Eco-Stim Energy Solutions Inc (NASDAQ:ESES) is a penny stock that has started to garner attention as the stock bounces up the chart. The recent breakout move follows ESES’s press release last week announcing an executed one-year agreement with a US oil and gas exploration and production company to expand its pressure pumping operations in the north central region of Oklahoma. ESES expects that the work to be performed under this contract should support a second well stimulation crew allowing the company to further expand its footprint in this region. The contract has an option, exercisable by the Company’s customer, for a second year.
According to the release, “while the contract does not require the customer to award any specific volume of work to the Company, the contract provides ESES with the exclusive right to complete all of the customer’s wells so long as ESES meets the operational standards required. Currently, the customer expects to complete 2-3 wells per month and is operating two drilling rigs in this region. Each well is expected to be completed with approximately 25 stages and will require approximately 40,000 HHP.”
Eco-Stim Energy Solutions Inc (NASDAQ:ESES) trumpets itself as an environmentally-focused oilfield service and technology company providing proprietary field management technologies and well stimulation and completion services to oil and gas producers drilling in the rapidly expanding international unconventional shale market.
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ESES’s proprietary methodology and technology offers the potential to decrease the number of stages stimulated in shale plays through a unique methodology that predicts high probability production zones while confirming those production zones using the latest generation down-hole diagnostic tools.
In addition, ESES offers its clients completion techniques that can dramatically reduce horsepower requirements, emissions, surface footprint and water usage. Eco-Stim seeks to deliver well completion services with better technology, better ecology and significantly improved economics for unconventional oil and gas producers worldwide.
As noted above, ESES shares just broke sharply in recent action to close out last week. The principal catalyst underlying recent action in the stock was the company’s move to become an exclusive contractual provider to a new client in Oklahoma, which is a sharp expansionary operational shift.
Chris Boswell, President and Chief Executive Officer, commented, “After starting our U.S. based operations in late May 2017, we have been in discussions with several other operators working in the Scoop/Stack Merge plays and these discussions have now led to the signing of a commercial contract. We believe that this agreement will be a foundational contract that should enable the Company to participate in the expanding activity levels indicated by the recent rig count increase within the Scoop/Stack/Merge formations being developed in the region. We continue to believe that this area is poised for growth and this contract will position the Company with a second significant customer in the area.”
Recent action has seen 44% during the past month in terms of shareholder gains in the name. This is emblematic of the stock. ESES is a stock who’s past is littered with sudden rips. In addition, the stock has seen interest climb, with an increase in recent trading volume of greater than 370% above the average volume levels in play in this stock over the longer term.
Traders should note this as important due to the very limited float size in the stock (of 5.7M shares). It’s something the veterans know to key on: a mechanically driven price squeeze can result from this type of mix of small float and ramping attention from traders.
Currently trading at a market capitalization of $24.65M, ESES has a significant war chest ($11.2M) of cash on the books, which stands against about $987K in total current liabilities. ESES is pulling in trailing 12-month revenues of $9.1M. In addition, the company is seeing major top line growth, with y/y quarterly revenues growing at 39.7%. We will update the story again soon as developments transpire. For continuing coverage on shares of $ESES stock, as well as our other breakout picks, sign up for our free newsletter today and get our next hot stock pick!
Disclosure: we hold no position in $ESES, either long or short, and we have not been compensated for this article.