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Please Continue the Deletions.
No, the moderators should continue to delete the peripheral, the inane, the unsubstantiated, and the plainly stupid postings that would otherwise turn this informative board into the muddy (even oily) froth on the Raging Bull site.
For those who’ve been deleted here, take now the wonderful opportunity to post your comments over on the Raging Bull board. They will mix nicely with the general junk that comprises the majority of the useless or misleading babblings over there.
In fact, given the sub-pedestrian level of most of what is allowed to appear there, the re-posting of the deletions from this board might actually elevate the level of digital intercourse at that site.
Frankly, I thank the moderators of this board for their very successful and continuing efforts to keep this one of the most informative and helpful websites on the subject. Keep up the good work. Hit the Delete button as often as you feel necessary. The quiet majority here appreciates your efforts.
–Falconer66a
Falconer's Response.
Recently, wlbne re-posted a lengthy posting I made in late 2006 regarding what I thought were some probable outcomes for AMEP in 2007, especially as the BDC organizational arrangement was to be voted on and changed to a conventional corporate reporting company.
Wlbne asked if I had any updates on my previous post (which can be read at the post 19446828). Yes, I do, for whatever use they might be.
First, as before, please note that these thoughts are my own, reflecting my own personal investing perspectives on AMEP. They are not intended to be the basis of anyone else’s investment in AMEP shares. Everyone must do his own due diligence and make his own decisions on this company.
In honesty, the announced progress of AMEP’s drilling or production numbers in 2007 has been zilch. In my earlier posting I projected some very nice ranges of drilling and production successes, none of which have yet publically materialized. I initially projected that any number of new wells would have been drilled and announced thus far in 2007. Virtually nothing, however, is currently known about new wells or production.
This, of course, is very disappointing.
But for me, it is not discouraging. The specific reasons for the company’s operational silence in the months following the shareholders’ vote to dump the BDC and reorganize as a conventional reporting company is a mystery. Apparently, corporate lawyers have advised the silence, a matter somehow related to a thorough and complete termination of the BDC’s legal cobwebs. This may require operation under the new legal arrangement for a quarter or two before news is announced.
Nonetheless—and here is significant, pivotal point for me—nothing other then the speed of all that I mentioned in my previous posting has changed. No, there have not been any announced new wells so far. Expanded revenues from existing wells, if they (the revenues) exist, have not been revealed. Things haven’t moved very far. Static might be the best word to describe AMEP today.
And that’s the point. Nothing of value has really changed. Every one of the company’s value-adding assets remains. What asset since my earlier post has been lost? Has a single acre of leaseholding been lost or sold? Nope. Have AMEP’s two rigs (and other drilling equipment) merely rusted away in the Texas weather? Not possible. Charles Bitters was diligent in thoroughly painting and refurbishing these rigs. They are still AMEP’s.
Of course, have any of the hundreds of millions of units of condensate oil or natural gas in AMEP’s Barnett Shale holdings evaporated or drained away? Not a kilogram.
Lastly, after watching how Charles Bitters works for several years, I would be a fool to presume that for the last several months he has had his feet propped up on a desk reading sports magazines. Who knows what private wonders he might have arranged. Some new leases? Some new collaborative drilling projects? Who knows. But based upon deals and arrangements AMEP has undertaken in the last three or four years, I see no reason to presume that all of this came to an end.
In short, I have every confidence that AMEP is moving forward toward operational profitability. Everyone should intelligently note that Bitters simply doesn’t incur any massive or debilitating debts. That’s so rare in progressing upstart corporations. The company’s debt-free status allows it to stick to the knitting, however slow it might presently be.
In time (admittedly, not as fast as in my earlier posting), I’m convinced that AMEP will attain the projected revenues. The company has elected to go slow and steady toward eventual successes. It continues to move in exactly the directions I and other astute investors desire. Nothing but short-term results have been lost.
Long term, in two, three, or four years, AMEP can’t help be a remarkable return for those who have carefully invested for returns on the distant horizon. The possibility of an outside buyout has been raised. That is probably the worst that could happen to the company, at a share price much reduced from what it might be in five years or so. I’m very much against any takeover, and I wouldn’t sell a single one of my several million shares for less than two or two and half dollars. (As good as that might be, it is still only a fraction of where the company will be in five to ten years.)
