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Gold/Mining/Energy : International Rochester Energy Corp. (V. ROH)
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To: R F B, Jr. who wrote (177)5/11/1997 7:41:00 PM
From: Ed Ajootian   of 188
 
RFB,

Great to see that you concur with my production and reserve numbers.
If you divide your numbers for no back-in (ie 800 bopd production and
12 mbo reserves) by 2 you get my numbers, which assumed Ecopete backs in.

Not sure why you are fixated on whether Ecopete will back in or not.
The markets for ROR and PKC stock have obviously assumed the worst, which
is that Ecopete will back in. Therefore it becomes irrelevent to an ROR
shareholder as to what the likelihood is of Ecopete backing in or not.
Maybe as an HEC shareholder you are more concerned though because the
market for HEC stock seems to have assumed that Ecopete will not back
in given the massive increase to HEC's market cap. that has resulted
as a result of this Estero well.

Regarding the production numbers, I was amazed that a superstar such as yourself
concurred with 400 bopd (ie 800 bopd pre-backin). This assumes that
the well actually produces at a sustained rate of 4,000 bopd gross.
Such an assumption is very rosy IMO. This is a water drive reservoir,
and these types of wells are typically produced at substantially less
than their theoretical maximum potential. This is because if you jack
it up too high you can create a coning effect and it could ultimately
damage the whole damn formation.

So in retrospect I probably should cushion that cash flow number. How
much? Even the most conservative production engineer would produce this
well at half of its maximum rate. So that is the bottom of the range
I guess. Fortunately ROR is traded on the VSE and no one values VSE
stocks based on cash flow anyway.

Folks who are wondering why the ROR stock price is down as low as it
is in spite of such great prospects have to realize that ROR has done
little or nothing to hype this discovery so far. They are following
the unwritten rules of the game, which is that if you're going for
financing you dare not hype your stock, because if you are successful
at it your prospective investors are not going to give you any
credit for the stock price being where it is because the stock was
hyped. So you have no choice but to sit on your hands and let the stock
sink wherever it wants to just on the merits of your discovery.

Then as soon as you do your financing you start blaring the horns, and
most likely the firm that brokered your financing does so too, in order to
insure that all of their clients that bought in to your company will
be able to make a handsome profit. Like it or not, this is how the game
is played with the Canadian juniors on the VSE.

So the key is to buy this thing sometime prior to the announcement of
the financing, IMO.
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