Here is an interesting post from AOL on AIPN.
Subj: Re: UNANSWERED QUESTIONS
Date: 97-07-21 20:02:55 EDT
From: EHKMSMBA
Bouhafa ---- Before I answer your question how I arrived at a > $100.00 per share valuation for AIPN's stock, let us start with some basics. Then all readers of this post can make some sound judgments as to whether or not the valuation has merit or not.
To begin with the AIPN working interest tract is in the western end of
Kazahstan's Caspian Sea territory.
Sixteen structures have been found so far. Seven have been tested by
seismographic means. Reuter's post on Company News stated that reserves at the AIPN license in its Caspian Sea in the western Kazahk section could be in excess of 1.0 billion barrels of recoverable reserves.
Not potential - recoverable - there is a big difference between the two. Recoverable reserves are $$ in the pocket to be obtained by drilling,producing, and marketing. Potential reserves can be a pipe dream at worst, recoverable reserves at best. There is a big difference.
Getting back to the Caspian Sea. There is a long history of oil found on the western shore of the Caspian Sea.
The most famous is the "eternal fire" near Baku. The religion of the Fire Worshippers was already ancient when Zoroaster reformed and reconstituted it somewhere between 1000 and 600 B.C. It was the religion of Persia in her days of glory and it has left a deep impression Judaism, Christianity, and Mohammedanism. The Magi, (The Three Kings) were Zoroastrian priests and astrologers. The religion's elaborate ritual was centered about the "eternal fire" that burned perpetually in or adjacent to the temple, and the principal temple was near Baku.
One of the early Iranian myth-hymns, long preceding Zoraster's reformation, refers to an eternal fire that needs no feeding on the shore of the Caspian Sea.
In A.D. 636, before the Saracens swept the Persians from their mastery of present day Azerbaijan's Aspheron peninsula which projects into the Caspian Sea, the Baku neighborhood was dotted with Zoroastrain temples, and thousands of pilgrims visited the sacred region every year.
The Moslem invaders extinguished Zoroastrianism in Persia, but a few devoted pilgrims continued to come from India until recently.
Hanway wrote in 1754, "What the Guebers or Fireworshippers call the Everlasting Fire is a phenomenon of a very extraordinary nature ....... There are several ancient temples built with stone, supposed to have been all dedicated to fire. Amongst others is a little temple which the (Asian) Indians now worship ..... A little way from the temple is a cleft of rock, in which there is a horizontal
gap, two feet from the ground, nearly six feet long, and three feet broad, out of which issues a constant fame, in color and gentleness not unlike a lamp that burns with spirits, only more pure ..... They do not perceive that the flame makes any impression on the rock. This also the (Asian) Indians worship, and say it cannot be resisted, but if extinguished will rise in another place."
Writers predating Hanway refer to the Baku oil. Marco Polo says, "To the north of Armenia lies Georgiana (present day Georgia) near the confines of which there is a foundation of oil which discharges so great a quantity as to furnish loading for many camels. The use made of it is not for food, but for an unguent for the cure of cutaneous distempers in men and cattle, as well as other complaints; and it also good for burning . In the neighboring country no other (oil) is used in theri lamps, and people come from distant parts to procure it.
The glory of Baku's deposits on the western Caspian peninsula has not departed. Some of the world's largest wells with initial productions up to 120,000 barrels a day have been drilled there. Azerbaijan whose territory in the Caspian Sea lies across the border from AIPN's Caspian Sea tract produced nearly 80 % of Soviet oil in 1938. it produced 340,000 barrels a day in 1959.
(PLEASE SEE my next post - for continuation of this fabulous story and how I reached the $100.00 per share valuation for AIPN).
According to Max W. Ball, Douglas Ball and Daniel S. Turner in their "This Fascinating Oil Business" The Bobbs-Merrill Company, Inc, Publishers in Indianapolis, Kansas City and New York, Copyright 1965, one would think that such fields as Bibi-Eibat, Balakhany, and Sarakhany, not to mention myriads of smaller fields, would exhaust the oil & gas possibility of the Aspheron Peninsula which juts out into the western portion of the Caspian Sea.
OK so much for the oil production history on the western edge of the Caspian Sea up until 1965. Just east of the Baku field, in the Caspian Sea is a field operated by France's Elf Aquitaine. It is in the Azerbaijan sector ot the Caspian Sea, and has potential reserves of around 375 million barrels.
Now, let us look 125 miles to the northwest of AIPN's 4.7 million acre working interest holdings. They are 125 southeast of the largest discoveries in the region, the massive Tengiz field, which is operated by Chevron, a joint venture between LUKoil and ARCO, Mobil Corp. and the Republic of Kazakstan. That field has some 6 billion barrels of reserves.