So, I will publically admit that my earlier projections were too optimistic—but only in time sequence, not in final execution. In time, AMEP is going to have dozens of wells. In time, they will saturate their 7000 acres of leaseholdings with productive wells. 2007 will end with far fewer wells than I projected, with much reduced revenues. But I’m certain that by December 2007 AMEP will be cash positive and growing at ever increasing rates.
I also take into consideration that wholesale prices for AMEP’s natural gas and oil almost surely will escalate in years to come.
I’m confident and settled, allowing Charles Bitters and his people to move things along as they see fit. The guy is not lazy. He’s not inattentive to new opportunities. Like a few of us serious, committed investors, he looks out over the horizon before others do and takes effective action. How do you suppose AMEP gained drilling rights on 7000 acres of what is now the best natural gas lands on continental US?
With all of that said, I’ll go back to lurking, to read with profound interest the diligent postings of a few others in-the-know on this remarkable company. But for most postings, especially the muddy froth over at Raging Bull, I’ll just take a quick smile at these, pondering how quickly they will evaporate when real AMEP numbers and projects come out later in the year.
As I have in recent months, I’ll continue to add shares to my holdings at these low prices. Nothing of substance has changed. Only the pace has been slower than wished or anticipated. The end results, with properly-valued share prices, are locked in and sooner or later will materialize.
Long-term patience. . . .
–Falconer66a
Scenarios for AMEP’s Future—2007 and Beyond
By the end of 2007, American Energy Production, Inc., will not be the company it is today. Dramatic changes are in store. Current and potential investors would be wise to examine the several possible outcomes for the company. Here, I have outlined my personal potential scenarios. They are decidedly my own. They should not be the basis for anyone’s investment in the company. For my own personal consideration, and to help me continue make profitable decisions about the company, I’ve outlined all of the reasonably potential outcomes I can foresee for AMEP in 2007 and beyond.
--A New Beginning Beyond the BDC--
With the imminent resolution of the SEC-contested business development company (BDC) organization of AMEP and its holdings, the company’s corporate assets will become fully known to the investment world. Presently, they are not. There is no doubt that AMEP owns drilling lease rights to over 7,000 acres on the universally productive Barnett Shale in Texas. Furthermore, AMEP holds these drilling rights unshared with other companies. Therefore, oil and natural gas (O&NG) revenues accrued from these lease holdings will be diluted only by standard landowner royalties and taxes. Those are not inconsequential, but they do not approach the fractional revenue split among multiple corporate entities on wells jointly owned or operated.
In short, AMEP has full net working interests in virtually all of the wells it will drill, and those wells will all be on the vaunted Barnett Shale and other productive geological strata above the shale. From my standpoint, neither of these factors have been entered into any official AMEP Net Asset Valuation (NAV), accounting in part for the currently low (Dec. 06) share price.
--The New Padgett Well--
With the recently filed application to drill a new AMEP well near the completed Padgett Ranch #11 well, there is evidence that the Padgett #11 will be very productive. High closed-in pressures are known to be a factor in the completed #11, but any real production results have not been announced. But inasmuch as AMEP has thousands of acres of other lease rights upon which to drill its next well, the only sensible reason to install the new one just a hundred yards or so from #11 would be because #11 is known to be a great producer.
If the two wells on the Padgett Ranch are highly productive, others owned by AMEP will be drilled there in coming months. The assets of these wells have not entered into any publicly-announced NAV.
--Two Drilling Rigs – Insufficient Current NAV--
Secondly, AMEP owns two functioning drilling rigs, along with other ancillary drilling equipment and supplies. Investors will discover that vast acreages of the Barnett Shale sit undrilled-upon for lack of drilling rigs. Many O&NG companies own drilling rights over the Barnett Shale, but own no drilling rigs themselves. Rigs are in short supply and are rented out at high day-rates. AMEP does not have to stand at the end of a long line of small O&NG companies attempting to arrange favorable drilling rents or schedules. With their two wholly-owned rigs, AMEP can drill in-house, with no additional costs or delayed scheduling. This is a major corporate asset, as yet also not factored into any realistic public NAV.
