My understanding, Razor, is that they paid somewhere in the neighborhood of $250,000 cash and an undisclosed amount of stock for their 70% interest in the firm that was granted the concession yesterday. I've also been told by someone who has been close to this company for 4+ years that this is an entirely new ballgame in that management is concious of its shortcomings and, therefor, has no intention of playing an active role in getting the oil out of the ground. Rather, they will take a back seat to a future partner(s) chosen from among those with which they are currently in discussions. My understanding is that the major oil companies are all knocking on the door...AIPN is listening to their proposals looking for the best deal.
The negativity of some people on this board is probably healthy and, in that context, appreciated as a counterweight to the "cheerleading" that is going on over at the AOL thread. That said, I think there are some key things that we ought to keep in mind:
1. There is definitly oil in this concession. Chevron is in the same neighborhood as are other companies. Whether there exists 1.1 billion barrels worth is a legitimate subject of debate. Personally, I am not overly concerned with the number. If AIPN can get $3/barrel out of the deal (about 15%), I'd be just as happy with 500 million barrels. Even if they are forced to give away the store and only get to retain 1% of 1.1 billion barrels that would still put the stock much higher than it is today. It seems to me that, any way you cut it, AIPN is in a win-win situation. The only question is how big will the "win" be?....and that's not counting results from the rest of the concession.
2. The 1.1 billion barrel estimate was made by Huddleston which I understand to be a respected oil surveyer with a reputation for being very conservative. Can any of the oil people on this thread give us a solid read on Huddleston's reputation and track record? I was told that Huddleston usually plays it safe by only reporting 15% of their actual estimates. Is this true? If so, I think that fact would be a strong positive.
3. To suggest that this is all hype would necessarily mean that everyone involved is part of the hype....the Kazakstan government that granted the concession yesterday, the firm in which AIPN has a 70 % interest (forgot the name), Huddleston, etc. I find it hard to believe that all those players could be involved in hyping something that does not have real potential. In fact, I don't believe it.
I expect to hear something very soon re: the partnership and financing arrangements. I'll bet that the MM's expect the same thing which might explain why they took the stock down today. In my opinion, this is a buying opportunity.
Cheers...Faris |
