CAMAC Energy Inc (CAK) is a development stage company formed to develop new energy ventures, directly and through joint ventures and other partnerships in which it may participate. The company’s operations consist of drilling of oil wells in Inner Mongolia, China, and exploration and development operations.
Due to the inherent nature of the company's industry, Camac's growth is highly erratic. In 2010 revenues increased from $67,000 to $31,612,000 due to output from a successful oil field search and the commencement of extraction. Net income is equally as susceptible to crude oil prices. In addition, Camac's search, venture, and investment in future oil fields are expensed as part of operating expense. This also severely impacts the company's net income.
Following BP's oil spill, the US government put a hold on deepwater drilling and instituted new regulations. Although the ban was lifted, the US and other countries have instituted new, tighter rules and stronger regulatory oversight. Increased regulation will increase costs for producers that operate in deepwater drilling.
The price of oil and gas directly affects the revenue of oil drilling and exploration companies. If the price of oil remains high, producers will be incentivized to produce more and tap into once unprofitable reserves. On the other hand, if the price of oil remains low, exploration and production companies will put projects on hold and see a decrease in their revenue streams.
The competition in this industry is fierce. However, the competition is exclusively on the exploration side. There is no competition based on crude oil price since the price is controlled by the Crude Oil Futures market.