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Gold/Mining/Energy : American International Petroleum Corp
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To: qdog who wrote (4219)10/28/1997 12:24:00 AM
From: Cathi Wierzbicki  Read Replies (1) of 11888
 
Qdog: Thank you very much for elaborating on that scenario. It is very useful to us all to get as much input as possible regarding what types of deals have been done or appear plausible. I am still somewhat puzzled by your reasoning in this example though.

Huddleston has issued a report listing "potential" reserves at 1.1 billion barrels. This report only covered 7 of 17 structures, if I remember correctly. But, even if one assumes that Wavetech will identify NO ADDITIONAL "potential" reserves in the other 10 structures, we are still left with 1.1 billion barrels "potential." If "potential" reserves are usually sold in the area of $.50 to $1.00 per barrel and "proven" reserves (admittedly a different figure that could be larger or smaller) are sold, as you stated, at between $4 and $6 per barrel, then why would AIPN be interested in doing a deal for what would be $.04 per barrel for the "potential" reserves, or once proven, only as much as $.54 per barrel?

If the figures you used are representative of the kinds of deals that are structured for "potential" reserves, then the value of AIPN wouldn't ever reach $10 per share even under the most favorable outcomes.

This would suggest that AIPN stock should have been sold when it reached $7 as that would represent full value even years from now. Is that your belief?

Thanks.

Cathi

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