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

To: Sycamore who wrote (4268)	10/28/1997 10:03:00 PM
From: Zeev Hed	Read Replies (2) \| Respond to of 11888

Sycamore. One way to look at it is as follows: A proven barrel in the ground is worth between $3 to $6 bucks in the ground. The range is due to variability in costs of extraction. I think that in Kazachstan it should toward the higher part of this range or aboutt $5 (cost of transportation should be higher than other places). The reason for such a low value (relative to a market price of crude in the $18 to $22 per barrel), is that these are future revenues and they need to be discounted over the time it will take to get this field runing. Now, how do we get to $.5 to $1 for a potential barrel, this is very simple, there is only a 10% probability that a potential barrel will become a proven barrel, thus you give it only one tenth the value of of a proven barrel. I hope that more or less explains it. Zeev