Riverdale Oil & Gas Corp. (OTCMKTS:RVDO) Makes a Spectacular and Puzzling Run
Many people who have been following Riverdale Oil & Gas Corp. (OTCMKTS:RVDO) for the past months probably thought that it is not capable of registering a daily dollar volume of around $4.65 million. They also most likely considered 958% in price gains to be in the realm of the impossible. The ticker proved them wrong during yesterday’s session.
RVDO opened the day at a little over $0.30 (a whopping 400% above Tuesday’s close), surged to a massive intraday high of $0.90, and then settled down at $0.635 per share. More than 9.2 million shares changed hands which is another all-time record for the ticker. Naturally enough, we decided to see what’s going on.
We opened our database, but we saw that there seems to be no active promotions currently running for RVDO. We checked the press releases only to find that the latest announcement hit the wire almost three weeks ago. The report for the third quarter was published in November which means that it can’t have had such an effect on the stock performance.
All in all, the reasons for yesterday’s run remain a mystery. Nevertheless, the climb is a fact now. RVDO currently stands at nearly $0.64 per share which commands a market cap of $16.6 million. The big question is: “Is RVDO capable of sustaining the new valuation?“.
Unfortunately, there isn’t a whole lot to suggest that it is. A quick peek at the company’s latest financial statement reveals a part of the problem. Here’s a summary of the most important figures as of September 30:
- cash: $289
- current assets: $3,154
- current liabilities: $13,898
- quarterly revenues: $2,327
- quarterly net income: $136
Note that the document makes no mention of the above figures being in thousands which, by the way, isn’t really that much of a surprise. As you can see, they are generating revenues from some producing oil wells, but their interests in the properties are minimal and so are the proceeds.
A year ago, they announced that they want to expand their assets and bring value to the shareholders by raising $1.5 million through the sale of shares at $0.60 a piece, but it’s clear that this didn’t really happen.
The company CEO, Ron Herzfeld, now admits on the website that the plan was a bit “too ambitious” and on February 14, he announced that he is making another private placement, this time offering the company stock at $0.25 per share. That does indeed sound a bit more realistic, but since there have been no press releases since then, we can not be sure if they have managed to raise the money.
At the same time, a comparison between the results from the third quarter and the ones from the preceding period reveals that the revenues have dropped by more than 58%. The short text under the statement tells us that this is due to the loss of production at one of the wells.
It’s clear that RVDO need to ramp up their operations and provide a much more substantial set of figures in the future reports if they are to succeed. They say in the occasional press release that they’re trying to achieve just that, but there can be no guarantees that they actually will.
Baffling runs such as the one displayed yesterday add yet another layer of risk which is why doing a lot of due diligence is absolutely essential before putting any money on the line.
RVDO wasn’t the only OTC stock to have an exciting day during yesterday’s session. AlumiFuel Power Corp. (OTCMKTS:AFPW) tried to lure in investors by announcing their entrance into the marijuana industry, but instead of jumping, their stock took a 22% dive. mCig, Inc. (OTCMKTS:MCIG), on the other hand, registered similar percentile movement, but in the positive direction. The run was caused by some promises of yet more states legalizing the use of marijuana.
