Reading this board is truly amusing. I love it when I see someone claim that AIPN has no money and no reserves. First of all, the company has already paid MED for its 70% interest in the concession with the final payment due on July 28, which happens to coincide with another interesting date that makes an interview with CNBC seem like small potatoes. You see, the company is meeting on that day with analysts, fund managers, brokers, etc. in New York. Now, do you think these invited members of the financial community will be unable to ask the hard questions and do you think a company that did not feel comfortable answering them would voluntarily organize such an event?
Now, lets talk about those reserves for a second.
Some skeptics have stated that the use of the word "potential" in describing the 1.1 billion barrels means, in oil business lingo, that, until further tests are made, there is a possibility that only 10% of those reserves will actually be oil....had they used the word "probable" to describe the size of the reserves, the likelihood of there being oil increases to 50%. Some have said that, given that 10% figure, the company is engaging is misleading the public. Well. I did some number crunching today and I must say that I disagree with those skeptics using their own worst-case scenario as my model.
Let's assume that AIPN and it's as yet unannounced partner only find 10% of those 1.1 billion barrels. That comes to 110 million barrels worth let's say $17/barrel. I've been told that AIPN's cut of that will hopefully be somewhere in the neighborhood $2.50 and $3.00/barrel. With 37 million shares outstanding that would give AIPN an asset value of $7.43 and $8.91/share!!!....and that's the worse case scenario which also excludes oil that may exist in the 40% of the concession that has not yet been assessed. Of course, if the current structures contain more than 10% oil then the above asset values increase accordingly.
In my opinion, even the most conservative analyst of this situation would have to conclude that AIPN is tremendously undervalued at this level. George Faris (AIPN's CEO) claims that the stock is trading at equivalent of .20/barrel. Now, how many of you think that this company would jump through all the hoops that it has in order to do business in Kazakstan for .20/barrel?? Unlikely, in my opinion.
Also, here's another question for our oil industry experts some of whom suggested in an earlier post that the "blowout" involved natural gas not oil. What is "31 gravity" oil? Is it high grade? I've been told it is. The reason I ask is that I have learned that when the "blowout" occurred in the as yet untested part of the concession, samples of the oil were taken, presumably by Huddleston, before they sealed the hole...when that sample was analyzed it was 31 gravity oil. Doesn't sound like natural gas to me!!
To those who keep hammering away with "where's the hole", I've already told you I'm getting a headache. The company is negotiating with major producers who are coming to them with various partnership proposals. The company is going to try to get the best deal they can. I would rather they took their time than rush into an unfavorable deal just to satisfy the Silicon Investor thread (only half-kidding).
Now, is anybody out there confused as to why the Exxon's and Chevron's are coming to AIPN. If so, its simple. AIPN OWNS THE CONCESSION THAT HUDDLESTON HAS TESTED AND CLAIMS CONTAINS 1.1 BILLION BARRELS OF CRUDE!!! It doesn't take a rocket scientist to figure out that the majors would want a piece of this action....and, by the way, the majors use Huddleston for their own exploration assesments so they know what it means when Huddleston claims 1.1 billion barrels of potential reserves...it must mean something if they are talking to AIPN.....and that something is the potential of a lot of money for a partnership.
Cheers...Faris (not to be confused with CEO) |
