Petron Energy II (OTCBB:PEII) Turns On The Afterburners
After the unprecedented 525% run from Thursday, Petron Energy II (OTCBB:PEII) surprised everyone when the ticker jumped up by another 33% during the last session of the week meaning that in just two days it has managed to log gains of more than 700%. Rewind a few more days and you’ll see that PEII managed to climb out of the sub-penny field and run all the way up to $0.10 per share in just five sessions. The total gains amount to around 1,350% and although the inherent volatility of penny stocks means that we’ve seen some impressive runs in our time, few are as rapid or as head-turning as the one showcased by PEII. Having seen it however, you just have to ask yourself: “Where is all the excitement coming from?
Well, unfortunately, there doesn’t seem to be a definitive answer to that question. Sure, PEII did issue a couple of press releases on Thursday and Friday which, rather conveniently, coincided with the most impressive trading sessions and they do sound terribly optimistic. The first one said that the production at some of their properties has increased by as much as 15% while the one that went online about an hour and a half before the opening bell on Friday talked about an acquisition of some new wells in Oklahoma but truth be told, oil and gas producing penny stocks make similar announcements every day but they rarely have such a profound effect on the behavior of the tickers.
If we have to be particularly fastidious, we would also point out that Friday’s announcement about the newly acquired properties doesn’t give us any information about the transaction and people are left wondering if it will be paid for with cash, shares or notes. An 8-K form disclosing the details around the agreement (which has yet to be published) will probably give us a definitive answer to that, but this is not the most important question right now.
What most of the people are asking is: “Will PEII manage to sustain the relatively high price in the long run?”. Unfortunately, there seems to be a lack of certainty around this question as well. We already said in our previous article that PEII does seem to be a more solid company compared to most of the oil and gas penny stock ventures and because of this, Thursday’s announcement about the increased production at their properties seems all the more positive. Friday’s press release informing us about the new acquisition should mean yet another source of revenues but, as always, things are not as simple as they first appeared. PEII ended the first quarter of 2013 with around $383 thousand in net losses and if they don’t manage to keep the expenses at bay, the colossal $20 million accumulated deficit will grow even further – something that the shareholders definitely don’t want to see.
The future reports will tell us if the management team will manage to steer the company into calmer waters, but in the meantime, new press releases and possibly some other factors might just keep the ticker afloat.
Having looked through the message boards we can see that some of the posters are convinced that PEII will come up with new production figures this week and although the management team themselves have given us no indications that this will happen, some exciting numbers will definitely give the price a push further up the charts.
A thing that does cause some concern however, is the presence of the pumpers. As we mentioned in our previous article, we received some alerts from 24-7 Stock Alert and OTCMagic. The latter disclosed a compensation of $8 thousand from an entity called One22 Media LLC and we last heard from them on Saturday when they sent us yet another email about PEII. Its contents however, could suggest that this is the last one we’ll see during this campaign. Although 24-7 Stock Alert said that they covered PEII for free, they have also given us some indications that they might be moving on. It will be interesting to see if PEII will manage to perform without the help of the newsletters but if the pumpers’ track records are anything to go by, we might be in for some disappointing days.
Take Bayside Corp (OTCMKTS:BYSD), for example. The two promoters tasked with pumping PEII sent out their alerts on BYSD on July 17. There was some delay but the ticker did eventually move up. The only problem is, the peak was so brief that it probably took most of the people off guard and if you are one the traders who got burnt, you’re probably looking at around 60% in losses after just two red sessions. That’s why, no matter how good the news seems, you should always have in mind that penny stocks carry a certain degree of risk and considering it carefully could save you quite a lot of headaches.
