Okay, Gregg, let's take it one at a time...:-)
First, you state "If everything you mentioned is iron clad, the valuation of the aipn's land holding is being serverely discounted. Why? What's missing from the equation?"
You KNOW I NEVER stated that ANYTHING was iron clad. If you want scientific specificity from others, please reciprocate. Furthermore, there is NO WAY that AIPN could possibly "prove" the reserves in this entire concession themselves. As you correctly point out, they are near broke. It takes years and lots of money to "prove" a 4.7 million acre concession. Look how long Chevron has been at it at Tengiz (and how much they have spent.) The oil experts on this thread have stated that it would take months before they could drill a single well....you know that ole spud, turn to the right stuff we keep hearing about..:-) That alone it would seem to me would argue against any possibility of AIPN waiting until their reserves have been proven to sell off any or all of the concession.
Second, you wrote, "Now, does the co wait to start building infrastructure before any exploratory drilling and confirmed flow rates are established? Absolutely they wait. Why? Well, why not, it makes sense to know what's in the ground that's recoverable. And here is where your argument has big problems. "Proven" does not mean "recoverable." In fact, it can be a rather small percentage. Your #'s may take a serious downward slide as this hypothetical company evaluates what they might actually get out of the ground. This can be serious leverage against little ole' aipn."
Actually, Gregg, my understanding is that "potential" reserves are always heavily discounted. We were told by 85% in the case of Huddleston. "Proven" reserves may turn out to be significantly larger or smaller that preliminary "potential" reserves. I frequently read press releases from oil companies that state that their reserve estimates have been increased based on new seismic studies or drilling programs. I BELIEVE (...:-) those numbers are frequently fluid. I am aware that not all proven reserves are recoverable. Perhaps, this is why reserves are valued at deep discounts when they are only potential. But, this is no different in the case of AIPN than it is in any other oil deal. And they make oil deals at all different stages of exploration and production. Have you any substantive info to suggest otherwise? Perhaps YOU wouldn't make a deal for this concession at this stage if you were running a major oil company. But, do you have any info that would indicate that oil companies would not and do not do so?
"And, of course, remember that aipn must return the great majority of the license in a couple years to the gov't for bidding."
Wasn't that FIVE years? Do correct me if I am wrong. I want to be ACCURATE...:-) I don't "believe" the entire 4.7 million acre concession contains oil. They get to choose the part they keep...:-) I also should point out that most investors seem to "believe" that the JV will be doing the exploration and drilling programs for the majority of this concession.
As I previously stated, nothing is ever certain in investing. To me, this one looks better than most.
Cathi
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