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$IMPP An Imperial March

Long
NASDAQ:IMPP   Imperial Petroleum Inc.
Biden’s Russian Oil ban rattled the structure of the neoliberal globalized market, causing rifts that left demand to soar. But Imperial Petroleum Inc. (NASDAQ: IMPP) navigated the recently disheveled oil and petroleum markets and managed to drastically improve its fundamentals by paying off all of its outstanding debt. As a petroleum transporter, IMPP made a concerted effort to meet demand by increasing the number of its vessels, and as a result, increased its revenue by 1182% in Q1. Despite its strong fundamentals, the stock was near a new low after conducting a 1-15 reverse split to maintain its NASDAQ listing. That being said, IMPP stock ran 41% on May 8th after its Q1 earning report results were released.

IMPP Fundamentals

Oil and gas aren’t going anywhere anytime soon. According to the Energy Information Administration (EIA), the US is expected to increase oil, and gas production through 2050, and given the Russian oil embargo this rings especially true.

In 2019, the US imported a total of 61.75 million barrels from Russia – a new high at the time. Since the embargo took place in 2022, it’s safe to assume the sanctions on Russian oil have left a void that the oil logistics market is trying to fill.

As an oil, and gas transporter IMPP has benefited from these disruptions. Recently IMPP purchased two handysize dry bulk carriers from Japan, the vessels were delivered at the end of March increasing the fleet’s capacity by 71,000 deadweight tons (dwt). IMPP has managed to increase its fleet from 4 in December 2021 to 12 in February of 2023. Its fleet is now capable of transporting 808,000 dwt of oil at a time. This drastic increase in vessel quantity is indicative of the market’s growing demand for oil tankers, which is promising for IMPP.

Now, IMPP is well-positioned to take advantage of the growth in the oil and gas logistics market which is forecast to increase 5.3% by 2027. North America alone accounts for 37% of this growth. Thanks to hydraulic fracturing and other technological developments, the United States is able to mine more gas and oil translating to higher demand for oil and gas logistics. As the market grows, IMPP will have more opportunities to generate revenue from its fleet.

Debt Free

Due to IMPP’s initiative and the market’s growing demand, IMPP was able to pay off the last of its $69 million debt to Alpha Bank earlier than expected, making it debt free. The company was able to pay off these debts by mortgaging two of its containers – Clean Nirvana and Clean Justice. The early repayment of this debt is estimated to have saved IMPP $5 million per annum in finance costs, and $10.3 million per annum in principal loan repayment.

Reverse Split

On April 28th IMPP conducted a 1-15 reverse split, to stay in accordance with the NASDAQ’s listing requirements. Following the reverse split, IMPP stock climbed 8% and then fell 8% before riding the 21 MA support. The stock then fell to a low but started to run after the Q1 results were released.

An Undervalued Play?

IMPP has approximately $69 million in cash, which is significantly larger than its 39.02 million market cap. This indicates that the stock is extremely undervalued. That being said, given IMPP’s expanding fleet, and the repayment of its $69 million debt, things are looking up for IMPP. It is highly probable that IMPP will generate more revenue in this upcoming quarter as a result of its efforts. If that occurs then the earnings report may act as a positive catalyst for the stock moving forward.

IMPP Financials

During, the first quarter of 2023 IMPP experienced an explosive increase in revenues. It made $65.4 million in revenues, which is a 1,182% increase in revenue from Q1 2022. Income increased as a result as well. Its Q1 2023 income is $35 million, which is a 17,750% increase in revenue from Q1 2022. This progress is a direct result of increased fleet operational utilization, which increased to 84%, due to the fact that IMPP no longer has any mortgaged ships. Its debts are paid and it is set to sail beyond the horizon.

Technical Analysis

IMPP stock’s trend is neutral with the stock in a sideways channel. The stock is currently trading above the 200, 50, and 21 MAs, however, the MACD is curling bearishly and the RSI is overbought at 75.

After posting record revenues in Q1, IMPP stock soared by as much as 41% as it could be undervalued at its current market cap. With this in mind, IMPP could continue climbing over the coming days thanks to the growing bullish sentiment surrounding the stock.

However, investors should note that while IMPP appears to have a promising future, the stock is extremely hyped at the moment which could trigger a sell-off as investors take profits. At the same time, IMPP formed a gap near $2.4 following its impressive Q1 earnings which has to be filled. In light of this, investors could wait for the stock to consolidate after filling the gap to enter their positions in IMPP stock.

IMPP Forecast

IMPP is a promising oil, and gas stock due to its drastic increase in size, and the rising demand for oil, and gas logistics. IMPP has increased the number of its vessels to meet the market’s increasing demand for oil logistics, and as a result, grew substantially. Additionally, its repayment of its 69M debt means that it is now capable of utilizing the entirety of its fleet as it sees fit.

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