Altogether, I am fully convinced that the current share price (less than 10 cents) is only a fraction of the company’s dissolution value. Others who are current on the issue have speculated that a sale of the company’s drilling leases alone are worth something in the range of 7 cents a share or more. The ability to drill on the company’s own leases with its own two drilling rigs is as yet unaccounted for in the daily share price.
As I mentioned, the company also owns additional drilling, storage, and transport equipment, all of which will facilitate getting extracted product to market. A number of leases are adjacent to or under working NG transmission lines that will bring product conveniently to market.
Again, it is abundantly clear that the AMEP NAV is markedly higher than reflected in its current low share price. The general market is ignorant of AMEP’s total corporate assets.
But all of that is supporting background material, not a reasonable estimation of any future worth, the real purpose of this article. What, then, might be some reasonable, evidence-based projections for AMEP in 2007 and the ensuing years? Let’s get started.
--Worst Possible Projection--
I will start with what I imagine would be a worst possible outcome, where everything imaginable turns out wrong. I’ll presume, for example, that neither the Padgett #11 nor any other AMEP well is able to produce any profit. I’ll presume that all of the wells to be drilled in 2007, for whatever reason (hard to imagine) turn out to be moderate, low-yield wells.
This will presume that by December 2007, try as hard as it might, AMEP was not able to generate any significant operating funds, that corporate revenues continued to be negligible or absent. The share price result? AMEP would be worth somewhere just under a dime a share. In folding, the company would sell off its two major assets, its drilling rigs and associated equipment, and also its rights to drill on 7000 acres of the Barnett Shale.
That’s the first scenario, the worst—and least likely. Even if it were to happen, I would more than double my early investment in AMEP. In two years I have acquired over 2.6 million shares, at an average cost of 3.3 cents each. A close-out sale at 7 to 10 cents would be very profitable—but I don’t think this is a reasonable outcome. Other potential investors will have to make their own decisions on this.
There is every reason—geological, engineering, oil field experience, and many others—to believe that AMEP’s new wells are and will be highly productive. All ensuing projections merely set out potential well completions and production numbers. From those, round ballpark production and revenue yields can be calculated. Here are the factors I’ve used to come up with in my projections.
--The Two Central Success Factors--
The first question is how many wells can the two AMEP rigs and their crews complete in 2007 and beyond. The second question is how many production dollars will flow to the company from each well. I’ve created a spreadsheet with both of these factors, and the numbers—even at the lowest production levels—are orders of magnitude beyond the current sub-dime share price.
How many wells might the AMEP crews drill in 2007? Of course, it depends upon how quickly they can drill each single well. For my projections, I created a possible well-completion range. At the lowest, where each well requires six weeks to complete and bring on line, two drilling rigs and crews could complete 17 wells. (I’m presuming a 50-week operating year in all calculations.)
I understand, however, that Barnett Shale wells should never take this length of time to complete. For the shortest drilling times, I’ve presumed a typical well could come on line after just 3 weeks of drilling time. Two rigs punching wells at 3-wk. intervals could complete 33 in a year.
So, at the low end, we could expect AMEP to have 17 new wells at the end of December, 2007, or at the high end, a total of 33.
The next factoring question is how many dollars of revenue will accrue to the company from each of its wells. Using existing wells over the Barnett Shale for guidance, it appears that virtually all of them produce some oil or natural gas. It could be presumed that poor Barnett wells would yield one or two million dollars annually. But there is every indication from the Padgett #11 that this will not be the case. If it were, why would the experienced people running AMEP deliberately choose to put their second well as close to the #11 as legally allowed? And because few other known Barnett Shale wells are poor producers, I’ve elected to discard the one to two million dollar yields/well. There is no evidence whatsoever to support such low numbers.
--Production Projections--
Consequently, I’m starting my low-end production numbers at $3 million per well per year. Like other “monster” Barnett wells, the Padgett #11 could easily be two or more times as productive. It could yield anywhere from five to eight million dollars of revenues in its first years of production.
Production from the Padgett #11 will not indicate what the adjacent new Padgett #12 will yield. I didn’t mention that the new well is authorized for horizontal drilling, sending a shaft sideways deep into the producing stratum. The #11 was only a short vertical puncturing of the local pay zone, taking O&NG from a single short column of hydrocarbon-bearing strata. The new Padgett well will turn sideways deeply into the pay zone. Consequently, it must yield some multiple of the #11.
