Kenny, you are right. I made a mistake. I'll go with your $28 million figure based upon 10% proved reserves in only 60% of the License Area at $4/barrel. Using the 2.72 multiple of asset value that would give AIPN fair value at these levels.
Unfortunately, I do not believe that only 10% of the estimate will turn out to be proved reserves. I think the number will be much higher in light of the fact that the entire area seems to be oil rich. Every major producer is either there with good production numbers or wants to be there. These estimates, after all, were not made in my backyard where the probability of there being oil would be remote!...they were made in the Caspian Sea where the likelihood of there being oil seems to be a given
Furthermore, the 40% of the Area that has not yet been tested is a wild card that could easily produce more oil If it is true that 31 gravity samples were obtained in the blow-out before the hole was sealed, I think there is a reasonable expectation that quality crude is there.
True, you never said that the company was a "scam" but all this negative talk about the company alledgedly misleading the public would certainly suggest that that is how you feel. I repeat, the company never claimed that the License Area contained "probable" or "proved" reserves. They have always used the word "potential" so there's no deception going on there.
To get back to Triton Energy, you may be interested in knowing that, in 1987, when the company presumably came op with it's seismic testing results in Cusiana the stock was trading between $11 and $22/share (the drop from $20 to $11 was attributable to the '87 crash)..,in 1988 the stock traded between $9 and $19...in 1989 the trading range was $12 to $18...in 1990 the range was $4 to $12/share (the Gulf War was the event that took the stock from $12 to $4)...in 1991 the stock went from a low of %5.60 to a high of $52...it stayed between $26/share and $60/share for the next five years with the company losing money every year ( $2.39/share in 1993, for example...that's about $85 million in losses!!)
What the above tells me is that when Triton came out with its early estimates of potential reserves and well before a single hole was drilled, the market gave the company a market cap of $320 million (16 million shares X $20/share discounting, of course, the crash). With the exception of the period of the Gulf War that market cap remained pretty consistant for the next 3 years. If the market were to value AIPN the same way it did Triton when the latter could only claim "potential" reserves then we should have a stock price of about $8.64 ($320 million divided by 37 million outstanding shares)....and that should be well before a single hole is drilled!!!
Yes, I will forget about this $100/share"nonsense", too but that still leaves me wondering why you had no reaction to EKH's discussion of seismic testing techniques, the implications of the "blowout", the geology of the region, and the claim that Exxon gets $9/barrel...well below your $4 estimate. Yes, EKH seems to have overlooked the question of partnerships, government equity, etc. but his discussion of other topics seems very well informed...is it not? Also, your number of 70 million shares worth of dilution strikes me as unrealistic. Don't forget, MED owns or has a right to own a ton of AIPN stock. I doubt they would be very happy about share dilution and probably were given assurances that that would not happen before they made the deal with AIPN. Just a reasonable guess.
Qdog, I am sorry that you have chosen to get a bit personal and I am also sorry that you got burned in 1992. To repeat what I said above...if the market can value a Triton at $320 million without a single hole being drilled then, surely, AIPN should be worth that much if not more given that only 60% of the area has been evaluated and given the oil rich nature of the entire region. Are you really suggesting that we all wait until a partner is announced, the first hole is drilled, and samoles tested before investing in AIPN. You must be one of the guys who got into Triton at $60/share!!! Also, do you have any comments about the substance of EKH's post leaving aside the $100/share projection. Sure would be interested in hearing your views on his discussion of seismic testing and the geology of the region.
Cheers...Faris |
