North American Oil & Gas Corp (OTCBB:NAMG) Goes Up Despite All Odds

The OTC Markets is a strange place. Normally, when a company, especially a development stage one, publishes a quarterly report showing some horrific financial results, investors tend to run to the hills and that in turn means that the price takes a plunge. North American Oil & Gas Corp (OTCBB:NAMG) filed their latest 10-Q on Monday and, as we wrote yesterday, it isn’t pretty.

It showed that a large portion of their current assets has disappeared, presented NAMG‘s shareholders with yet more liabilities and revealed that they are planning on exploring acres upon acres of oil-rich land with only $39 thousand in the bank.

With all the hype from the last month in mind, these are not the figures that everyone was expecting and, predictably enough, the ticker took a hard dive on Monday, wiping out more than a quarter of its value in just six and a half hours of trading. We were expecting much of the same from yesterday’s session, but, apparently, investors confidence was regained as quickly as it was lost.

When the opening bell rang, NAMG was standing at $1.19, embarked on a slow and steady ascend and by the end of the day, it had reached $1.36 which is around 15% above Monday’s close. As we mentioned, considering the dismal financial situation, this kind of stock performance seems rather illogical, but we think we might have found the culprits.

The first one is probably NAMG‘s latest press release. It was published on Monday but since it came out in the afternoon, we think that it might have still had its effect. According to the announcement, NAMG have signed an agreement for the acquisition of some additional working interest in a project called Tejon Ranch. The purchase price is $140 thousand, it is supposed to be paid in cash and according to NAMG‘s CEO, Mr. Robert Rosenthal, it is a “modest outlay”.

We’re not quite sure what he’s on about. As we mentioned, the report from yesterday states that the total amount of cash on hand is no more than $39 thousand and instead of filling up the press release with statements about the “significant resource potential”, the management team could have tried to explain to their shareholders how exactly do they plan on acquiring the additional funds.

That said, we’re pretty sure that some of the more inexperienced investors saw the projected potential of more than fifty million barrels of oil equivalent that the press release talks about and got immediately excited. But was there something else that gave the ticker a push?

Well, we mentioned yesterday that a new promotional email flew in before the start of the session. Trader Central apparently, is the next in a long line of promoters employed to tout NAMG. At least they can say that they were having it easy since all they had to do was copy some optimistic projections about the future written by former Fox commentator, Tobin Smith and spread the word around.

The landing page which was written by Mr. Smith himself is still alive and kicking as well and we’re pretty sure that it too is making investors jump up with excitement. We mustn’t forget, however, that although at first glance Tobin Smith’s name does give some credibility, he is no stranger to touting penny stocks that don’t quite live up to his expectations.

Take the last big pump that he was involved in, for example. It was for Petrosonic Energy Inc (OTCMKTS:PSON) and it took place a couple of months ago. Just like NAMG‘s campaign, a special landing page was set up and Mr. Smith got paid to write how excited he was about PSON‘s short- and long-term success. The pumpers decided that a paper mailer brochure is needed as well, and, as you can see from the chart on the right, the price did soar. Problem is, every single peak was followed by a scary drop and when Mr. Smith got fired from Fox because of his promotional efforts on PSON, the results were particularly devastating. Now that the ticker is left to its own devices, it’s far below the former heights and we’re really struggling to see how it will ever get back up.

Will the same thing happen to NAMG? Let’s say that there’s little to suggest the opposite. Make sure you have all these things in mind while you’re making your final investment decision.