Far East Energy, Inc. (OTC:FEEC) Waits Down Low
The shares of Far East Energy, Inc. (OTC:FEEC) went south after its winter promotion ended. But this deep valley poses questions- will the underpriced ticker at nearly 5 cents rise up again, or drift as investors finally lose interest. So far, our database does not see a promotional effort outside the company’s PR announcements. The big climb in the first three months of the year followed an announcement that the energy business had secured an agreement for $80 million in new financing. 
Between January and today, FEEC made several announcements regarding its 2013 drilling program, keeping the stock levels relatively healthy. The annual report holds many warnings that FEEC has taken up a money-consuming activity that is yet to materialize profits. The 10-K report states clearly that the main source of cash are public and private placements of stock, which will inevitably lead to dilution. 
So far, the yearly results should keep FEEC on track with its explorations:
- $1.3 million cash
- $75 million total assets
- $48 million total current liabilities
- $1.6 million revenues
- $27.1 million net loss
It seems the fate of FEEC hinges on managing well its high debt, while also expanding its oil and gas sales. With oil hovering relatively stable on this or that side of $100 per barrel, FEEC may not expect a rise in price as steep as a few years ago, when the commodity left its comfortable $30 range for the first time and shot for the sky.
Another red flag for the company are the harsh conditions of its latest financing, with 13% interest rate on the long-term debt, which may amount to a significant $3.9 million outlay every six months. But any of those factors could be insignificant if in the end the ticker is mostly run by investors’ mood.
Currently, energy stocks are among the most actively promoted, with Norstra Energy, Inc. (OTC:NORX) and Double Crown Resources, Inc. (OTC:DDCC) making the rounds. But FEEC seems too high-quality compared to the other businesses. Still, it is best to be aware that a 5-cent stock is prone to sharper corrections, and plan your investment accordingly. In the past few years, FEEC deflated from highs of 80 cents, and revisiting old levels is a possibility, as well as further sliding down.