At the high end, I’m presuming an annual production yield of $5 million per well. Both of the Padgett wells may be much higher, but just to be conservatively safe, I’ll presume a $5 million high average. If this can be realized—and it’s not totally unreasonable—the results for investors will be stunning.
So what are calculated projections at various well numbers and production results? They are these.
--Total Projected Results--
At the lowest end I have presumed AMEP will be able to complete and bring online only 15 wells in all of 2007. Additionally I presume that the average revenue yield to AMEP will be just $3 million per well. That’s a gross corporate revenue stream of $45 million. There is every reason to believe that AMEP’s gross revenues for 2007 will be at least at these levels or higher.
Now at the high end, should everything go forth perfectly, the numbers are these. In this case, I’ve presumed that AMEP drills and rigs completed wells in just 3 weeks each, yielding 33 for the year. But for simplification, let’s presume a round 30 new wells in 2007.
Let’s also presume that average well revenues coming to the company will be $5 million per well. That’s a total gross revenues sum of $150 million. (These are no longer “mom and pop” numbers.)
On the lowest end, I’m seeing corporate revenues of $45 million, with $150 millions at the highest end.
--The Mid-range Projection--
I don’t think either one of these will be accurate. If I had to make a single bet, I’d toss my dice at a, say, 60 to 80 million dollar range, right in the middle.
The results for AMEP shareholders at any of these amounts, high, low, or medium, will be rewarding. What might AMEP share prices be toward the end of 2007? Let’s take a look.
--2007 Share Price Projections--
Let’s start at the high end. Share prices depend primarily (but not exclusively) on two things, the number of outstanding shares to which dividends would be distributed, and current Price to Earnings or P/E ratios. AMEP is authorized to issue up to 500 million shares. The current number of shares is somewhere in the 480s, I believe. For convenience and simplicity, I’ll presume that all 500 million shares are outstanding and being traded.
With a gross corporate income of $150 million, divided among 500 million shares, the maximum possible dividend would be 30 cents. Of course, because of operating costs, royalties, taxes, and other factors, any dividend would not be at this level. But that’s not a concern as AMEP is not likely to issue dividends in 2007 anyway. It would be best to retain all free revenues to invest in new leases, drilling equipment, or other projects that would enhance future shareholder values.
But let’s presume the 30 cent earnings per share number. At a low P/E of 10:1, that would yield a share price at the end of 2007 of three bucks. But a P/E of 10:1 is likely to be low. I think a 15:1 ratio is possible, even reasonable. That would result in an AMEP share price of $4.50.
Most investors would question either of these elevated projections, and rightfully so. Everything has to go just so for these to be realized in 2007.
What are the numbers down at the low end? A corporate revenue stream of $45 million divides into earnings of about 9 cents per outstanding share. At a P/E of 10:1 the end-of-year share price should be around 90 cents. At a 15:1 P/E the share price will be $1.35.
That’s at the very reasonable low end of projections. In the middle, at say $60 million dollars of revenues, the 10:1 P/E will be $1.20, with the 15:1 ratio being $1.80.
In summary, my year-away share price projections range from $0.90 to $4.50. Both the low and the high numbers are possible. If I’m way short, by a factor of two on the low end, a year-end share price in 2007 of only $0.45 would still be an almost 9x gain over the late December 2006 share price. A mid-range share price of $1.20 will be an approximate 20x gain for the year.
--Investing in AMEP for the Long Term--
Anyone who invests in AMEP only with the thought of selling out at the end of 2007 is essentially a trader, not an investor. Nowhere here have I projected new wells and their revenues out into 2008 and 2009. With two drills and crews it is impossible to saturate AMEP’s 7000 acres in one year. AMEP will be drilling new wells for the next several years. When they saturate their own leases, they can cost- and revenue-share new wells on lands leased by other companies who don’t own their own rigs. In all cases, AMEP revenues can be projected to ramp upward for the foreseeable future. My projections have been only for 2007. I intend to sell very, very few (if any) of my shares in the coming year.
