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Gold/Mining/Energy : American International Petroleum Corp -- Ignore unavailable to you. Want to Upgrade?

To: Geneat who wrote (4052)	10/25/1997 12:40:00 AM
From: faris bouhafa	Read Replies (1) \| Respond to of 11888

GREG: In an earlier post you wonder why AIPC would sell out for .50 rather than wait for "proved recoverable" reserves to be certified. What you ought to think about is that AIPC might have other plans in other parts of the world. Should they receive $1 billion for, say, 51% of the concession they would find themselves with a lot of cash plus a 19% interest in the License Area. If it turns out that that License Area holds in excess of 10 billion barrels of "proven recoverable" reserves valued at $6/barrel then AIPC's 19% interest would be worth about $11 billion (where do you think the stock would be under such circumstances?). You also wonder how AIPC came to be involved in this deal. Well, as I said months ago, this is a story about Kazak interests looking to benefit from the exploitation of their natural resources. AIPC is the "lucky" vehicle to make that objective a reality. It really is that simple, Greg. The Kazaks will retain a 25% interest in the future revenues of the concession as well as a 10% interest in the future appreciation of AIPC stock. There really is no mystery here. This is about the political elite taking care of themselves...it happens all over the developing world. We just happen to be the means to that end. If you really want to know how AIPC got involved in this deal please go back to my posts in late August when I reported on the NYC meeting. ZEEV: Your valuations are correct. However, you should keep in mind that they are based on a number that was a result of an 85% discount by a firm that was uncomfortable interpreting Soviet seismic data. Huddleston only looked at 7 of the 17 structures in Begash. They didn't even look at the prize structure, Chikaduk. WaveTech has done a more thorough job and is respected for their ability to read the Soviet data. They have completed the Chikaduk evaluation and, from what I hear, the amount of "potential recoverable" oil that they have predicted is anywhere between 2.2 billion barrels and 8 billion barrels.So, it is possible that your numbers will have to be adjusted upwards. Finally, at $5/share, AIPC would have a market cap of about $250 million or, at .50/barrel of "potential" oil, about 500 million barrels of "potential". AIPC is clearly undervalued just based on the Huddleston report. CATHI: You are right. In five years AIPC gets to keep 10% of the concession but they get to keep the parts of their choice...presumably, the most productive parts. If the concession ends up having only the amount of "proved" reserves that Tengiz has (8 billion barrels) then 10% might be about 800 million barrels valued at $6/barrel. That's almost $5 billion in assets. Cheers...Faris