Borislav Tonev

Breitling Energy Corp (OTCBB:BECC) on the Move Again

by Borislav Tonev July 9, 2014

Breitling Energy Corp (OTCBB:BECC, BECC message board) first popped up on the radar back in February when in a matter of a few days, it managed to more than double its value. It ran from under $0.40 to nearly $0.90 per share, but just as everyone thought that breaking through the $1 barrier is imminent, it lost momentum and crumbled down. After just two sessions of heavy selling, BECC was sitting at $0.52.

Not exactly the perfect performance, but it should be noted that over the following months, the ticker managed to avoid more serious drops. It moved sideways for a while but right now, it appears to be on the run yet again. Over the last month, BECC has gained 38% which means that the climb is not as explosive as the one seen in February. Nevertheless, yesterday's dollar volume of around $444 thousand suggests that investors are excited.

They appear to have a good reason to be. As we mentioned in our previous article, BECC's management team seem convinced that their company deserves to be traded on one of the national exchanges and judging by the latest financial report, they might just be onto something. Here's what the 10-Q for the first quarter of 2014 looks like:

  • current assets: $2.6 million in cash
  • current liabilities: $3.2 million
  • quarterly revenues: $16.9 million
  • quarterly net income: $6.7 million

The most positive thing about the Q1 results is the fact that over the last twelve months, BECC have made some huge steps forward. There's been a 112% jump in revenues year over year and the net income has increased by mind-bending 2,057%.

If the trend continues, BECC could turn out to be one of the few success stories on the OTC Markets. It should be noted, however, that things were a little bit different seven months ago.

BECC actually came to existence after a public penny stock called Bering Exploration Inc. (traded under the BERX symbol) and a private company called Breitling Oil and Gas Corporation inked an asset purchase agreement on December 9, 2013.

Prior to the acquisition, BERX was also in the oil and gas business, but it's fair to say that they were struggling. During Q3 of 2013, for example, they logged just $19 thousand in revenues and a net loss of around $763 thousand. If you take a closer look at the report covering this period, you'll also see that BERX had quite a lot of convertible notes back then.

And that got us thinking: “What happened to the toxic debt?”.

The answer can be found in the 8-K describing the asset purchase agreement. If you read through it, you'll see that in connection with the transaction, some former note holders converted a total of $387,500 worth of debt into 6,068,431 shares of common stock (the average rate comes in at just over $0.06 per share).

Go through some of the older filings (Pages F-12 and F-13 of the 2012 10-K are a good read), and you'll notice that a lot more shares have been issued at less than $0.10 a piece over the years.

BECC is a different company now and it is indeed moving forward, but despite this, the discounted stock is a part of its share structure and it presents some risks. Bearing them in mind before putting any money on the line is absolutely essential.

Comments 5

1. Guest
July 11, 2014, 10:11AM

Quotes I would like to see Breitling permit some wells before I assume development is happening.

2. Guest
July 09, 2014, 11:37PM

Quotes Go to the Investor's Hub BECC page and you will learn will see why the price is moving like it is.

3. Guest
July 09, 2014, 11:34PM

Quotes Hey 2nd comment. Did you not just read the first comment?!

4. Guest
July 09, 2014, 01:27PM

Quotes Breitling Energy has been incredibly successful at identifying properties that have significant oil reserves and flipping those properties to operators for big profits while keeping a 1% royalty interest. This strategy now generates over $16M in revenues quarterly. Now Breitling is developing a property with Clayton Williams in which they have a 100% working interest. This marks a turning point for the company which has ZERO debt and plenty of cash in the bank. The company controls over 90% of the shares which is a very positive thing for shareholders since the public float is only around 10M shares. The CEO is a a brilliant speaker and great advocate for the fracking industry. They will most likely be uplisting to the NASDAQ after the summer according to recent filings and the upside potential here looks fantastic.

5. Guest
July 09, 2014, 09:35AM

Quotes One of the perplexing things about BECC is that it is so difficult to confirm exactly what they do. They tout the fact that they were awarded "Best North American Operator," whatever "best" means, but public records do not confirm that they operate any producing wells and public records confirm that they operate two wells, neither of which shows any 2014 production. The CEO likes to be called the "Frackmaster," but try to find out if they have ever designed and implemented a horizontal well frac job. I mean as a controlling working interest, not a minority, non-operating interest where the operator designs and implements the frac. You may find it hard to find out. With about 84,000 bbls of proved producing reserves by their estimate, one has to wonder what they have that's worth $500 million in market value. Don't guess, don't assume, call them before investing and ask what wells they operate.

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