As we have noted recently, Viking Energy Group Inc (OTC US:VKIN) is lined up to experience some capital-driven expansion on very good terms. Given the trend in the oil and gas markets, this should be ranked as extremely good news for shares of VKIN.
However, the stock has been retesting support levels over recent days, suggesting it may be enticing as a value opportunity in the energy sector.
For a little background, VKIN is the majority-owned subsidiary of Camber Energy Inc (NYSEAMERICAN:CEI), which has recently secured a $15,000,000 equity transaction from an Institutional Investor.
The most important part, as described in CEI’s most recent release, is that the funding deal was done as a premium-to-market convertible investment that appears to help dispense with apparent dilution risk from other notes in play for CEI – and thus, for VKIN.
Most importantly, it may directly translate into expansion for VKIN and its shareholders.
Moving Forward
Viking Energy Group Inc (OTC US:VKIN), updating this key situation, just announced last week that it has completed an additional deal with Camber Energy for the sale of another $11 million in common stock to CEI.
According to the release, the proceeds from the transaction are to be used by Viking to (i) facilitate the potential acquisition of an approximate 60.5% interest in a company engaged in the manufacture and supply of industrial engines, power generation products, services and custom energy solutions; (ii) facilitate the potential execution of an agreement with respect to the license of a patented carbon-capture system for exclusive use in Canada and for a specified number of locations in the United States; and (iii) for general working capital purposes.
Clearly, this is the real-world tangible manifestation of that large investment into CEI that we saw a couple weeks ago – that $15 million on strong terms… it’s already starting to have an impact.
In this narrative, it’s important to remember that VKIN is the main operational component for NYSE-listed CEI. VKIN is the enchilada. It’s the chewy center in the middle of Camber’s tootsie roll pop. And you can go straight to shares of VKIN, which are likely not the subject of speculative fervor in any way (yet), and may be extremely undervalued, trading at $0.43 per share with oil at over $70/bbl.
If interested, additional details regarding this most recent transaction were included in Viking’s and Camber’s Current Reports on Form 8-K filed with the Securities and Exchange Commission on July 30, 2021, and are available under “investors” – “SEC filings” at www.vikingenergygroup.com and www.camber.energy.
The Space
All of this takes place in a context of extraordinary fundamental strength for the energy sector. There are strong bull catalysts on the demand side, due to reopening, fiscal supports, and monetary policy. And there are strong bull catalysts on the supply side, as production lags, OPEC stalls on hiking output, and the US shale industry wallows in balance sheet crisis and culture shock.
The oil bull trend – and now the nat gas bull trend – rides a tide of steady support and reinforcement on both demand and supply catalysts. Yet, investors have not moved in and bet on those facts, for whatever reason.
It may simply be habit – as so many things are in financial markets. When something has been underperforming for such a long time, people become conditioned to be blind to emerging bull narratives, and to always see the bearish story as the most likely because that has been the right cognitive filter for the past number of years.
Yet, when that type of process becomes entrenched, you know you are always very near the tectonic shift that will bring the out-of-favor gimp back into the spotlight as the new golden child in the market. We have seen it over and over again.
At this point, we appear to be at a similar point for energy stocks – long forsaken, criminally discounted by investors out of habit, now poised with undeniable fundamentals, they may be ready for a rebirth of attention.
This has enormous consequences for many players in the space – particularly small-cap energy plays like SilverBow Resources Inc (NYSE:SBOW), Matador Resources Co (NYSE:MTDR), Diamondback Energy Inc (NASDAQ:FANG), Helmerich & Payne, Inc. (NYSE:HP), SM Energy Co (NYSE:SM), and VanEck Vectors Oil Services Etf (NYSEARCA:OIH).
However, interested speculators may find the best bang for the buck comes from an OTC name: Viking Energy Group Inc (OTC US:VKIN).
