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Gold/Mining/Energy : International Rochester Energy Corp. (T. ROH) -- Ignore unavailable to you. Want to Upgrade?

To: Ditchdigger who wrote (219)	12/6/1997 2:24:00 PM
From: Lee Fredrickson	Respond to of 934

DD: Looked it up in my dictionary of obscure and seldom used terms of the microscopic-cap energy stocks; Spudette=Small Potatoes. [I think.] Lee

To: Ditchdigger who wrote (219)	12/7/1997 8:14:00 AM
From: Ed Ajootian	Read Replies (2) \| Respond to of 934

DD, If FE were handed a magic wand and told to paint a picture any way the kid wanted to for ROH, here's what it would look like: 1) Have Strain put out an obviously conservative, "re-Strain-ed" report on ROH that nevertheless values them at about double where they are now. 2) Have Harken be backed up against the wall with immense pressure to say something to rally their stock before their shareholders meeting on 12/16 in order to avoid a violent revolt by the natives. 3) Have the next Estero well (which is actually the Estero #3 because the Estero #2 never got permitted yet) be spudded this week. Have Mikel put out a press release announcing the spudding sometime shortly thereafter, maybe on Monday 12/15, wherein he mentions for the first time in print that they have had this fancy study done on the Palo Blanco and the potential there is massive --- they could be getting 30,000 bbls. a day gross out of there by mid-'98. 4) Have ROH be going to the Strain-Westergaard O&G Microcap Conference to be held on 1/15 this year --- right before the results will be due for the Estero #3. Have last year's "belle of the ball" Harken Energy NOT attend this year's conference, because now they are "too big" for this sort of thing. Same for Seven Seas. So all the folks that bought Harken when Strain started covering them at $1.625, or Seven Seas when they started them at around $.90, or better yet, the folks that PASSED on these turkeys at such prices, are gonna ask Chuck and Mike, "what's the next big plays guys?". And they're gonna respond "ROH and PKC you idiots!". OK, back to reality. Actually, points #1,2, and 4 ARE REALITY. And the report I mention in #3 is reality too --- I saw it laying on Mikel's credenza when I broke in his office last night <g!>. The only question left is when he will choose to disclose its results. More on the Strain report. He is using a whopping C$8 a bbl. for the price of oil in the ground. I asked Mike about this and he said although the oil is rated as heavy it would not need to be heated in order to transport it and they probably would not get whacked with too much of a discount due to its quality. He's the expert here and I'm just a bean counter so you gotta go with his call --- C$8 a bbl. it is. So at that price if you put a 90% probability on the 25 mmbo they have already discovered in the Ubaque formation and then put a 75% probability on the 25 mmbo they have identified in the Guadalupe and Mirador formations, you get a value of C$3.09 per share for the stock. The reason he gives the Guadalupe and Mirador potential such a high probability even though those zones have not been production tested yet is that there is plenty of well control data from other wells in the basin that produce from either or both of these formations. That is, if you have a well that is producing from the same formation in the same basin whose logs look just like the logs on your well, whatever it has for reserves and production are a good bet to be similar to what your well will do. The fact that this stock is selling at such an immense discount to its "intrinsic" value may alarm folks, thinking that there must be some good reason for this, that both Strain and Fast Eddie are missing. I am convinced that it is nothing more than a function of the fact that the stock is a VSE stock and it has not promoted itself very aggressively yet. We US folks have largely been sheltered from the severe carnage that has taken place on the VSE in 1997. Phil Walsh (ROH pres.) really drove it home when he told me recently that the VSE Composite index was over 1300 when ROH hit the Estero #1 last March, and now it is barely over 600!! Where do you think the average US O&G microcap stock would be right now if the Dow had crashed to under 4000? He says its so weird that, on one hand, he gets calls from US shareholders asking why the stock is so low, and then he gets calls from Vancouver brokers marvelling at how WELL the stock has held up amid the bloodletting! This "VSE Crash" discount that is on the stock is only as temporary as the length of time they will remain on that exchange. Unless Glen reports back to the contrary I presently believe they have the necessary qualifications _right _now to get on the Toronto exchange, and it would not surprise me in the least if they show up at the Strain/Westergaard show as a TSE stock. The clincher to me that this stock has bottomed occurred when they announced last week that they issued some employee stock options at C$1.65. The astute managers of a company would look for a time that is just prior to a point when a lot of good news is gonna come out on their company and the stock has just completed a healthy correction, to issue options to themselves. This is a perfectly legal form of "insider trading" and, in my experience, is a pretty reliable indicator of where the stock is gonna go over the intermediate term. I like to see a healthy amount of employee stock options out on a stock because then I know that my interests are closely aligned with management's. Last week I did something I only do about once a year or so. Being already fully invested, I drew on my credit cards, at high interest rates, to buy more thousands more ROH stock, mostly at C$1.65. With all this thing has going for it, I would be totally stunned if I am not looking at a stock that is well over C$2 come February. This I gotta see man.