Petrotech Oil & Gas Inc (OTCMKTS:PTOG)’s Marijuana Business Sends it Further Up

Petrotech Oil & Gas Inc (OTCMKTS:PTOG) announced their plans to expand their business operations into the field of medical and recreational marijuana just over a week ago and it seems that since then, things have been moving at a break-neck speed.

The press release about the new cannabis related subsidiary hit the wire on February 19 and they have managed to keep the enthusiasm going through two more optimistic announcements. An hour before last Thursday’s opening bell, they gave us some more information about the business of the new daughter company. Apparently, Legalizepot.us Management Group, Inc. will have three main divisions. The first one will deal with news and information, the second one will be in the entertainment and arts business, and the third (perhaps the most important one) will take care of the production of marijuana and hemp.

Yesterday, PTOG issued yet another press release. It informed us that they are working frantically on getting the new business off the ground. They have apparently signed some contracts with licensed pot growers in both Colorado and Washington and they are negotiating lease agreements for warehouse and storefront facilities in the two states.

Predictably, there’s been quite a lot of buzz around the stock as well. As we mentioned in our previous article, PTOG skyrocketed after announcing the entrance into the pot business and it managed to log daily gains of no less than 234%. The following days weren’t quite as exciting, but yesterday’s press release propelled the ticker on another run. In just six and a half hours of trading, it managed to shift more than 93 million shares while the price jumped up by no less than 133%. PTOG finished the day at $0.0395 per share which commands a market cap of around $4.5 million.

The huge buying pressure shows that there’s no shortage of people who believe that PTOG really is in for a more prolonged run in the right direction. Is that the case though? We’re about to find out, but we should note that there are some things that could hamper its progress.

Let’s start with the intense promotional activity around the ticker. If you say that PTOG has been one of the most heavily promoted penny stocks during 2013, you won’t be mistaken. The first batch of emails hit our inbox in May and back then, the ticker was hovering around $0.15 per share. By the date of the latest alerts for 2013 (December 16) it had dropped to less than $0.01.

That is a pretty horrific performance, but the pumpers seem unperturbed. The promotional coverage continued throughout January and it’s even going strong at the moment. Right now, PTOG is touted by some of the smaller players in the promotional world like Value Penny Stocks, Financial News Media, and Stock Roach, but keeping the campaign (and the countless risks associated with it) in mind is, we reckon, absolutely crucial.

Throughout 2013, pumpers of all shapes and sizes tried to tell us how huge PTOG‘s potential is. In reality, however, the company fails to impress. The Q3 report presents a rather horrific balance sheet and although the revenue generation has finally started, profitability is still a long way away.

Is the marijuana business about to change that? We’ll need to wait and see. If PTOG fail again, the ticker will be in for another massive drop. If they succeed, however, investors who are jumping in right now could be presented with some healthy profit opportunities.

There is one last thing you should bear in mind though. The latest financial report shows that between April and September, PTOG turned $81 thousand worth of notes into 47 million common shares (the average conversion rate comes in at under $0.002 per share). After the end of the third quarter, they printed nearly 30 million shares valued at roughly the same price.

Is the discounted stock about to hit the open market? We’re about to find out. Is it going to be a surprise if it does? Not really.