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Microcap & Penny Stocks : Leah Industries, Inc. (OTC-BB-LEAH) -- Ignore unavailable to you. Want to Upgrade?

To: CYBERKEN who wrote (929)	12/25/1998 11:46:00 PM
From: Andrew H	Read Replies (1) \| Respond to of 2153

>> OK. Let's say 30 million bbl just in Kazakstan (annual production), times $.75/bbl=$22.5 million. With 23.5 million fully diluted shares that's a $.96/share increment.<< Didn't mean to give the wrong impression. I don't know what the cost production figures are in Kazakhstan but they may be a bit higher than in Russia. Currently as I understand it, the costs for producing a bbl of oil in Russia are about 2.50 and they sell it for 7.50, which is about $5 profit/bbl. There may be some small expenses which come out of the $5. Now for every dollar the price of oil increases, they make 75 cents. So if oil is selling for 12.5/bbl, LEAH will make 5.75. At 13.50/bbl, they will make 6.50. At 15.50/bbl, they make $8/bbl. Below I give an idea of how it translates into EPS. Now they have a lot of development to do in Kazakhstan and things may proceed slower than they hope. Production costs may be more expensive than in Russia. But if and when they are producing 30M bbls of oil in Kazakh per year, I suspect they will make a minimum profit of 3.5/bbl at current prices(11.50/bbl). That would be $105M in profit or about $4.50/share in Kazakh alone...now if oil is back to 15.5, then we would be looking at a minimum of 6.5/bbl (4 x.75=3.00+3.50=6.50) if the same leverage applies. That would be 195M or about 8.30/share if the outstanding shares remain the same. That gives you an idea of the leverage based on the price of oil. Now in Russia, they already have the financing in place to triple production in short order and expect to multiply it 6 fold within 1 year. If they continue to make $5/bbl at current prices...we will see a lot of revenue growth. I think that is where the projection of 250M for SM in the next year came from. Now, remember, it is at the end of the year (1999) that they expect to reach 1M bbls/month, so 2000 should show significant revenue growth as well as 1999. Now if we could only get the damn thing over a dollar.