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Gold/Mining/Energy : International Rochester Energy Corp. (V. ROH)
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To: Brad Danchuk who wrote (35)2/20/1997 10:08:00 AM
From: R F B, Jr.   of 188
 
Brad :

It's a good thing I don't go to Canada much I guess. Closest I got was Calais, ME this past summer.

I have not figured currency differences. If ROR is quoted in CDN, I presume I would get more shares for my $. Were you aware that a portion of the oil when found is paid for in Colombian Pesos? A percentage of it anyway, the rest is in US dollars I'll assume for American and Canadian Companies alike.

Correct me if I'm wrong here..... Let's say ROR is trading at $0.70CDN. My investment would be ....say $5K - US. I would get 10,000 shares?

Now, ROR etal hit 60 mbo on March 1. Colombia Gov't takes 20% of the oil as royalty. That leaves 48 mbo. Ecopetrol will take 70% (based on prior deals and amount of oil found w/HEC). That leaves 14.4 mbo. ROR will get 25% of this or 3.6 mbo. 3.6 mbo times $4US(I'm going up) = $14.4mm times 1.4 CDN conversion = $CDN20.16 mm. Divide this by 25 mm outstanding and you get $0.80CDN as a result of this hit. Add this to the NAV of ROR and you should have a pretty good idea of the value of the stock. I'm trying to find out what their book or NAV is. I know they have debt as they defaulted twice in making payment to HEC. If they are laden with debt, 60 mbo hit in Palo Blanco will not put this stock over $1.00 CDN.

I think they will hit oil. If not, this will be the only well they drill in Colombia this year in Alcaravan.

Now my 10,000 shares which cost me $5k US are now worth say $8,500CDN (assuming a $0.05 NAV). That would be what, $6,071 US. or a 20% gain. Granted that would have been a short period of time but it is hardly my idea of a wise investment to risk my principal with upside potential of 20% (In all of Alcaravan not just Palo Blanco).

RFB
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