If you are looking at book value and earnings to base your decision to buy this stock, you should get out immediately or not buy the stock. The potential upside for the stock is the JV agreement that Zaza has with EOG with their acreage in South Texas that could be the another big huge shale play. I can't think of a better partner to have than EOG, who will be bringing their knowledge and expertise of South Texas, and most importantly their money to the table to see if the Eaglebine shale formation will be the next big shale play. I have also been told there are several other formations that will be examined as well that oil and gas could be economically produced from. No doubt that the stock could go lower if the JV wells proved to be uneconomical or dry holes, but with the stock trading at around a $1.00 a share, but in my humble opinion the upside far outweighs the downside. Also, you can't ignore the fact that the CEO just put in $1.5 million of his own money to buy more stock.
I couldn't agree more about the potential for this stock and have been saying all along that EOG is the best in the business. They are the operator and this is completely their show. If you play small-cap, at a $1 a share the upside is too great to ignore here.