Business

Konrad Kuhn, a specialist in low-priced stocks, sees upside potential in Royale Energy (NASDAQ: ROYL), a speculative play on natural gas. Here's the latest from The Kon-Lin Letter.

"The firm is a small, leading independent oil and natural gas producer; it diversifies the development of its properties by selling a portion of the working interest in each lease that it acquires to third party investors and retains a portion of the prospect for its own account.

"The strategy of shared ownership in multiple wells provides investment opportunities that minimize risk while seeking superior returns for shareholders. The firm operates 49 natural gas well in California, 6 in Utah and 17 in Texas. 

"The company's strength is continually reaffirmed by investors who participate in funding over 50% of its new projects. Of the 8.5 million shares outstanding, insiders own 43% and institutions hold 9.3%.

"Royale was first recommended last month, and the discovery of a new natural gas field sent the stock soaring. The company is recognized as one of the fastest growing firms amongs natural gas and oil producers in the US.

"An established independent producer of domestic oil and natural gas for nearly 20 year, Royale is well-positioned for continued growth for the balance of the decade.

"The shares can be bought in the $2.50 to $.275 area for a first target of $5 to $5.50 and an ultimate target of $8."