Good News Brings Bad Performance For Bering Exploration, Inc. (OTC:BERX)

The shares of Bering Exploration, Inc. (OTC:BERX) slumped big time yesterday after the company announced having been granted permission to re-complete a well.

Closing trade at $0.42 per share, BERX went down 28% from its previous close, shifting a total volume of approx. 1.4 million, a new six-month high. The intense trade with BERX shares came hot on the heels of the news about the company’s newly acquired permission to resume working on one of its oil wells which is also said to contain potential gross reserves of as many as one million barrels. While there could be a grain of truth in such a bald statement, we would rather see evidence thereof in the near future. Why this pessimism? There are hundreds of penny stock companies out there exploring for oil and gas, yet successful undertakings have so far been extremely rare.

Nevertheless, the company’s managers must have felt that success is imminent as they started awarding themselves with tons of stock options to buy common shares immediately at the fairly reasonable price of $0.10 per share for a maximal term of 5 years. Considering that the company’s expenses soared from $336 thousand to $1.5 million within the 12-month period ended Sep. 30, 2012, they must have exercised the vast majority of these options in the meantime, thus taking full advantage of the current market conjuncture. Good for them, bad for regular investors who did not have such privileges.

On a positive note, BERX is focused on exploring for Oil & Gas in the Gulf Coast region, which is the heart of the U.S. petrochemical industry, hence the higher potential to strike it lucky.

Even though BERX does have a stake in a handful of properties which supposedly contain oil & gas deposits, what it has achieved so far is barely enough to justify a market value of $4.68 million. At this stage, BERX shares could safely be deemed overvalued until CEO J. Leonard Ivins & Co. succeed in defying the odds.