The micro-company Sky Quarry is preparing to launch an oil refinery. What about its stock?

Shares of energy company Sky Quarry, which has a market capitalization of just $9.11 million on the Nasdaq, soared 62% on June 22. The company announced that its oil refinery—the only one in the state of Nevada—is ready to begin operations following a modernization. This comes as other companies are cutting back on capacity, which Sky Quarry believes gives it a strategic advantage.

Sky Quarry shares rose 62% on the Nasdaq on June 22, to $1.9. In premarket trading on June 23, the stock is down 16%.

The rally began after the company announced that its oil refinery in Nevada is ready to begin operations following a major modernization. Operations are scheduled to begin in July.

The plant's launch marks a turning point for Sky Quarry's business, according to a press release.

The company initially focused on processing asphalt crumbs, but a few years ago decided to build a vertically integrated holding company. To that end, in October 2022, it acquired Foreland Refining, whose main asset was an oil refinery in Nevada. Since then, the refinery has been undergoing a major modernization.

With the plant now operational, Sky Quarry is shifting its focus to manufacturing and supplying products to customers, which will generate cash flow, said the company’s interim CEO, Marcus Laun (his comments are included in the press release).

The Sky Quarry plant is the only operating oil refinery in Nevada, a state that has historically relied on fuel imports from other regions, the company says.

However, the situation there is changing: several large oil refineries in California have recently either ceased operations or announced plans to do so, leading to a reduction in capacity across the entire U.S. West Coast market, Laun explains. He believes that against this backdrop, the Sky Quarry plant occupies a unique position in the supply chain, making it a strategically important asset in the region.