Tracer Petroleum (TCXXF) Message Board

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Gold/Mining/Energy : Tracer Petroleum (TCXXF)

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To: Peter G. Troyan who wrote (994)	5/6/1999 5:25:00 PM
From: drrobinson	of 1261

To acquire production and/or a development play domestically (US or Canada) will cost you on the order of anywhere from $5 to $9 per barrel of reserves. To do this, Tracer would have had to either issue a bunch of stock to acquire the assets, or issue a bunch of stock to raise money to acquire the assets. Tracer does not have a solid enough of a track record to be able to borrow money from a bank to do this. Either way, Tracer would have ended up with many more than 4 million shares outstanding, making it that much more difficult to justify a high enough valuation per share to get the share price up over $1. The reason that I like the Iran deal is that Tracer will be able to acquire a development play for pennies per barrel. In fact, by my estimate, we will end up paying about $0.03 per barrel for the project that we are currently focused on acquiring the rights to. So, yes it takes longer to do a deal in Iran than it does in North America, but you can get in for much less, leaving much more upside potential for the shareholders. This is a concept that works for me. BTW - I was never CFO of Arakis. I was Executive VP, and I joined the company in 1990. DRR

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