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Gold/Mining/Energy : American International Petroleum Corp

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To: Juan Dominguez who wrote (1071)	8/2/1997 3:49:00 PM
From: faris bouhafa	of 11888

I agree that AIPN has not fully recovered but the point is still valid whether we are talking about 3/8 of a point or 1/2. Talk of a lawsuit under these circumstances is simply ludicrous. As for the volume, as I said, I am not concerned. Stocks that go up on heavy volume and correct slightly on lower volume are in my opinion very healthy. No concern in this corner as long as volatility does not rear its head in a low trading volume environment. I am not an expert in this industry either but I have learned a few things from my talks with Bossey and others. Remember Bossey used the lower end of the scale for for placing an asset value on "potential" reserves. Acting conservatively, he used .50 instead of $1 /barrel (not gallon). Also remember that Huddleston's estimate of 1.1 billion barrels of "potential" oil is conservative as well and is reflective of an 85% discount of his true estimates. In other words, Huddleston determined that there could be 7+ million barrels in the 60% of the concession that he studied. To play it very safe, he only went on record with 15% of that number. Using Bossey's .50 number the math works out as follows: .50 X 1.1 billion = $550 million X 20% (AIPN's interest)= $110 million which when divided by 40 million shares = $2.75/share asset value. Using the $1 number would give AIPN a current asset value of $5.50/share....and that's just based on estimates for 60% of the concession (the remaining 40% contains the field that the Kazaks claim could be larger than Tengiz which has reserves in excess of 7 billion barrels. Now let's look at what happens when "potential" reserves become "proven" reserves. Industry practice places a $4/barrel asset value on "proved" reserves. Now let's say that Huddleston's recent survey was, in fact, off by 85% (unlikely from what I have heard of his reputation)leaving us with only 1.1 billion barrels of "proved" reserves. If you increase the number used to determine asset value from .50 to $4 you get the following: $4 X 1.1 billion barrels = $4.4 billion X 20% (AIPN's interest) = $880 million which, when divided by 40 million shares, gives you an asset value of about $22/share. Once again those figures are based on only 15% of this field actually producing marketable oil and, of course, does not take into account the potential of the remaining 40% that has yet to be surveyed. Of course, if Huddleston turns out to only be off by 70% then you could have a $44 stock. If the other part of the concession turns out to be as large as Tengiz...well you can do that math yourself. Bottom line is that there is oil in this concession and lots of it according to the Kazaks whose data Huddleston used to arrive at the same conclusion. Even with a 20% stake AIPN will do very well...and don't forget the minimum $25 million projected annual revenue from the Louisiana refinery that I am told could reach $250 million annual revenues over time. Cheers...Faris

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