Camber Energy Inc (NYSEAMERICAN:CEI): A Turnaround Story

In March 2017, Camber Energy Inc (NYSEAMERICAN:CEI) was low on cash, struggling with cost overruns and being threatened with delisting by the New York stock exchange.Since that time, the board has begun making changes in its management structure.Investors and analysts are still curious to see what the future of the company will be.In today’s article we will give you latest information on Camber Energy; its leadership’s strategy to steer the company out of the murky waters of debt and its growth initiatives through acquisitions.First, take a look at its share price movement: CEI Daily ChartThe company released its production results revealing that production levels were well above initial expectations while its well recompletion costs have also been well managed as they currently fall below projections made.Brief HistoryCamber Energy, Inc. (previously known as Lucas Energy) was established in 2003 by William A. Sawyer and James J. Cerna with its head office in San Antonio, Texas. It is a growth-oriented, independent oil and gas company engaged in the development of crude oil, natural gas and natural gas liquids in the Hunton formation in Central Oklahoma and on the San Andres formation in the Permian Basin, of Texas. Although recently restructured, its operations remain focused in Central Oklahoma, South and West Texas.Recent DevelopmentsIn October 2017, the company released its production updates and it was revealed that the recompletion of the 5th well, in a six well recompletion program in Coyle Field, located in Payne County, Oklahoma, was completed on the early in the month. To date, actual recompletion costs are approximately 45% below estimates, while production levels are significantly above projections. The 6th, and final well in the field, was expected to be completed within the next few days allowing production to commence in November.Camber Energy, Inc. in September 2017, shared the news that it had executed a non-binding term sheet with an existing shareholder to rapidly provide additional equity capital to the company. The firm plans to use the proceeds from the raise to resolve its defaults with its lender, International Bank of Commerce and is currently in discussions with the Bank regarding the timetable for resolving such defaults.It should be remembered that NYSE (New York Stock Exchange), America granted the Company a two day extension, to submit its plan of compliance, addressing how it intended to regain compliance with Sections 1003(a) (ii) and (iii) of the Company Guide by August 3, 2018. Its management has submitted a formal plan to the NYSE.The company also reports that it is still pursuing possible resolutions of the default of its wholly owned subsidiary CATI Operating LLC ("CATI"). This loan is non-recourse to the Camber Energy.Company FinancesIn November 2017, Camber Energy Inc. entered into a Stock Purchase Agreement on its Series C preferred shares. The Company plans to use the proceeds from the sale of the Series C Preferred Stock for working capital, workovers on existing wells, drilling and completion of additional wells, repayment of vendor balances and payments to its senior lender, in anticipation of regaining compliance.Richard Azar, the Interim Chief Executive Officer of Camber highlighted that the financing represented a significant milestone for the business. He explained that the management believes that the new capital would provide the Company with sufficient runway to execute its immediate business objectives, which would in turn drive shareholder value. This was in line with a detailed strategic plan that is expected to facilitate the growth and expansion of the business. The capital raise signified the first step in executing the plan.CEI presently has $0.71M in cash assets with cash flows from activities of ($6.39M). The company faces the real risk of running out of both cash and any other sources of financing. Although this trend is not irregular for some firms within the industry, the impacts of running out of cash may be huge as it may have to keep increasing its very high debt to stay afloat.Operating expenses(recurring) grew by 49.77% over the past year, which is quite high. At the rate, CEI may run out of cash much faster than investors anticipate. As it stands, costs must be very drastically cut down if the club has no further intent to raise funds soon.According to the company CEO, Richard Azar, management is confident that by the next calendar year, Camber Energy Inc could be generating as much $2.0 million per month in EBITDA (Earnings before Interest, Tax, Depreciation and Amortization)ConclusionAlthough Camber Energy seems to be performing quite well from an operational perspective, the company needs to make real changes to its finances. We are placing CEI on our watchlist and will be monitoring the latest developments.We will be updating our subscribers as soon as we know more. For the latest updates on CEI, sign up below!Image courtesy of Robby Virus via FlickrDisclosure: We have no position in CEI and have not been compensated for this article.