Nostra Energy, Inc. (OTC:NORX) Pump Kicks Off
After we covered Nostra Energy, Inc. (OTC:NORX) yesterday and made a point that the company is a very likely candidate for a promotion, half an hour later the pump emails started pouring in.
The promotion is led by pumper Stock Publisher and Penny Stock Crew, who revealed compensation amounting to $100 thousand, with later emails arriving near the market close compensated with another $50 thousand.
NORX‘s claim to fame is a farmout agreement signed with Summit West Oil, LLC., who hold 100% working interest in the farmout areas. The land in question is located in the Bakken region. According to the agreement, NORX will acquire working interest in the property after collecting exploration data and paying $200 thousand upfront to Summit West no later than April 30, 2013, then drilling three wells, each at an estimated cost of $5 million, with deadlines spread out across 2013 and 2014, in six-month intervals.
Even if that sounds like a potentially lucrative undertaking, the requirement for $200 thousand paid upfront is already an obstacle for the company. As of the date of its latest financial report for the quarter ended November 2012, NORX had the following financials:
- $8 thousand in cash, comprising total assets
- $13 thousand total liabilities
- zero revenue (exploration stage company)
- $40 thousand accumulated deficit
The company did post an 8-K containing information of a secured convertible note in the amount of $100 thousand. This note was also issued with conversion provisions allowing the holder to convert at a price that is roughly 50% below NORX‘s last closing price. This still leaves the company 90$ thousand short of their April payment and several million short of their $5 million estimated costs for the completion of the first well by December this year.
The pump started caving in very early, as NORX took a serious dip right after the open on large volume spikes, clawed its way back, then dipped again to close the day only 4% up, trading 10 times its average volume.
The pumpers at Penny Stock Crew ran other promotions in the past and some of those turned out truly horrible. The same promoters were part of the funeral choir that assisted iMing Corp. (PINK:IMNG) as it went under in February, currently 70% below the spike of the promotion.
Traders are advised to be extra careful with promoted stocks, especially when the compensation is in the hundreds of thousands.
