America Resources Exploration Inc (OTCBB:AREN) Bounces On News
America Resources Exploration Inc (OTCBB:AREN) managed to recover some ground yesterday, after announcing that it has acquired two more oil and gas leases.
As reported in its newest PR, AREN has secured said 950 acres located in Callahan County, Texas through its 94% subsidiary – Seabourn Oil Company. Evidently, that was enough to bring investors back into the fold – but how long will that last?
Of course, it is difficult to say, but there are certainly hints that it may not be long at all. After all, this most recent news certainly looked like it presented a positive development, as it shows that AREN is expanding. However, the situation remains that the company is acquiring oil leases in the middle of an oil crisis. Does that really sound like it is the smart thing to do? AREN is obviously trying to expand, but at what cost?
Still, even if you ignore that train of thought, there’s another serious issue at hand, that is directly related to the company’s recent activities. How exactly is AREN managing to afford all these recent acquisitions? Last time it reported, it had scant little cash to spare for operations, not to mention more ambitious acquisitions.
Has AREN secured a line of credit that would allow it breathing room? There has been no indication that such a thing has happened to date – so it is not very likely that things have gone that way.
No, it looks more likely that the company is funding all its acquisitions through the issuance of common stock or toxic convertibles, as it has done on multiple occasions in the past. Toxic dilution is the most likely reason for its major stumbles in these last few months – well, that, and the inevitable crashes that have followed the multiple paid pumps targeting the ticker during that time.
Long story short – the dreaded Caveat Emptor (skull and crossbones symbol) that is stamped on AREN‘s OTC Markets profile was well deserved, even before the company decided to delay its now overdue 10-Q filing. Investors would do well to be extra careful until it comes out, and be ready to act fast when it finally does hit the web, as the information in it will likely dictate the course that AREN will take up or down the charts.
