Cheap Stocks: Imperial Resources (IPRC) Shale Oil Play

Shares in Imperial Resources Inc. (OTC: IPRC) have gained 200% thus far in 2012 as the penny stock tried to surpass its YTD high in the last trading session. IPRC, operators of a disposal facility in the Barnett Shale, reached as high as $0.325 Friday before the penny stock closed down -3.23% at $0.30 on volume of 235,143.  The company had filed reults for the quarter ended December 31, 2011 in February which were less than favorable compared to the same period the year prior.

IPRC did however announce on Wednesday that the work to repair and replace the damage caused by a lightning strike to the surface facility on November 8, 2011 continues at its Green Tide Salt Water Disposal Facility (SWDF). The company expects the re-build of the damaged site complete before the end of Q2, 2012.

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IPRC Stock Snap Shot:

Market Cap: 12.87M
52-Week High
(May 10, 2011): 0.79
52-Week Low
(Dec 29, 2011): 0.08
Avg Vol (3 month): 223,316
Avg Vol (10 day): 414,457
Shares Outstanding: 42.89M
Float: 40.42M
% Held by Insiders: 5.77%

Demand for disposal in the area continues to be very strong. The SWDF is located in the heart of the Barnett Shale, the largest gas play by number of wells, in Texas. IPRC‘s SWDF is conveniently located for the disposal of large volumes of salt water generated from essential fracture (frac) stimulation operations on Barnett Shale gas wells, some of which have been frac’ed up to four times.

There are approximately 6,000 wells within 20 miles of the Facility. Disposal rates in the area range from approximately $0.40 to $0.60 per barrel of water, even at less attractive, generally more distant facilities. In addition to disposal revenues the Company expects to benefit from materially additional revenues generated by the facility from the recovery and re-sale of oil contained in frac water.

To view the SEC filings for IPRC, click here.

Bottom Line: IPRC is worth adding to your lists of penny stocks as the company continues to repair its facility. IPRC seems confident it can attract disposal business up to the full operational limit of the SWDF once it is functioning.

As long as the shale oil play in the area remains operational and growing, IPRC could be positioned to take advantage of this.

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