As oil demand continues to heat up across the country, domestic oil producers like Allied Energy Corporation (OTC: AGYP) are bound to play a more central role in US oil independence. An oil and natural gas exploration company finding ‘existing’ wells and utilizing 21st century tools and techniques to rework and recomplete ‘existing’ wells, AGYP has shown promising throughout the year. The company has recently released an update regarding progress at its producing site located near Breckenridge, Texas which caused a dip in AGYP stock price.

Catalysts

The Gilmer site which first achieved production in October is still producing from its Wells #1 and #5 but has encountered delays at its second well due to pump issues. Citing these delays, AGYP CEO George Montieth explained to shareholders that these “are a part of the growing pains of an oil producing company”. Considering the complexity of oil companies and their operations, its not surprising that pump complications have temporarily stalled the well’s production.

But AGYP’s workover unit is already taking steps to end the delay, pulling the tubing pump and rods from the well in order to explore and repair the underlying issue. After fixing it, the crew will clean out debris from the wellbore and flush out particulates from the well to prevent obstruction. Then the crew will attempt to run the pump again to test and monitor “all mechanical parameters” for optimal oil and gas output.

Well #5 was shut in after a fluid level check revealed that more fluid needs to be removed to produce natural gas at optimal capacity. Meanwhile, the test conducted on Well #1 showed significant improvement in the cut of oil according to petroleum engineer – Curtis Boyles.

Last but not least, the salt water disposal well – Well #4 – passed a test observed by the Texas Railroad Commission as was done on the Green Lease saltwater disposal well on September 29th. The H-5 casing pressure test was meant to determine the well’s capacity to handle all produced water from the Gilmer Lease at this time and passed inspection after being pressurized up to 500 PSI and shut in for 30 minutes.

AGYP has been consistent in its updates to shareholders throughout the year and routinely releases videos of progress at its Green Lease, Prometheus Lease, and Gilmer sites. Investors can likely expect an update from the company’s management after all issues have been resolved.

Media Sentiment

InvestorHub legend @thommic see’s boom potential for AGYP stock…

Technical Analysis

AGYP stock chart

Currently trading at its support of $.31, AGYP stock could be shaping up for a rebound but could drop to its second support at .29. Meanwhile resistance remains at .34 while accumulation drops and the RSI holds at 45. The MACD had a bearish crossover on the 11th marking news of the company’s Gilmer site delay.

Should you Buy?

Although AGYP’s update did not bring good news of increased production at its Gilmer site, it does show the company’s dedication to production efficiency and optimization. The company is already finalizing a Gas Purchase Agreement with a yet to be disclosed regional natural gas purchasing company which is a promising sign despite delays. Currently trading at its support, AGYP stock may be a dip buy opportunity ahead of news of the company’s successful well restoration.

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