Amer Intl Petroleum Sees First Kazakstan Well In Nov.
By LOREN FOX
Dow Jones Newswires
NEW YORK -- Small oil prospector American International Petroleum Corp.
(AIPN) plans to drill its first well in Kazakstan in early November.
If the well, in the Chikuduk shallow natural gas prospect, is commercial the company would drill 10 to 12 more wells on the prospect beginning in March, Chairman and Chief Executive George Faris told Dow Jones.
That would mark the New York-based company's first drilling in the 4.7
million-acre exploration block onshore Kazakstan that has driven
investor interest since early 1997.
Faris said the gas prospect is 60 to 70 miles from either of two gas
pipelines, and development would require a roughly $20 million
connecting line.
The thinly traded stock has often moved on speculation regarding the
fate of its Kazakstan assets, which it holds through its 70% ownership
of a company that has 100% of the concession. The stock also traded on
developments in the financing, as the company has been criticized for
raising cash by selling potentially dilutive convertible securities.
Money questions and Kazakstan's uncertainty have hurt the Nasdaq-listed stock, which was up 1/16, or 6%, at 1 3/32 on Monday, well off its Dec.1 high of 5 3/4. With 54 million outstanding shares, its market value is roughly $59 million.
The stock had topped $4 a share in March, but then began sliding in
April on concerns over the company's sale of $12 million in convertible debentures to the Hunt family. Investors were also upset when the company didn't extend the maturity on warrants issued in 1994.
Faris acknowledged the stock has been hurt by worries over dilution,
saying: "It's a question that haunts me." But Faris said the Hunts have agreed not to convert their debentures for now, and the company has no intent of using an equity-backed $40 million line of credit with the Hunts.
American International first touted the oil potential of its Kazakstan
block, but it believes the shallow gas deposits of Chikuduk can be more quickly recovered and sold. That's a key issue for the
capital-constrained company, which has lost money for the past five
years and lost $17.9 million, or 43 cents a share, in 1997 on revenue of just $827.964. In the 1997 annual report, American's auditors questioned its "ability to continue as a going concern."
Although Faris expects American to show another loss when it reports its third-quarter results later this week, he believes the financial
situation is improving.
The company has retained an investment bank, which it wouldn't name, to advise it on a high-yield debt issue and on attracting a larger
strategic partner.In addition, the company's 30,000 barrels-a-day refinery in Lake Charles, La., began operating in the spring, turning Mexican heavy oil into asphalt. He expects the refinery to generate revenues of $40 million to $50 million in 1999 and make the company profitable for the year.
If all goes according to plan, Faris expects gas sales from Chikuduk in 2000. Coupled with profitable asphalt sales, he said, "We are on the verge of turning the corner."
-By Loren Fox; 201-938-5267
"Blah blah woof woof and by the way we retained an Investment banker"
DrRisk |
