Superior Oil & Gas Co. (OTC:SIOR) Crashes Down On Still Too Optimistic Market
14 Jul 2010

Superior Oil & Gas Co. (OTC:SIOR) stock crashed down to a brand new 52-week low at $0.011 yesterday. The large number of alerts sent out to investors by stock promoting websites last Thursday have not provided the desired results yet and there still seems to be considerable selling pressure.

As the shares are not oversold yet, the market is now probably wondering if the price can go even further down. High potential for that comes from the fact that the market price is somewhat too optimistic: the stock trades nearly 60 times higher than the company’s sales and the overvaluation relative to the three times more liabilities than assets cannot be determined.

Superior Oil & Gas history of operations also raises substantial doubt about how fair the stock market currently is. The company’s wells seem to produce some oil and gas from time to time, but unfortunately in the past the company had no money to fund that production, or that was the excuse in the latest 10-Q for the lack of considerable revenues and for the wells remaining shut most of the time.

Between 2006 and 2008 Superior Oil & Gas’ one and only employee drilled four oil and gas wells in Oklahoma, on which however by now either the interests got lost at some time, or the production was so minimal that there were no recordable revenues. Then, from the sporadic production, some revenues were gathered, in 2009 from held payments for gas produced and during this year from oil production from one of the wells.

So, the future looks promising. In March this year Superior Oil & Gas sold convertible securities, which if not paid out in October this year, will transform into 15 million shares of common stock. Also in March, 140 million shares were issued to two investors at a price of $0.065, in exchange of which the company received partial interest in another three “marginally producing” wells. The amount raised is impressive though, $9.1 million.

The only problem for those hoping that now, as there is money to fund the drilling, there will be revenues as well, is that $94,000 of the amount will be used to compensate those same two shareholders for their past investment in the company, which obviously lost its way. Considering the current price of $0.011, is seems highly probable that they may have to be compensated again.

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