Now what is common in the beds of ancient seas? Coral reefs. They can have grown up to over a 1,000 feet in height. They are even to be found today. Coral reefs and the islands they form in the South Pacific became public knowledge shortly after World War II, about the time petroleum geologists began to recognize them as important petroleum reservoirs. Such reefs or bioherms are
formed by several small animal types that live in shallow sea water under the right temperature, current, salinity, chemical content and food conditions. Each builds his own tiny limestone residence on those of his ancestors below. He lives in it and dies in it and when he dies - leaving a porespace(geologically speaking - porosity of an oil and or gas well). Thus, reefs grow hundreds of feet tall where the sea floor is sinking about as fast as the little animals can build their homes. Generally, the porosity left by the hosts is reduced considerably by washed-in silt and the remains of other sea
creatures that used the reef for hunting and or concealment. However many limestone and dolomite-trap petroleum fields, including Redwater and Leduc in Alberta, Canada, the Scurry Reef in West Texas and the Niagaran Reef oil and gas structures circling the lower peninsula of the state of Michigan produce their sweet crude from such gigantic reservoir structures which are in actuality nothing more than "capped" ancient coral reefs.
The "capped" structure is a very unpermeable rock overlying the reef, and can be detected by seismographic tests, which indicate the unpermeable volumes from the highly permeable - highly porous reef volumes - very easily.
A reef structure at its approximate top once its' cap rock is penetrated by a diamond drilling bit, will be a blowout well, blowing out gas and condensate, even some 15 years after the field is produced. The 50 kilometer long Chidkuk structure blew out when it was drilled near the top of the structure. And this in a virgin field, not a produced field. IMHO, whoever was on the drilling rig
was lucky he, his associates, the casing, the drilling rig and the drilling platform didn't blow sky high. They were lucky to seal this well and come away with their lifes. To try to test the well after hydraulic cement was injected into the well to seal the porosity is a futile exercise. I've seen it tried.
How can one test something behind a cement wall?????
Do you get my point?
If not don't bother to read further.
Ok so now we have established that sweet crude came out of the blowout well from the top of the Chidkuk structure. And that it blew. And that it 50 kilometers long. If it is over several hundred feet tall and a mile wide, that is an immense potential oil and gas field. I would venture to estimate that a field this size could very well contain more than 1.2 billion barrels of recoverable oil.
PLEASE see my continuation of this post.
Now lets talk about seismic testing. To survey a given are beneath a sea or an ocean, a ship trails a seismic sea streamer, a cable towing a series of hydrophones along the sea floor that record the seismic signals or echoes from unerwater detonations. Hydrophones perform the same function that geophones do on land. As the ship moves slowly ahead, harmless electronic detonations or air bursts are set off. The resulting sound waves are reflected from the rock formations (structures) beneath the sea floor and are picked up the trailing
hydrophones, which relay the sounds to the seismographic equipment onboard. When charges are detonated, the resulting shock waves travel downward, hit subsurface rock formations, and bounce back to the surface, where the echoes are picked up by the hydrophones and the impulses are fed into the seismograph, which produces a seismogram.
One of the newest techniques for determining the configuration and extent of subsurface rock formations is called the seismic cube or data cube. Essentially, the seismic cube is a three-dimensional representation of subsurface formations made with the aid of a computer. Numerous two dimensional seismic profiles showing height and width are made. Using these, the computer can be programmed to project the third dimension. The geologist and reservoir engineer can see the shape and size of the subsurface strata. By comparing seismic data from known oil and gas fields, as well as those whose
structures ended up with nothing than dry holes, with that of potential fields, a very good guess if not outrigh sttements can be made whether or not the potential field will be in the money or not. Without sinking one well. Even to how much the field will contain recoverable reserves (not potentialreserves).
OK, so based on the blowout well on the 50 kilometer long structure, we can most likely guess that the Chidkuk structure will in all probability by itself may very well contain more than 2 billion barrels of all oil by itself, which when combined with that of the combined total of the other 7 structures that have been already tested gives one the grand total of 3.1 billion barrels of
recoverable oil . Assume that once testing is completed that the remaining 8 untested structures also will be found to contain 1.1 billion barrels of recoverable oil.
Based on my experience 60% recovery by just recycling most but not all of the gas back into the reservoir has already been obtained in reef based sweet crude fields in less than 20 years from implementation. That is history.
IMHO, almost all of each fields remaining 40% recoverable reserves can than be recovered by gas injection from other surrounding sweet crude fields in the following 20 years or even less.
Since Exxon and many of the other majors are fetching around $9.00 per barrel of recoverable reserves, and George Faris the CEO of AIPN states that AIPN at the $2.00 per share price is fetching 20 cents per recoverable barrel of oil, then fortyfive 20 cent pieces gives you $9.00. 45 times $2.00 GIVES ME a valuation for known reserves as $90.00 PER SHARE for AIPN stock today. Add in the 23 mile long Chidkuk structure, and you conservatively have a valuation of
> $100.00 per barrel for AIPN's stock at a $9.00 per barrel for recoverable reserves.
Massaging the numbers another way, $9.00 per barrel of recoverable oil, (standard for the industry) times 4,200,000,000 barrels of oil reserves is 37.8 billions of dollars for the 37,360,000 shares of AIPN stock, or > $100.00 per share. That is what the oil is worth to the majors. Remember that sweet crude has been selling for more than twice that price, and is diminishing rapidly in supply.
This figure is the present upside target price for AIPN. It does not include up to now undiscovered structures in the 4.7 million acre AIPN Caspian Sea holdings.
Hope the above answers most all of your questions re AIPN and its stock price appreciation potential in the short and long term.
Enuf said. |