AMEP share prices toward the end of the decade and into the next are likely to approach or exceed $10 per share. But those numbers are too far in the future. Astute investors should focus presently on 2007. It will be a remarkable year for those who decide to purchase at the current low prices.
Again, I caution that these are figures I determined for my own consideration. I present them only as a prompt for others to undertake their own detailed due diligence. No one, regardless of the grand potential of AMEP presented here should invest with anything other than thoroughly discretionary funds, the ones that might otherwise have been discarded on a tropical vacation, a hobby sports car, or any other similarly peripheral or non-essential expenditure.
For those of us who have held AMEP shares for the long term, for two years or more, the trek to the edge of financial greatness for this company has been slow and fitful. All of us would have presumed more rapid progress. But the time has arrived. Now, with the impending reorganization, with the dumping of the BDC status, and with the new wells being drilled and completed, 2007 will be the first year of reward with this company. There will be many more in the future, I believe.
--Falconer66a
I, too, have recently bought lots of cheap shares.
Like Greeneyedhawk, I have taken the opportunity to accumulate additional AMEP shares at the recently undervalued prices. Even without a single producing well, the AMEP leaseholding values would be worth at least $0.04 per share. Those of us who have studied the geology of the AMEP leaseholds believe that the posted 4 cent number is grossly inadequate. But for the nonce, it can stand as an isolated testament to the recent undervalued share prices.
The underlying value of the company – pun intended, with the 7000 acres of high-value and high-interest leases over the Barnett Shale and other strata – make the recent share prices a steal.
New or potential investors in AMEP should not concentrate solely on the known production potentials of the vaunted Barnett Shale. On much of the AMEP lease holdings, to get to the Barnett the drill holes must drop down through the Marble Falls and other potentially very productive pay zones or strata. There can be no doubt that the AMEP drilling crews have recognized these other strata that can be tapped, often even before getting down to the Barnett Shale. It’s not just the Barnett that factors into the AMEP equation.
All of this will be revealed in well production announcements sometime in the future. Yes, those of us familiar with the company – with its significant geological holdings, and with its in-house drilling rigs and crews – would have predicted and preferred more timely production results. But with the rewarding results that will come forward in ensuing reporting periods, in the coming year, the glacial development speed of the first wells will pale in comparison to the overall annual investment returns.
Yes, at a three or four cent share price, very few investors can show any current gains of any significance. But that’s a perspective to be held only by stock traders and flippers, not by authentic investors. Intelligently, AMEP should be regarded as a long-term investment, using discretionary funds carefully allocated for such investments. Personally, I don’t intend to sell a single share of AMEP until sometime in ‘08 or ‘09, with the majority up for sale perhaps several years after that, when the SP will be in multiple dollars.
Investors need to determine their return on investment (ROI) goals. Flippers and day traders aim for modest but continuing returns over long periods, dabbling in numerous stocks. Most of these, however, make very little and after a few months or years of trying to beat everyone else who also believes he’s got “the system,” they give up. A great deal of the activity in AMEP in the last year or so has been of this sort.
A number of us, however, have invested for the long-term, and know that in a few years (mark that, years, not days, weeks, or months) we will be recording annual (mark that, annual) share price gains in double and triple digits.
The crews have been working all summer. Let’s wait and see what will be announced.
And of course, all of these announcements will be enhanced by the shifting away from the present business development company (BDC) arrangement.
The corporate ducks are aligning, and soon will begin their ever faster march toward profound profitability. The ducklings have been very slow in getting to the parade step-off grounds. But they are there now, and the parade should soon begin. Those of us with 6 and 7 figures of cheap shares will be smiling from ear to ear, taking only a moment or two to quietly lament the many who played the game short-term and no longer own any feathers in any of the AMEP ducks.
My best to all who diligently examine and consider the remarkable assets (in all forms) of this company. Our day will come, the rabble and babble of the posted naysayers notwithstanding.
–Falconer66a
To Gold Runner (Nelderand) and others:
First, all of us who follow AMEP closely appreciate your particularly detailed chart projections for this company. Personally, I have no real competence in TA (technical analysis -- "charting"), but what I do know supports all of what you so diligently post and project.
