Norstra Energy, Inc (OTCBB:NORX) Plummeting Further Down

Until about a week ago, everything around Norstra Energy, Inc (OTCBB:NORX) seemed pretty bright. The investors were optimistic, the price was climbing and last Wednesday we saw a huge jump when the ticker gained as much as 61% in a single trading session. Then however, their annual financial report came out and things changed somewhat.

We wrote about the rather disappointing figures in some of our previous articles and we predicted in our video coverage on NORX that the statement might hamper the impressive progress that they have been experiencing during April, May and the first few days of June. But was it only the dreary financial state that put investors off?

Let’s put the rose-tinted glasses on and assume for a moment that they will somehow manage to raise the capital in order to start the exploration process on their properties. The next logical question is: “Are their properties lucrative enough to make them (and you) very rich?”.

Well, we read in the 10-K that they first bought 100% interest in a well located in Kansas in February 2011 but what’s more interesting is that they purchased it for the “colossal” sum of $15,000. We can’t imagine that the well will turn out to be a gold mine considering its purchase price, and apparently, NORX are inclined to agree since they have not done any exploration to it whatsoever.

Their primary focus, however, is the wells that they intend to acquire in the South Sun River Bakken Prospect. “Intend to acquire” is the critical phrase here since at the moment NORX have absolutely no ownership of the property. If they are to become the owners, they will need to invest $15.2 million by the end of 2014 and considering the fact that as of February 28, they had around $100 thousand in the bank, that may turn out to be a tall order.

Is there anything else to worry about? Well, we wrote previously that the agreement for the land was signed with an entity called Summit West Oil LLC (SWO). Later NORX chose SWO as their land operator as well and that sparked our curiosity: “Is there a connection between NORX and SWO and why do they like each other so much?”.

Unfortunately, an answer to that question is somewhat inconclusive. Even the mighty Google Search couldn’t find a website for Summit West Oil and apart from NORX‘s press releases, the only other link connected to SWO is this profile on a website called Shale Experts. The only thing listed there is their address and if it is the correct one, then NORX want to acquire land containing millions upon millions of barrels of oil from a company that is headquartered in a small suburban house in the city of Spokane, Washington (you can see a picture of it right here). Of course, there’s no way we can confirm that this is actually their principal office since they don’t have a website, but let’s assume for a moment that SWO are, in fact, a serious company and that the information provided by Shale Experts is outdated or incorrect. Is there anything else might have put a spoke in NORX‘s progress?

There is, actually and from a traders’ point of view, it’s a big one: the $3.6 million pump that’s been running for quite some time. We’re pretty sure that it will come to an end as soon as the third parties return some of their colossal investment and looking at the recent stock performance, this might just be happening as we speak.

And since we mentioned poor stock performance, we have also witnessed such a thing from a couple of other small cap ventures – DNA Dynamics Inc (OTCMKTS:DNAD) and Axesstel, Inc. (OTCMKTS:AXST). As you can see, the behavior of the two tickers has been pretty similar during the last couple of days, but the reasons for their failures are quite different.

DNAD failed because of a blatant promotional flop. Many newsletters sent out quite a lot of emails in the past few weeks but instead of giving the price a boost, they made the ticker tumble. AXST‘s wipeout from yesterday, however, was due to their inability to keep shareholders happy and develop their business at a satisfactory rate.

Looking at all the facts above, NORX‘s slide might just be a combination of both things and you should bear in mind that there’s still quite a lot of room to fall further down, which is why we would recommend that you consider the risks carefully before making any investment decisions.