AZURE MIDSTREAM PA COM UNIT LTD PARTNER INT (OTCMKTS:AZUR) is a midstream Nat Gas processing play in the penny space that caught a major boost last week in response to the company’s quarterly numbers. The data showed a clear pop in sales growth on more efficient operations and greater overall profitability.
The action here has been good. All told, we’ve witnessed more than 110% piled on for shareholders of the stock during the trailing month, a rally that has pushed up against longer standing distributive pressure in the stock. That said, AZUR is a stock who’s past is littered with sudden rips. Furthermore, the company has seen interest climb, with an increase in recent trading volume of exceeding 390% over the long run average. Traders should note this as important due to the extremely small float size in the stock (fewer than 11M shares). This type of thing is something to watch out for: with such a tight trading float, this kind of ramping interest can force a supply-shock squeeze.
AZURE MIDSTREAM PA COM UNIT LTD PARTNER INT (OTCMKTS:AZUR) frames itself as a midstream natural gas gathering and processing company in the United States.
The company offers gas gathering, transportation, compression, dehydration, treating, processing, natural gas liquids (NGL) transportation, and crude oil transloading services. As of February 22, 2016, it operated 1,002 miles of gathering lines in the Shelby Trough sub-play of the Haynesville Shale, and the horizontal Cotton Valley play located in east Texas and north Louisiana; four natural gas processing facilities in the Panola, San Augustine, and Tyler Counties of Texas; two NGL pipelines that connects its Panola County and Tyler County processing facilities to third party NGL pipelines; and three crude oil transloading facilities, which consist of six crude oil transloaders.
The company was formerly known as Marlin Midstream Partners, LP and changed its name to Azure Midstream Partners, LP in May 2015. Azure Midstream Partners GP, LLC serves as general partner of the company. The company was founded in 2014 and is headquartered in Dallas, Texas. Azure Midstream Partners, LP is a subsidiary of Azure Midstream Energy LLC.
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According to the company’s press materials, “Azure Midstream Partners, LP, headquartered in Dallas, Texas, is a fee-based, growth-oriented limited partnership formed to develop, operate, and acquire midstream energy assets. The Partnership provides natural gas gathering, transportation, and processing services; as well as NGL transportation and crude oil logistics services. The Partnership’s assets include 963 miles of gathering lines in the Shelby Trough sub-play of the Haynesville Shale and the horizontal Cotton Valley play located in east Texas and north Louisiana that are capable of gathering 1.9 Bcf/d. The Partnership also has three natural gas processing facilities with 210 MMcf/d of cumulative processing capacity located in the Panola, San Augustine and Tyler Counties of Texas, two NGL transportation pipelines that connect its Panola County and Tyler County processing facilities to third party NGL pipelines capable of transporting 20,000 barrels per day, and three crude oil transloading facilities containing six crude oil transloaders with a combined capacity of 31,200 Bbls/d.”
During the quarter ended September 30, Nat Gas prices were roughly flat. Hence, the company’s strong performance over that period is a good indication. However, political changes in the US threaten to bring back the coal market as a viable alternative to natural gas as a thermal energy source.
While the stock has been a strong performer and recent numbers look good, it’s a penny stock for a reason. It’s down from $24/share just 20 months ago because of its management on the liabilities side of the ledger, as noted below. That’s likely why we saw one of the inner circle immediately use this strong action to file a Form 4 and deal out of some ownership interest.
Now commanding a market cap of $11.1M, AZUR has a decent war chest ($11.15M) of cash on the books, alongside total assets of nearly $380M, which compares with a mountain ($171.94M) of total accumulated debt. The balance sheet is a major issue here and likely a fountainhead of confidence for shorts leaning on this stock. But improved operational performance and a brightening outlook for the Nat Gas market is a counterweight to this factor. We will update the story soon as events dictate. For continuing coverage on shares of $AZUR stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!