Camber Energy Inc (NYSEAMERICAN: CEI) is making a run for the top in the premarket hours this morning, trading on gains of more than 6%. The gains come after the company announced that its subsidiary has entered into a Letter of Intent to purchase a new asset. Here’s what’s going on:
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CEI Stock Pops On Lineal Star Holdings LOI
In a press release issued early this morning, Camber Energy announced that its recently purchased subsidiary, Lineal Star Holdings, has executed a Letter of Intent, or LOI. The LOI surrounds the potential purchase of EverconEnergy LLC.
In the release, CEI said that Evercon is a provider of pipeline solutions and field services, project management and inspection services, energy infrastructure maintenance, facility construction, fabrication, and Heavy Civil Construction Services.
Should an acquisition take place, the current President and Founder of Evercon, Brian Stiles, will stay on with the company as president. He will also retain an interest in the company should the transaction close.
In a statement, Mr. Stiles had the following to offer:
We are excited about the prospects for growth with Lineal Star, and believe their reputation and support will help us leverage our contractual relationships throughout Texas, especially with the State’s recently announced $77 billion Texas Highway construction capital plan.
The above statement was followed up by Craig Crawford, COO at the CEI subsidiary, Lineal Star. Here’s what he had to offer:
Evercon and Brian add key top tier relationships and capabilities in a strategic geographic area that enables us to use the capabilities within Lineal across new industry segmentsand geographies. We believe these synergies will bring growth and increased revenue, and, subject to the completion of due diligence, and our entry into a mutually agreed acquisition agreement, we anticipate closing this transaction in October 2019.
Why This News Is Such A Big Deal
Recently, Camber Energy acquired Lineal Star Holdings. Since, the company has already announced that a key project is nearing completion, showing just how much the acquisition is likely to have an affect on revenue.
With today’s announcement, one thing is becoming clear. CEI isn’t happy simply being a producer. The company wants to handle everything from construction of projects to pipeline construction and services to production of gas and oil.
Essentially, the company is breaking into just about every section within its sector. Importantly, the company is making smart moves with acquisitions. With more than 3 decades in the industry, Lineal Star is no small player on the ball field. The company was already generating strong revenues before being snapped up by CEI.
The same story is seen with Evercon. While the company is not quite as seasoned or large as Lineal Star, it has been in operations for years, generating revenues as it tackles the Texas market. All in all, should the deal come to a close, it would represent yet another highly accretive move made by CEI.
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