American Energy Development (AEDC): Hot Penny Stock to Buy?

When the alerts first went out April 11th, shares in the penny stock of American Energy Development Corp. (OTC: AEDC) had a price of $1.02. Oil drilling and exploration companies attract many speculative investors. AEDC closed at $1.12 on volume of just over 216 thousand for no gain on the penny stock in the last trading session. Since the promotion began, an incredible 10 cents has been added to the share price making AEDC and their “we could see shares hit $4.26 fast, and upwards of $27.63 ” claims as useful as tits on a bull.

Reporting from 1230 Avenue of the Americas, 7th Floor, New York, NY 10020, AEDC filed their most recent 10-Q on Valentine’s Day (February 14) and showed some love on the top line. Revenues were $2,276 for the quarter ended and also the first time since inception that American Energy Development Corp. reported.

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AEDC Stock Chart:

Market Capitalization: 97.81M
Shares Outstanding: 87.33M

52 Week High: (2/15/2012) 1.57
52 Week Low: (4/4/2012) 0.85

5 Day History:
Percent Change: -6.67%
Moving Average 1.14
Average Volume 936,045

Things look like they are going to pick up for AEDC for those who enjoy playing press release bingo. There had been back-to-back-to-back updates from the company heading into Friday’s trading session. The news was as follows:

• April 24: Rig Arrival and Setup on Cremer 1-1 on the Dansville Prospect (see here)
• April 25: Spudding on the Cremer 1-1, Located Within the Dansville Prospect (see here)
• April 26: Update on Brown 2-12 Production, With 898 Barrels of Crude Already Sold in April (see here)

Now it is proven, according to the April 24th and 25th press releases that anything viewed on the Discovery Channel can be considered false. It normally takes weeks to be able to get a rig set up, prepped, tested and then begin drilling, but AEDC is able to do it in a  day. Someone call the Mythbusters and get them over to Niagaran oil reefs in Michigan.

Seriously though, AEDC is what they refer to as “mailer stocks” because their public awareness campaigns are coupled with snail-mail direct marketing methods. Those behind the AEDC promo produced:

• First China Pharmaceutical Group (OTC: FCPGE) which went from 86 cents to $5.90 in a month,
• Horiyoshi Worldwide (OTC: HHWW) which went from $7.50 to $32.50 in 5 weeks, and also
• Kunekt Corp. (Pinksheets: KNKT) which went from 50 cents to $2.90 in a little more than 4 months.

About AEDC:

American Energy Development Corp. is currently an exploration stage company under the provisions of Accounting Standards Codification (ASC) No. 915, Development Stage Entities. AEDC was incorporated under the laws of the State of Nevada on March 10, 2010. Since inception, the oil exploration and drilling company has produced almost no revenues and will continue to report as an exploration stage company until significant revenues are produced.

AEDC’s principal activity is the exploration and development of oil and gas properties.

On July 12, 2011, American Energy Development Corp. filed a Certificate of Amendment to its Articles of Incorporation with the Nevada Secretary of State to change its name from “LJM Energy Corp.”

As of December 31, 2011, American Energy Development Corp. owned acreage in the State of Michigan which included a 43.75% working interest in three separate oil and gas leases in Ingham County, Michigan. The oil and gas leases are referred to by the company as the “Dansville Prospect” and total approximately 1,298 acres.

Coupled with the leases are option rights to acquire a 50% working interest in three prospects located in Trenton Township, Washtenaw County, Trenton Township, Jackson County, and Kinneville Township, Ingham County, Michigan. These three are referred to by the company as the “Option Prospects.” Seismic data for certain properties located in Ingham and Calhoun Counties, Michigan for further exploration and analysis is also available to AEDC.

AEDC also owns a 1.4% working interest in certain oil and gas leases in Pottawatomie County, Oklahoma. The company refers to these leases as the “Magnolia Prospect.”

Furthermore, American Energy Development Corp., on September 13, 2011, entered into a Purchase Agreement with Pepper Canister Nominees Ltd., pursuant to which AEDC would acquire all of the issued and outstanding shares of Pepper Canister Nominees’ wholly-owned subsidiary, Reservoir Resources Limited, in exchange for 12.5 milion AEDC common shares. The purchase agreement, as all are, was subject to certain closing conditions. Reservoir Resources owns an oil and gas exploration and development license in the U.K.

AEDC is subject to development requirements whereby they must drill at least one well in the licensed area to a depth of 400 meters to be spudded before December 31, 2012. Should they fail, Pepper Canister Nominees Ltd. would be granted the option to cancel the purchase agreement within 60 days of December 31, 2012, re-acquire all shares of Reservoir Resources and retain 50% of AEDC common shares that have been received.

American Energy Development Corp. will be subject to remitting to Pepper Canister Nominees Ltd. an overriding royalty interest of 2.5% of the overall gross market value at the time of production of all oil and gas produced from the licensed areas from proceeds of the sale of oil and gas produced.

To view the SEC filings for AEDC, click here. For the current stock quote on AEDC, click here.

Bottom Line: Is it safe to buy the penny stock? Depends how you look at it. There is never a problem with trading penny stocks that are obvious pump and dumps if you plan your trade correctly and avoid the “greed” factor. Considering that the other three pump and dumps were all conducted in the fall, AEDC could be a better performing penny stock promotion since it began in the spring.

Add AEDC to your list of penny stocks to watch and look for any spikes in volume before you buy into it. The history shows that these “mailer stocks” take some time to get off the ground and wind up getting played by the traders for a while before the snail-mail traders get in. Other penny stocks like this include Regency Resources (RSRS), SEFElectric (SEFE), and Omni Ventures (OMVE) which we tagged in March at under a dime.


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