Well, as I've whined about often, drill it and lets find out. They are a couple of caveats to his thinking, which if you do the total what ifs he might agree to some and not agree to others. It's always a joke that you can get a roomful of geogolist in a room and not get any two to agree.
It could very well be larger than Tengiz, when all said an done, it area. Now let's say the layer of strata that bears the hydrocarbons is only 40 ft thick and porosity is tight. Tight meaning that the strata ability to store the oil. You have to have nice little channels for this oil or gas to reside. You then drill the field and it yields on a sustain flow test of say only 500 bbls. per day. That is significant in the grand scheme of things. More wells have to be drilled to get to a prouction level of say Tengiz.
The flipside of the argument is, let say, the avgerage strata of hydocarbon is 100 ft. and high porosity. Well, buy Cuban cigars and Dom Perigon, we are all rich. That could translate into 5000 bbl/day in flow test. The cost of develpoment just drop 10X or more profitable. Less wells to get to a productiion of Tengiz. The other thing to consider here is how deep is that target layer? Is it 4000 ft? 6000 ft? 8000 ft? There is a difference in time/cost between those three. The deeper, the more things can go wrong and run the cost up. The more in material cost between them in casing, cement, mud, rentals, etc.
Then again there is yet another scenario, where in that region is the traps for the oil. Let suppose they drill a well and encounter thick layers of soucre rock, but no area of porosity and permeability. This area could be 50, 60, 70% of that scenario. The trick will to find the fault, fracture, uplift or any host of anaomolies in the earth crust that has this ligid or gas trapped. So you could have a situation of drilling 5 or 10 wells before finding that area.
So in this little explaination, you can see that the speculationof above ground is just that, speculation. The final arbiter is the drilling to find out just what is downhole.
I've invest in this stock because there is a chance that they do have something, mine you it's a holding in my total portfolio that is highly insignificant as of today.
When that first well is drilled and I see what the results are; there is plenty of money to be made then. But I do have that cheap entry. I added some profits from options trading the other day on warrants, but again it's insignificant. I still think a JV will be brought in at a nice and reasonable chuck of money that will giove AIPN a nice cash reserve to drill with and drive the stock price to a point of triggering the warrants. I expect them to have between 50-100 mil in cash and loans when that first well is spud with their participation cost being around 30-35% of the well. |
