MMEX Resources Corp (OTCMKTS:MMEX) is still languishing at all-time lows, despite showing signs of bouncing back in our previous update. However, trading volumes have picked in the recent past, an indication that the stock could bounce back on easing short interest pressure.
Taking into consideration the underlying long-term bearish run, it may be wise to take a back a seat and wait for further confirmation on the direction of trade.
A closer look at the chart above, it is clear that MMEX Resources is trading in a strong downtrend. For the stock to be considered a long-term play, its share price may have to rise and stabilize above the $0.01 mark, seen as a key psychological level.
On the downside, a close below the $0.0030 could accelerate the bearish run, which could see the stock registering a new 52-week low.
What Does MMEX Resources Do?
MMEX Resources bills itself as a development stage company engaged in the exploration, extraction, refining, and distribution of oil, gas and petroleum products. The company acquires, develops and finances oil, gas and power projects in Texas, Peru, and Latin America, in pursuit of revenues and shareholder value.
Pecos County Refinery Project
If MMEX Resources is to bounce back from the current lows, it will have to achieve significant milestones on the development of its two main refinery projects in Pecos County. It has since emerged that the development stage company is on track to bring the projects to fruition, expected to have a significant impact on revenue-generation capabilities.
The company is currently building an access road that will support the two planned Pecos Refinery project. Trucks can use the road to access the 10,000 barrel-per-day crude distillation unit. MMEX has also contracted Penta Petro Midland to provide trucking services. The firm is to transport refined products from the distillation unit to the final consumers.
“We’re projecting we will sell part of our production from the distillation unit within the Permian Basin, primarily to pipelines who blend the naphtha into their crude supply that typically goes to Gulf Coast refineries,” said CEO Jack Hanks.
The opening up of the refinery is a big development as it comes at a time when the energy sector is showing signs of edging higher, after years of underperformance. As it stands, MMEX Resources remains well positioned to generate significant revenues, from refined products, from its two main refineries.
The Chief Executive Officer has already confirmed that they have signed contracts with three major purchasers and companies with strong balance sheets. In addition, they have entered into an off-take agreement with Pilot Thomas Logistics for the sale of Diesel fuel production from Phase 1 of the MMEX refinery project in Pecos County.
“MMEX is very pleased to announce this significant milestone agreement with Pilot Thomas Logistics to market our Diesel production to the Permian Basin drilling industry. As a major fuel provider in the United States, Pilot Thomas Logistics will be a great partner, and we look forward to working with Pilot Thomas in providing a major base load to the marketing program for our refinery production,” said Mr. Hanks.
MMEX Resources has already tapped the debt market in pursuit of working capital to finance ongoing works on the development of the two main refinery projects. The company has already completed a round of funding made up of 12% convertible note issued to JSJ investments for a total principal amount of $125,000.
In addition, the company has completed a funding of an 8% convertible note in the principal amount of $220,000 to Auctus Fund LLC. MMEX Resource can redeem the note any time prior to 90 days from the issuance date, at a redemption price of 125% plus accrued interest.
MMEX 2018 Outlook
MMEX Resources has made significant progress on the development of two refinery projects that are poised to define its prospects in the near future. Completion of the two projects will allow the company to operate at full capacity, perfect for generating significant revenues.
The ongoing recovery in the energy sector is another positive that affirms the company’s long-term prospects as it moves to produce oil and gas products from its two refineries. Oil prices have already ticked up, to levels that can offset production costs thus allow the likes of MMEX Resources to generate significant profits.
While the stock has underperformed a great deal over the past 12 months, things could change for the better going forward. Trading volumes have already picked up an indication that investors are starting to take note of the stock’s potential as a bounce-back play.
Just as was the case in our previous update, MMEX is still a risky investment, given that it is trading below the $0.01 mark, clobbered by an underlying long-term bear run.
However, a bounce back above the key psychological level should make the stock an exciting pick on the recovery of the energy sector.
Disclosure: We have no position in MMEX and have not been compensated for this article.