Christmas week has proven to be a profitable time to be invested in the penny stock of New Western Energy Corp. (OTC:NWTR) with new highs set in each of the last three sessions. Focusing on the ratio of market capitalization to oil reserves, NWTR stock set not only a new 52 week high at 0.86, but also had its largest volume trading session of the year. The momentum came after Zacks Investment Research set a target price of $1.30 to $1.40 at the same time that traders have struggled through the holiday shortened trading week searching for any play that was trending bullish. The question now is can this rally continue or is it déjà vu?
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NWTR Stock Chart
Market Cap: 55.77M
Close: 0.83 ▲ 0.05 (6.41%)
Dollar Volume: $352,992
Average Trade Size: 2,074
Issued and Outstanding: 67,190,866
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New West Energy Corp. popped up on the radar screen back in September when it had a 4 day run from 0.55 to 0.74. The shares of the oil and gas developer had not seen activity on consecutive trading session prior to that except for a brief period in August when approximately 115,000 shares traded within three trading sessions. Although the Company’s revenues were growing and their balance sheet was extremely healthy, especially in the sector which they do business in, interest dwindled and the shares returned to sporadic trading until recently.
On November 21, the Company filed their 10-Q for the three and nine months ended September 30, 2012. While revenues were down YoY, $24,398 versus $42,567, they had increased more than 78% to $76,043 compared to the same period in 2011, $42,567. Looking at the numbers though, it’s clear that in Q3, 2011, the New West Energy booked their initial revenues for the calendar year then which has since dropped quarter by quarter in comparison during 2012. While they sell their oil to one customer only, the health of the balance sheet and lack of multi-million dollar losses is accomplished by not owning or leasing any production equipment and simply collecting a percentage from the drilling and extracting of oil from their Swenson, Trice and Terry Heirs leases.
While the shares of New West Energy Corp. have had a nice bull run since the middle of December when NWTR stock was trading for as low as 0.55, the rally which kicked off setting new highs daily since Christmas. On December 24, Javanshir Khazali, current President and one of the founders of the Company, filed a 13-D with the SEC reporting his beneficial ownership, 38,800,000 shares. Back in October, 2008, Khazali purchased 50 million shares for $5,000, $0.0001 per share, and transferred 11.2 million of them between October 15, 2008 and December 31, 2009 to non-affiliated third parties. While there have been no stock splits since inception, the current price level has those third parties at a current gain of 829,900% gain assuming the cost basis of $0.0001.
While the new $5 million financing arrangement and new leases all point in the right direction for NWTR to continue their recent trend, its worth watching headed into 2013 since it doesn’t appear to be near the “fiscal cliff” as of yet.
About NWTR Stock
New Western Energy Corporation is engaged in the acquisition, exploration and development of, and production from oil, gas and mineral properties located in the United States. Click here to view the SEC filings for NWTR.
Last 5 Trading Sessions:
Bottom Line: NWTR has been a hot penny stock this week without any dispute. Are they going to run to $1.30 plus as indicated by Zacks? Rarely do price targets ever get hit, especially with ADD type trading activity the OTC tends to have. After reviewing their balance sheet and revenue model, NWTR stock is closing out the year nicely and likely to reappear at some point in 2013.
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