full 8.3M held by the CEO and other company insiders, makes DUMA some tasty low-hanging fruit by investment standards.
Moreover, in excess of 75% of capital investment thus far has derived exclusively from the CEO and large insider commitments, showing a fearless seriousness about the company’s objectives and operational vectors. With such tight share structure control, mounting hydrocarbon demand is able to send the DUMA share price soaring and the company is on track for their projected 2.5k BOEPD for the end of 2013.
Shale gas metrics are changing the dynamics of the industry itself these days, something made obvious by Duke Energy’s recent decision to dismantle, rather than try to repair/retrofit, their Florida-based Crystal River Unit 3 nuclear power plant, in part due to the rapidly growing abundance of shale gas supplies. Duke’s facility joins Dominion Resources’s Kewaunee reactor in Wisconsin as another nuke plant going into early retirement due to the obvious shale gas logistics at play and the global utilities sector is taking note of this shift as well.
Despite the growing availability of shale gas and hydrocarbons thanks to the latest fracking technologies and analytical methods, it is clear that whether we like it or not, oil prices are going to rise as a growing global economy shakes off exhaustion and realizes how hungry for energy it has now become. Huge emphasis this year for DUMA will be placed upon improving production output and cash flow, an underlying trend for the company that Zacks Equity Researchtook note of with their initiation of coverage (Sept 18, 2012), giving the stock an outperform rating and a $5.00 price target ($2.25 open today). Q1 revenue of $2M was well in line with projections by Zacks and the $1.1M in lease operating expense forecast was exact.
Beyond the success of DUMA’s domestic operations, that Namibian property recently came back with an updated source rock study from the operator (Hydrocarb Namibia) showing a P10 estimate as high as 1.1B barrels for the structural Oponono Prospect. Choice access to the primary target (Huttenberg Formation), which has really high porosity, will potentially make this development a serious producer and the largely underexplored Owambo Basin, in which the concession blocks are located, has all the right characteristics for becoming a major new hydrocarbon province.
The success of drilling in Trinity Bay during March of 2012 (Fishers Reef Field) roundly proved up the massive 3D seismic fault block which could hold over 5M bbls of oil and the targeted Tex II Sand interval itself in the lower Frio trend is a huge goal because of how prolific/productive the trend has been all along the Texas Gulf Coast. The shallow water targets in Galveston Bay and Trinity Bay (8k to 10k feet) represent a huge opportunity for investors to get in on the action through a company that has put together all the proper risk versus reward angles. Strategic interest levels in truly transformational properties, tight share structure, heavy commitment by principals, and a drive to produce really make DUMA stand out in its category as something special.
For more information on Duma Energy, visit www.DUMA.com
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