Delta Petroleum Corp. (NASDAQ: DPTR)

Delta Petroleum Corp. (DPTR) engages in exploration, acquisitions, development and production of crude oil and natural gas in the Gulf coast and Rock Mountain areas.  The Company maintains leaseholds in the Eastern Washington region, called the Columbia River Basin.  The Company’s business model consists of increasing reserves and production through acquisitions and drilling operations.  Operations in the Gulf Coast center on Texas and its traditional oil and gas reserves.  The Rocky Mountain operations focus on non-conventional tight gas sands.

Founded in 1984, the Company is headquartered in Denver, Colorado.

Source: Reuters.com, SEC Filings.

Financial Summary

Source: Reuters.com

Analyst Consensus

The mean of six analysts polled by Thomson Reuters rate shares of DPTR a “Underperform.”  The details of the analysts polled are as follows:

Analyst Recommendations and Revisions

Source: Reuters.com

Investment Highlights

Overview

DPTR engages in exploration, acquisition and development and production of crude oil and natural gas in the Gulf coast  and Rock Mountain areas.  The Company maintains leaseholds in the Eastern Washington region, called the Columbia River Basin.  The Company’s business model consists of increasing reserves and production through acquisitions and drilling operations.  Operations in the Gulf Coast center on Texas and its traditional oil and gas reserves.  The Rocky Mountain operations focus on non-conventional tight gas sands.

Market

Investments in the oil industry are dependent upon the price crude and natural gas brought about by supply restrictions and world GDP growth rates.  Global production cannot increase without energy, which is overwhelmingly dominated by oil and natural gas.  Expected GDP growth in the BRIC (Brazil, Russia, India, Russia) countries is expected to grow, and in the case of China, grow substantially.  The impact of China’s economic growth on the oil market is magnified due to the county’s relative energy inefficiency when compared to the United States and Europe, further exasperating overall declining world oil supplies.

Energy analysts cite the post-June 2008 plunge and subsequent oversold condition in oil and gas prices to panic liquidation of contracts by hedge fund managers during the credit and liquidity crisis, which began in earnest in September of 2008.  However, in the intermediate term, as the global economy stabilizes, the spot price of coal, oil and its popular substitute, natural gas, are expected to firm, said the Energy Information Administration (EIA).

Longer term, the outlook for fossil fuels is for much higher prices.  Private analysts such as Matt Simmons of Simmons & Company, and William Powers of Powers Energy Investor hold this optimist view of the future oil and natural gas prices, citing evidence of world peak oil production and expected increased demand as world GDP begins to regain its upward projection led by the BRIC countries.

Global production from the BRIC and ASEAN (Association of Southeast Asia) countries remains a key driver of fossil fuels prices, with production in these countries weighing heavily on the marginal increase in world production outputs.  Most economists expect a rebound in durable goods production in Asia, especially China.  China’s real GDP growth is expected to reach 8% in 2010, officially, while GDP growth in the OECD countries is anticipated to be flat or rise slightly.  Since the demand for energy correlates strongly with overall economic activity,  oil and natural gas prices may continue higher as excess inventories are depleted and diminishing new supplies struggle to satisfy this demand sometime in 2010, according to the Energy Information Administration (EIA).

The nature of most transactions made in the oil market is another bullish factor affecting investment into oil production and services companies.  Since the majority of transactions for oil are conducted in the U.S. Dollar, the anticipated continuation of the Dollar’s decline will attract hedge funds and institutions into purchasing oil and natural gas as a currency hedge to further declines in the Greenback.  As the Dollar reach record lows on the USD Index, oil and natural gas prices were reaching record highs.  A re-test of the lows of the U.S. Dollar increases demand from institutional and hedge fund managers for oil and natural gas, as these markets are the deepest and most liquid in the commodities space.

Recent Company News

On September 9, the Company said that the Klickitat County Board of Adjustment approved the Company’s plans to drill four exploratory wells in the state of Washington.  The Company’s stock has surged recently, presumably on the news.

Technical Analysis

Source: http://stockcharts.com/h-sc/ui?s=dptr
DPTR trades above its 13-day moving average. This bullish sign is significant because the moving average are also positively trending.

The MACD for DPTR currently indicates a bullish signal.  The MACD is above the signal line, a 9-day moving average of the MACD.  The MACD is also above the critical level of 0, which implies the past price action had been positive.  Overall, the chart is bullish, but expect consolidations and pullbacks as the RSI has reach the overbought level.

Comparative Analysis

Source: Thomson Financial

Insider Trading Activity

Data provided by Thomson Financial

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