Sky Quarry Inc. shares retreated sharply on Tuesday morning, giving back some of the prior session's dramatic gains, as the micro-cap refiner's stock pulled back from a 62.4% surge. The stock was last trading at $1.66, down 24 cents, after moving between $1.58 and $1.815 in early trading.
The decline follows Monday's explosive rally, when shares closed at $1.90 on volume of approximately 221.4 million shares. That spike was triggered by the company's announcement that repairs at its Eagle Springs (Foreland) refinery in Nevada have been completed, with operations expected to commence in July.
With the financing and facility rehabilitation phases now behind it, Sky Quarry faces the critical test of actually operating the refinery and generating revenue. According to a June 22 filing, the company holds roughly 10,000 barrels of crude and in-process inventory at the site, against a storage capacity exceeding 100,000 barrels.
Interim Chief Executive Marcus Laun stated that the company is in the “final stages” of preparing the refinery for production, emphasizing that Sky Quarry will be evaluated on “production, customer deliveries, operating margins, and cash flow generation.” Operating margins, which reflect revenue after feedstock, labor, and other expenses, will be a key metric for investors.
The Foreland refinery in Ely, Nevada, is designed to produce diesel, vacuum gas oil, naphtha, and asphalt for customers in the western United States. Vacuum gas oil serves as feedstock for further refining processes.
Financial disclosures paint a challenging picture. Sky Quarry reported net sales of just $383 in the first quarter, a dramatic decline from $6.3 million in the same period last year. The company attributed the revenue shortfall to ongoing repairs at the refinery, which were completed after the quarter ended.
Broader market action in the refining sector was muted on Tuesday, with PBF Energy slipping 0.3%, HF Sinclair dropping 1.1%, and Marathon Petroleum falling 0.5%. This divergence suggests Sky Quarry's movement is driven by company-specific factors rather than industry trends.
Several risks remain. The July launch may not yield steady production volumes, and fluctuations in crude supply or product prices could work against the company. Sky Quarry's own filings highlight risks related to plant startup and operation, commodity price volatility, feedstock sourcing, competition, and regulatory costs.
Balance sheet concerns are also front and center. In its annual report, Sky Quarry disclosed recurring operating losses that raise “substantial doubt” about its ability to continue as a going concern. The company also reported approximately $7.6 million in overdue debt as of the report date, underscoring the need for additional funding.
For now, traders are betting on a potential refinery restart in the near term, but the company's tight financial position makes July a pivotal moment. The coming weeks will test whether Sky Quarry can bring the plant online, ship fuel, generate sales, and begin drawing down storage to improve cash flow.
