Faris ...... I always enjoy dialogue with professional money mangers; please be assured that I am in fact neither long nor short this stock. I happen to be well aware of the company's history dating back to early 90's when I did consider it as a "long" purchase at that time while it's Colombian activity was receiving similar attention. Fortunately I did NOT buy at thattime either as some on this board did --- they note that it did not work out very well. vbg>
>>Trust me, those analysts, brokers, and fund managers who attend these things are largely a skeptical bunch with expert knowledge of the relevant industry. They usually ask the hard questions. The fact that AIPN is willing to face such an audience on July 28 in NYC suggests to me that they feel confidant about their prospects.<<
Perhaps you too can go armed with some "hard questions" ---- just study the sceanrios I have provided. I might also add that "management can act confident" but they still can't call reserves "proven" that aren't. Ask the "right" questions when you go and this "story" should get clarified.
>>...Taylor, thanks for your analysis of the various possible scenarios.The part that I might disagree with you about is the dilution of shares from 37 million to 70 million. This has to be pure guesswork on your part.<<
The dilution "assumption" is just that --- it's a variable in the equation. I would not argue whether it is "guesswork" or not. Use your own judgement on that point ----- I merely suggest if you know the stories of other financially strapped "resources" companies in need of financing natural resource developmennt projects, most including the AKSEF model that I suggest you review is that they have experienced substantial share dilution. So let's say "guesswork", where "history" supports my argument and suggests that it is highly likely to occur.
This company has experienced about 500% dilution in its shares since late 1993 already without even attempting a project of any magnitude.
>>In my opinion the "Base Case"scenario is flawed because, in addition to the .35 that you mention you have to add the book value of their refinery which is .40/share. So, your base case is really .75/share while your Scenario 2 has to be $1.10 book value. Also, all of your calculations are based on estimates for only 60% of the concession. Should the remaining 40% be shown to have "potential" reserves as well I would assume that you would revise your scenario estimates upward..albeit conservatively. Frankly,given the fact that I am not one of those who believes that this is a $100 stock next week, I find all your scenarios very comfortable especially in light of the fact that most companies trade on a multiple of earnings.<<
I merely was suggesting a way to "speculate" on the potential value of reserves ---- not looking at the refinery. It may or may not have value ---- certainly $.40 for the refinery does not affect this "story". You can certainly change the variables in my scenarios if you wish to speculate on reserves on the other 40% of the concession. There's still none there until they are drilled. There are many combinations of these variables you can play with. My susggestion still to readers is that the base case and second variation are the reasonable of the ones I have shown and they are very "generous".
Thus $.35 per share or $.70 per share; giving the company a "risked" likelihood of 110,000, 000 barrels is a "very generous" assumption Faris. Look at other companies with proven track records --- even Triton. It's a generous assumption that still makes a share value over $1 unreasonable at this point in time.
>>As for the 10-K not showing that the company has any money, I have a question. The 10-K covers corporate developments through December 31, 1996 (unless they are on a different calender year). Does your copy of the 10-K show any revenue from the sale of the South American operation? The reason I ask is that I am under the impression that that sale took place in 1997 and, thus, would not be reflected in the 10-K to which you refer. I may be wrong.<<
The copy of the 10K filed for everyone to see in the SEC EDGAR database at www.sec.gov does tell the whole story including the proceeds in early 1997 from the other asset sales. I stand by my prior statements that despite these "proceeds" which occur in various forms, the company is still financially strapped and this info is there for everyone to read. The 10Q cited by Qdog is also there in the same EDGAR data base. You may wish to make a different interpretation of it than I, but the fact that the company continues to dilute shares for nominal cash needs speaks for itself IMO that they remain "strapped". |
