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Gold/Mining/Energy : International Rochester Energy Corp. (V. ROH)
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To: peter hogan who wrote (13)2/14/1997 8:33:00 PM
From: R F B, Jr.   of 188
 
Peter :

Thank you for your analysis. I believe that NAV may be the only accurate way of valuing ROR's deal until there is actual cash flow from it. When/if it comes, ROR could trade as a multiple of cash flow.

Regarding your price per barrel of $15. That should be discounted back to $3 (as more knowledgable than I believe), or at least $4 (my preference). 30 mbo would be split 20% off the top to Colombian Royalty. That leaves 24 mbo. As HEC has in excess of 150mbo (Torcaz #2) Ecopetrol's take jumps from 50% on a sliding scale to 75%. Ecopete thus would get an additional 18 mbo. HEC's share would be 6 mbo of which they would have to give 25% or 1.5 mbo to ROR. 1.5 mbo x $3 = $4.5mm/25 mm shares = $0.18. I was not aware of Parkcrest's interest and will check this out.

If the entire potential of 60 mbo was hit, ROR would increase $0.36/share in my opinion.

Please tell where you get your data on ROR's finances.

Regards,

RFB
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