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Did A Denial Send Chimera Energy Reeling? (CHMR)

A lot of noise has been made lately over the process of hydraulic shale oil extraction, known as fracking, with environmentalists waging a campaign to ban or greatly restrict the method over concerns of groundwater pollution. In late July, Chimera Energy (OTC: CHMR) unveiled an extraction technology that does not use water, potentially allaying the fears of fracking opponents. The company executed a memorandum of understanding with PEMEX (Petroleos Mexicanos) last month to test the non-hydraulic extraction technology in one of Mexico’s largest hydrocarbon reserves. Despite a spate of positive press releases concerning the project, the stock continues to fall from grace.

Any doubts held by traders were probably not alleviated by two stories that came out yesterday. Aire Liquide denied having any supply agreement or contact with Chimera Energy, which Chimera mentioned in a press release on September 21, 2012. The company was also mentioned in a negative story concerning Save the World Air (OTC: ZERO) published by Seeking Alpha.

This morning, shares of Chimera Energy began trading just about where they ended yesterday’s session at $0.46, which also established the high print for the day. As the lunch hour approached on the east coast, share prices dipped by almost 30% and the stock marked an intraday low of $0.30. Share prices stabilized a bit in the afternoon as the brisk trading in the morning dissipated. The stock ended the trading session with a loss of 25% to close down 11 cents at $0.34. The day’s volume of 2.8 million was one of the largest totals in the last month and easily out paced the 1 million shares traded on an average day.

Since the stock began trading in July, traders have cinched their seatbelts extra tight. Share prices appreciated by 700%, going from $0.25 to annual high so far at $2.00, in the three weeks following the stock’s initial appearance on the trading scene. Chimera Energy shares completed the round-trip flight seven days later when the stock landed back at $0.25. At the end of August, the stock appeared ready for takeoff when shares traded for $0.75, but buyers thought twice about the trip. The question for traders is whether anything short of bringing oil to the surface can calm their jittery nerves. Traders will also watch to see if the stock can hold the current price level.

In a press release today, the company divulged it had received a request from PEMEX for scientific presentation review. Chimera Energy management took this as a sign that PEMEX was increasing the level of opportunity for the non-hydraulic extraction technology.

In a related story on Tuesday, Chimera Energy representatives traveled to Veracruz, Mexico, to meet with officials from PEMEX. The purpose of the meeting was to verify the first wells where the company’s non-hydraulic fracking technology will be put in service.

Chimera Energy supplies equipment and components to the energy sector for use in oil exploration and production. The company claims its non-hydraulic shale oil extraction technology is friendlier to the environment since it eliminates the need for groundwater. The Houston-based company was founded in 2011.

Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email ([email protected]) or his Google+ page (https://plus.google.com/103338576216002376250).



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