This stock has turned £1,000 into £7,000 in just 9 months

Since the beginning of 2017, shares in small-cap oil & gas producer Empyrean Energy(LSE: EME) have gained over 600%, turning a £1,000, 40,000 share investment into just under £7,000 today. This explosive growth has catapulted Empyrean from a market capitalisation of around £8m to £53m and there could be further gains to come.

Ready for take-off

Empyrean's shares first took off during June when the company announced solid progress developing a trio of assets spread over China, Indonesia and the US. Since then, the good news has continued. In Indonesia, testing at the Mako South-1 well produced high-quality gas flows of 10.9m cubic feet of gas per day, a performance management described as "exceptional." A few weeks later, the company reported that its partner in the US, Sacgasco Ltd had discovered "significant gas shows" at the Dempsey 1-15 well in the Sacramento Basin onshore California. While testing was being carried out at these two assets, Empyrean has been busy in China compiling seismic data with its own testing and through acquisitions.

Today the company announced yet more good news from its California asset. The well, which has already produced positive results, is still being drilled and has reached a depth of 2,760 metres. Drilling will continue into the under-explored deeper targeted reservoirs in the 440 metres of the remaining section to be drilled. Initial indications are promising and management has high expectations.

In today's release, CEO Tom Kelly declared: "After slow and steady drilling through some very hard rocks over the last few days, we are very encouraged to see the best looking gas shows from another sand in what we now believe to be part of the primary target zone in this well. We have not drilled out of this latest gas bearing sand yet, so it will be interesting to see how thick this zone is."

Time to buy?

So it looks as if this well could be better than expected, which is good news for investors and could ignite further share price gains. As well as these positive results from California, Empyrean has today released the findings from its surveys in China. Initial findings "greatly" exceed the firm's early expectations. The three prospects considered by the company contain an estimated 591m barrels of oil in total, according to the preliminary survey. Further data processing is required to give a more reliable estimate.

Considering all of the above, it's clear Empyrean has a highly valuable portfolio, but could the company be a good investment? Well, as of yet it is not producing any income, and the company is burning through cash.

At the beginning of August, the company raised £1m by the placing of 12m shares at 8p to finance development operations, following two fundraisings during June for £1.5m and a £1.2m cash raise at the beginning of May. Considering the recent rise in the firm's share price, I would not rule out an additional capital raise in the near term to raise cash while the going is good.

These fundraisings show Empyrean needs more cash to keep the lights on, and while the company's asset portfolio looks attractive, I'd treat the shares with caution until it starts producing revenue.

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Rupert Hargreaves has no position in any share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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