DUMA: Second quarter production impacted by equipment replacement.

Zacks Small Cap Research
April 1, 2013

Duma Energy (OTC BB:DUMA) reported its 2013 second fiscal quarter on March 26, 2013. During the quarter the company replaced some equipment in two of the fields in operation. This is normal for oil companies but for small ones it causes significant fluctuations in production. As Duma grows these fluctuations will smooth out.

Second quarter oil production declined from 18.3 thousand bbls in 1Q13 to 14.8 thousand, which was slightly higher than production in 2Q12. Pricing increased sequentially but was below the 2013 level. Duma is still able to sell its oil at above the price for WTI Cushing (the Nov. to Jan. average was  $89.77) due to its superior quality.

Natural gas production was well below year ago levels but prices have been improving over the past nine months and is now back at mid 2011 levels. Since some wells produce more gas than oil the type of well that is shut down to replace equipment would alter the profit matrix beyond our ability to forecast revenue in the short term.

Galveston Bay currently has four producing wells with positive cash flow and Duma intends to open up a number of shut-in wells in this area. Additional infrastructure improvements should enhance the oil recovered (and sold) at minimal costs thereby increasing cash flow.

The company intends to drill a second well on the Curlee prospect in South Texas. The first well provided important data on the oil bearing formation that, together with 3D seismic data, should enable continued production from existing leases. Two additional wells will be drilled in South Texas.

The Markham City Field in Illinois is currently producing a small amount of oil under a pilot waterflood program and data is being obtained that will lead to a recommendation on expanding the waterflood program later this year.

A copy of the full research report can be downloaded here >> DUMA Energy Report 

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