NEW YORK (TheStreet) -- BPZ Resources Inc.
(BPZ - Get Report) rose 16% to $2.13 a share in early morning trading on Wednesday after the company reported production from its new Albacora well along with onshore and offshore drilling updates. As of 10:40 a.m., the stock traded at a volume of 1.36 million compared to its average volume of approximately 581,929.
The company is currently developing drilling at multiple wells at Block Z-1 offshore and is exploring onshore at Block XXIII. BPZ president and CEO Manolo Zuniga said the following in a company statement:
"I'm excited to have entered 2014 with good well results at the Albacora A-18D well, boosting current Block Z-1 gross production levels in excess of 4,900 barrels of oil per day, of which we have a 51% interest. We look forward to continued production growth as we drill additional Z-1 development oil wells.
"On the exploration front, I am pleased that we have started drilling onshore at Block XXIII, and plan to drill onshore at Block XXII later this year where we are targeting both conventional and non-conventional oil plays. In the meantime, preparations are ongoing to drill the selected offshore Block Z-1 exploration prospects mapped with the new 3D seismic."
TheStreet Ratings team rates BPZ Resources as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate BPZ RESOURCES INC (BPZ) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow, generally high debt management risk, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly decreased to -$34.51 million or 62.94% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- BPZ's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 40.46%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The debt-to-equity ratio of 1.39 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, BPZ has managed to keep a strong quick ratio of 2.41, which demonstrates the ability to cover short-term cash needs.
- BPZ RESOURCES INC has improved earnings per share by 13.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, BPZ RESOURCES INC reported poor results of -$0.34 versus -$0.29 in the prior year. For the next year, the market is expecting a contraction of 47.0% in earnings (-$0.50 versus -$0.34).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, BPZ RESOURCES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: BPZ Ratings Report