Yuma Energy, Inc. (YUMA), the oil and gas company, jumped recently. The share price went from trading on July 7, 2017 at around $0.9 to touch the level of $2.20 on July 10, 2017. The volume was also very high. More that 4 million shares changed hands. Have a look at the share price action.SourceOn many financial forums, including Yahoo Finance and iHub, nobody could explain it. None of these websites correctly reported what happened. Their news feed did not include the reasons to explain the move. We expended some time researching the company's documents and found this filing released on July 10, 2017, wherein it was noted that Hein & Associates LLP is the new auditor of YUMA. In this article, we will explain in more detail the market reaction to this news.Yuma EnergySourceYUMA focuses on "the acquisition, development, and exploration for conventional and unconventional oil and natural gas resources in the United States Gulf Coast and California". It is based in Houston. The following table represents the company's oil production in the last two years.
Production volumes:
2017
2016
Crude oil and condensate (Bbls)
76,397
34,718
Natural gas (Mcf)
899,427
400,365
Natural gas liquids (Bbls)
33,474
30,262
Total (Boe) (1)
259,776
131,708
Average prices realized:
Crude oil and condensate (per Bbl)
$ 49.95
$ 29.95
Natural gas (per Mcf)
$ 2.84
$ 1.96
Natural gas liquids (per Bbl)
$ 23.15
$ 11.69
Recent Developments
On June 29, it was reported that EnerCom, Inc. will host The Oil & Gas Conference® 22 on August 13-17, 2017, in Denver at the Westin Denver Downtown. YUMA will present at the conference along with other oil & gas operators, such as Cabot Oil & Gas (NYSE:COG), Evolution Petroleum (NYSE:EPM), and Bill Barrett Corp. (NYSE:BBG ). Mainly, people from buy side portfolio managers, energy bankers and investors looking for opportunities specifically in the energy sector will be there. Hence, perhaps YUMA will use this event to communicate something to the market. This conference may be a catalyst for the stock.On May 23, 2017, Yuma Energy declared that it had sold certain oil and gas properties in Texas ("El Halcón") for $5.5 million. The property "consisted of an average working interest of approximately 10% (1,557 net acres) producing approximately 140 Boe/d net from 50 Eagle Ford wells and one Austin Chalk well". Sale of properties and restructuring moves are usually appreciated by the market. But, the news did not seem to move the share price. Additionally, the money received from the sale of oil and gas properties was used to pay part of a bank credit facility of $44 million. Sam L. Banks, CEO of the YUMA, also said:“The sale of the El Halcón oil and gas properties furthers our strategy of selling certain non-core assets, reducing our debt, improving our balance sheet and focusing our resources on our newly acquired Permian Basin acreage.” SourceFurthermore, Yuma Energy announced on May 11 its financial results for the quarter ended March 31, 2017. The net income reported was $2,602,125. We also want to note the net average production, which was 2,886 barrels of oil equivalent. This is a 99.4% increase over the Q1 2016. Sam L. Banks, CEO of YUMA, explained the results with the following words:
"We are excited about our Permian Basin acquisition and look forward to expanding our position in the San Andres horizontal play. We are well positioned to execute our business strategy of investing in relatively low-risk and low capital opportunities within our existing inventory and grow shareholder value by organically increasing our inventory in the San Andres play. As can be seen in the first quarter results, the merger with Davis has improved our liquidity and financial position, and nearly doubled our production." Source
What did the share price move?On July 10, 2017, the company put out that Hein & Associates LLP will be the new auditor. Grant Thornton, the previous auditor, issued a letter stating that the company and the firm did not have disagreements:
"The report of Grant Thornton on the financial statements of the Company as of and for the fiscal year ended December 31, 2016, did not contain any adverse opinion or disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal year ended December 31, 2016, and the interim period through July 10, 2017, (i) the Company had no disagreements with Grant Thornton on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, " Source
In our opinion, the fact that no disagreements were found regarding the financial statements was appreciated by the market. The release of this filing was made at such a crucial time that the share price jumped.
ConclusionYUMA is making great business decisions and the share price is reflecting this. The fact that the company is selling some assets to pay back its debt should be appreciated. Additionally, the last quarterly earnings shows that the company is producing more and generating more net income as well. Finally, the change of the auditing firm was made successfully. The share price went higher as the firm did not say that the financial statements of the YUMA are wrong. Try to be alert on this name, and check what the company communicates on the The Oil & Gas Conference® 22 on August 13-17, 2017; and subscribe to our newsletter as we will be covering the conference for our subscribers.We will updating out subscribers as soon as we know more. For the latest updates on YUMA, sign up below!Image courtesy of tarboat via FlickrDisclosure: We have no position in YUMA and have not been compensated for this article.
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