Riverdale Oil & Gas (RVDO) operates in the oil & gas sector. We had alot of success recently with another oil and gas stock, TECO, which moved over 400% from our alert so we thought we would stay in the sector.
At a current price of $0.18 RVDO sports a market cap of $4,363,367. For comparison, TECO (@ .0425) has been awarded a market cap of $23,100,926. If the market were to grant RVDO the same market cap as TECO, it would be trading at $0.95! That represents a 427% gain from current levels. We’re not saying RVDO will go that high but it does offer some perspective.
About the company:
Riverdale Oil and Gas Corporation is an energy company, which owns mineral rights
that require development. It has oil production revenue from those minerals, operated
by others. Riverdale Oil and Gas Corporation is active in its oil and gas development
program on its 631.82 acre Foster Lease in Jim Wells County, of south Texas.
Riverdale is preparing to commence the acquisition of 3D seismic data over the Foster
Lease, and will have the data process and analyzed using a state-of-the-art proprietary,
Neural Network program, designed to provide much added information about the 16
potential oil and gas reservoirs under the Foster Lease. Once the lease has been
evaluated, the drilling operations will commence. There are at least 8 to 10 development drilling locations, that will have multiple pay objectives.
We have spoken to the CEO of RVDO Ron Herzfeld numerous times while conducting our due diligence of Riverdale. During our conversations, Mr. Herzfeld explained to us that the company has working interests in quite a few potential oil and gas producing wells on their 100% owned Foster Lease (we confirmed this by reviewing RVDO’s most recent quarterly statement). However, prior management of RVDO had done a bad job keeping the wells in good shape. So once Mr. Herzfeld took over as CEO he had the company working hard to restore these wells. Well, after more than a year of hard work it seems as if RVDO is ready to take the next steps towards drilling. With the company’s last press release coming over 1 year ago, our talks with management indicate to us that updates could be forthcoming.
RVDO seems to have alot of positive developments going on with their Foster Lease. Particularly, the Foster #7 Development Drilling Prospect, which is being operated by Property Development Group, Inc. (PDG) who is an independent oil and gas company in the state of Texas. PDG has a great reputation:
“Over the past 13 years (06/1997-10/2010) Property Development Group has produced 622,659 Barrels of Oil and 3,828,825 MCF of Gas. That’s more than 100 Million Dollars ($100,000,000) at today’s prices; and, it is an average daily production of 130 Barrels of Oil and 800 MCF of Gas.”
RVDO’s website also noted:
“Funding for the drilling of the Foster #7 well is proceeding on schedule. We will drill the well to a depth of 8,000 feet, and test the Yegua, Pettus, Hockley, Frio and Miocene sands. We expect the funds to be available by the beginning of the 1st Qtr. 2011.”
Judging by the $148,283 in cash they have in the bank for “Foster #7” (as listed under their current assets in their most recent quarterly statement filed 5/12/2011), we think it is safe to say that they have retained the funding necessary to get started on the well.
What we like most about RVDO is that management passed the “ear test.” Given the many companies we contact on a day to day basis, we feel we have a pretty good idea of what a scummy CEO sounds like when we hear one. And quite frankly, we did not get that impression whatsoever when speaking with Ron Herzfeld. Instead, we feel that Mr. Herzfeld is working hard to restore value to RVDO’s stock.
As for the chart, resistance on RVDO lies @ .25 while support seems to be stabilizing around the $0.15 level. We think shares that are accumulated between .15-.20 should prove to be a good entry on the stock, both in the near and long term. The stock has a minuscule float of only 10,170,996 shares, of which less than 7 million have ever traded. That makes us think that RVDO shareholders are holding their shares tightly causing the tradable float to be even smaller. Mix in the potential for increased trading volume, investor interest, and news from the company, and RVDO presents a potentially explosive situation that could see shares rise substantially from current levels.
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