Camber Energy, Inc. (NYSE-Amer: CEI) scored massive investor attention on Monday, with shares jumping over 26% on 3X its average volume. And that happened for excellent reasons. In addition to completing a share consolidation, CEI announced its intention to close an accretive acquisition expected to add $55 million to its revenue streams. That’s not all. To ensure that value earned is value kept, CEI also announced hiring Shareholder Intelligence Services, LLC as part of its overall efforts to help identify and combat potential short selling of its stock and protect the interests of its shareholders. That initiative may be helpful sooner than later, especially with its potential acquisition likely utilizing the buying power of treasury shares in combination with cash.
Remember, the proactive measures to protect shareholder value do more than support stock prices; it comforts asset sellers that the compensation taken will be less volatile and not preyed upon by illegal trading activities. That can help keep a floor in the stock price and add leverage to the CEI bargaining team. Additionally, with its cap table adjusted and subsidiary interests continuing to capitalize on U.S. and overseas revenue-generating opportunities, income to shares could generate higher multiples for CEI stock. With a $55 million acquisition in its crosshairs and only about 22.2 million shares outstanding, that’s a probable scenario.
Asset Interests Strengthen Value Proposition
Still, while that planned deal adds plenty of value-creating firepower, it’s far from being the only value driver. CEI also maximizes value from current assets that are already accelerating a growth-oriented diversified business strategy. Perhaps the most significant contributor so far comes through its majority-owned subsidiary interest in Viking Energy (OTC: VKIN), a fast-growing company providing custom energy & power solutions to commercial and industrial clients in North America. Further benefits accrue from the value inherent to its interests in United States oil and natural gas assets.
And they aren’t limited to the U.S. Markets. Through its majority-owned subsidiary reach, which CEI plans to make wholly-owned, Camber benefits from subsidiary interests holding an exclusive license in Canada to a patented carbon-capture system, interest inherent to intellectual property rights to a fully developed, patented Waste Treatment system using Ozone Technology, and additional asset interests benefits CEI through intellectual property rights to fully developed, patent-pending, ready-for-market proprietary Electric Transmission and Distribution Open Conductor Detection Systems. In other words, CEI accrues value on several levels, each contributing to creating sustainable shareholder value.
Moreover, stable positive cash flows already in play from conventional energy and resource opportunities and interests position CEI well to drive its interests and subsequent valuation upward through a diverse portfolio of innovative, clean energy technologies. As noted, much of that potential appreciation could come through the already-mentioned Viking Energy Group. Camber Energy, Inc. owns a majority of the issued ordinary shares of VKIN, which creates, in addition to those already listed, value from being a leading manufacturer and supplier of industrial engines, power generation products, services, and custom energy solutions. They also hold substantial I.P., with VKIN recently updating investors about a fully developed, patent-pending, ready-for-market proprietary Waste Treatment system using Ozone Technology.
There’s more. Viking also shared details regarding I.P. rights to fully developed, patent-pending, ready-for-market proprietary Electrical Transmission and Distribution Open Conductor Detection Systems, interests in conventional oil assets in the Mid-Continent Region (USA), and leveraging an Intellectual Property License Agreement with ESG Clean Energy, LLC regarding its patent rights and know-how related to stationary electric power generation, including methods to capture 100% of carbon dioxide and to utilize heat to produce saleable commodities (e.g., distilled water, DEF, NH3, NH4).
Tangible Value Drivers With Inherent Attributes
The combined contributions from CEI’s interests are valuable and, more importantly, from an investors standpoint, position them well to execute its diversified growth strategy. Still, while assets in hand provide rev-gen momentum, what’s in store could add appreciably to CEI’s growth spurt. During Q4/22, Camber Energy announced entering into an agreement to acquire certain privately-owned companies generating $55 million in annual gross revenues. Once finalized, the deal will give CEI working interests in 169 proved producing oil wells (producing 2000 barrels of oil per day), 174 proved non-producing wells, and 12 proved underdeveloped well locations. Of course, these interests are oil-price dependent, which in recessionary times can be weak. Still, despite current oil market conditions, the agreement can be a significant catalyst as markets recover in 2023. Assets in the ground can be untapped but enormous contributors to the balance sheet.
In January, CEI announced entering a Membership Interest Purchase Agreement to acquire a 100% interest in companies bringing a processing plant designed to produce renewable diesel into commercial operations. Once operational, the plant’s estimated production capacity is expected to be roughly 43,000,000 gallons per year. It’s a timely deal. Renewable diesel fuel, sometimes called green diesel, is a biofuel chemically the same as petroleum diesel fuel and is produced through various thermochemical processes such as hydrotreating, gasification, and pyrolysis. Renewable diesel is made from renewable feedstocks instead of crude oil and is approximately 50%-55% less carbon-intensive than traditional petroleum diesel.
Here’s good news related to that interest: global renewable energy consumption is increasing annually, which is likely to continue as governments mandate and businesses and individuals voluntarily shift to less carbon-intensive energy sources. Keep in mind, though, that the deal is still open. Camber’s obligation to complete the transaction is conditional on a number of items set out in the Membership Interest Purchase Agreement, and there is no guarantee the conditions will be satisfied. With that said, meeting those conditions and closing the deal could be a transformative moment for CEI.
Milestones Reached Into Catalysts
While investors would embrace that closing, it’s essential to recognize the totality of contributing assets that can make CEI a much larger company in 2023. in fact, with many milestones reached in 2022, catalyst opportunities are in play this year. And despite depressed oil prices possibly affecting near-term revenue-generating opportunities, that market will correct higher on a single headline indicating that global economic growth is again accelerating. In other words, lower oil prices could be enhancing CEI’s value proposition.
Still, patience is a virtue when it comes to energy market investment considerations. And sometimes, the best success is earned by those trading ahead of the pack to capitalize on valuation disconnects created by short-term dynamics. CEI, at discounted prices, is a company to consider. While shares may trade in tandem with commodities, they certainly have a diversified portfolio of interests that can maximize opportunities in markets not so directly related to oil, especially those inherent to its VKIN interests. That makes CEI an attractive growth stock investment candidate.
Yes, monetizing the entirety of its potential will take time to happen. But as subsidiary interests continue to contribute to a shared ambition of creating sustainable shareholder value, milestones reached can indeed become bullish catalysts. With that in mind and news likely in the queue, Camber Energy is a value play worth considering.
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