Petron Energy II (OTCBB:PEII) Smashed Through The Stratosphere
On June 24 Petron Energy II (OTCBB:PEII) issued a press release in which, among other things, they announced that they have engaged an entity called Southridge Fund Management who were supposed to take care of PEII‘s accounts payable and also pay for an investor awareness campaign in order to draw traders’ attention to the ticker. Looking at the historical records, some spreading of the word around might not have been such a bad idea since back then, the ticker was not particularly famous – daily trading volumes rarely exceeded 100 thousand shares and the price movement was pretty much non-existent.
On June 25 however, PEII corrected the announcement from the previous day saying that Southridge will NOT be funding any awareness campaigns. Despite that, traders’ attention was drawn to the ticker and trading volumes immediately started to pick up. Unfortunately, the end results were not that good. By July 18, just three weeks after June 25’s press release, the ticker had dropped from around $0.04 per share all the way to $0.008. Then, the paid newsletters joined the party.
24-7 Stock Alerts and OTCmagic sent out a total of three emails between Monday and Wednesday and that, along with some optimistic press releases about growth in the oil production at PEII‘s wells, resulted in something that we rarely see even in Pennyland – 525% in daily gains. The volume amounted to a mind-boggling 22 million shares and the trading value exceeds $936 thousand, making PEII, a ticker that was virtually dormant a couple of months ago, one of the most heavily traded stocks on the OTC Markets yesterday. Do they really deserve it, though?
Well, unlike most of the oil and gas companies that we deal with on these pages, PEII does seem like a more solid venture. They are working on some wells in Texas and Oklahoma and unlike other promoted penny stocks who talk at length how much oil their wells contain, PEII‘s properties have been explored for years which means their latest quarterly report covering the first three months of 2013 contains some actual figures under the revenues section. Here’s a summary of all the important financials:
- cash: $380
- current assets: $23 thousand
- current liabilities: $1.3 million
- quarterly revenue: $106 thousand
- quarterly net loss: $383 thousand
Right off the bat, you can see that while there are indeed some revenues, they are hardly mesmerizing and the losses have been constant which means that the accumulated deficit as of March 31 amounted to no less than $20 million. Cash-wise things look pretty gloomy as well, but at least there’s some good news.
They recently announced that they have negotiated a $5 million credit line which should provide them with enough money to continue drilling. In case they manage to achieve profitability, which should keep dilution at bay, shareholders will be happy as well. In addition to this, as we already mentioned, a press release came out yesterday according to which there’s been a 15% increase in the oil production in several of the wells located in the Oklahoma properties. All in all, while it’s much too early to make predictions on their success, we can definitely say that PEII appear to be working hard. Whether this means that you should invest your hard-earned cash in their stock however, is a different matter altogether.
One thing is for sure: they have yet to show us some sort of steady and consistent stock performance. When active trading began during the second half of June PEII managed to move up the charts and reached around $0.045 per share, however, all the upward movement was soon wiped out and you would agree that losing 77% in just over three weeks doesn’t really make for an easy life as a shareholder. In addition to this, the ticker ran way higher than everyone had expected yesterday and this could prove to be dangerous since, as you know, penny stocks tend to crumble when the pressure gets too much. Bayside Corp (OTCMKTS:BYSD) and Emo Capital Corp. (OTCBB:NUVI) showed us yesterday how catastrophic the results could be which is why we would advise you to weigh the risks carefully and consider all the unknowns before making your final decision.