My holdings in AMEP were purchased (at an average share price of $0.0335, a bit over three pennies each) based upon the remarkable asset fundamentals (not the TA) of the company. For those of us who know, I needn't list in any detail the known hydrocarbon reserves of AMEP's lease properties, the high corporate working interests for these, the ability to drill wells in-house, etc. Your TA fleshes out the profound fundamentals of AMEP.
Wells have been drilled, logged, frac-ed, and frac water is being retrieved. As Greeneyedhawk as pointed out, it's now merely a matter of time, probably a few weeks or so, before actual continuing, dollar-producing production begins, the actual topic of this posting.
Over on the generally vapid Raging Bull AMEP board, you've posted that investors will soon "discount" future production gains into the AMEP share price. Might I suggest that you discard the "discount" word and substitute the terms "project" or "projections."
The future share prices of AMEP are not going to be "discounted," reduced in value when production begins. The ever-ramping production numbers will be very positively "projected" into the daily share prices. Unless production declines, there will be no "discounting."
Based upon the on-site reports of a number of posters here (Greeneyeedhawk, in particular), along with remotely known and posted company information, those of us who’ve done our homework know -- just as your charts project -- that when production numbers start to appear the share price will begin a steep, rarely-retreating climb to unknown new periodic highs.
In short, this is the last chance to buy AMEP in the less than a dime range. All summer, the price has not pierced the 5 cent support. Those who wanted to bail at these prices have done so. The vast majority of shares are now held by strong hands, by folks like me who won't be selling any shares until the SP gets much higher. Even in the fifty-cent range, a sale will be foolish, as both your TA and asset fundamentals show that a share price in the 70 cent range is very likely to occur within a year.
But will drilling and production increases stop by, say, next August? The greatest returns will be to investors who are looking out five to ten years, when the multiple pay zone strata of the current leases have been fully tapped.
Those who are factoring in only the next few months, whether "discounting" or "projecting," are missing the much larger picture. Frankly, what's going to keep AMEP from reaching a remarkable future profitability? Lack of places to drill? No, they have 7000 acres of leases over the Barnett Shale and other known pay zones. Do they have to hire expensive outside drilling contractors? Nope, they've got their own drilling rigs and are building experience and crews to drill more efficiently. Will the market for AMEP's product decline? Hardly.
For two years or so the AMEP bashers have predicted every sort of bad result for the company. They have been wrong on every account. Yes, progress has been much slower than any of us would have wished or projected. Nonetheless, the AMEP ducks are beginning to align and will soon start marching ever faster (and more visibly) to profound profitability.
New investors should be careful in weighing the discountings of the bashers. Several of us were implying exactly the same thing a year ago, when the share price was half what it is today. I've nearly doubled my investment in a year, and in a few months, it will be a multi-bagger.
From quarter to quarter, AMEP has no where to go but up. It's only a question of the steepness of the slope of the curve. As always, day-traders and short term investors will be in and out, creating typical jags on the curve. But those of us with strong hands, those of us who are looking several years down the road to make our first sells, we will be smiling the entire way. Few investments, in my mind, have such locked-in potential.
--Falconer66a
The Real News That Will Make This Company
As always before, Greeneyedhawk’s posted diligence information is crucial information for those who might intelligently consider the rare investment opportunity that AMEP presents. His DD #4 report is representative. And this new posting of 4 approaching news items is another informative contribution. Those newly contemplating AMEP would be wise to read all that Greeneyedhawk has posted.
But the real company-making PR will be the publication of an experienced petroleum engineer’s hydrocarbon assets report describing the lands leased or owned by AMEP. Everyone knows that the company has valuable drilling rights on over 7000 acres of the Barnett Shale. We know that the Barnett Shale, along with the several other productive strata outlined in Greeneyedhawk’s DD #4 report, has tremendous potential.
Most investors (not day-traders) are understandably cautious about jeopardizing investment funds on apparently speculative penny stocks. But when AMEP’s accessible oil and gas reserves are professionally described, based at first on initial Hart #8 production results, then upon extrapolated strata data from the earlier seismic survey, and other conventional resource asset determination methods, things here are going to change dramatically.
The Hart #8 results will be incontrovertible, whether at a $1,000,000 or a $3,000,000 per year rate (the later is more likely). By the time these early numbers are posted, the second well probably will be deep, if not also in production. Then, those who were previously prompted to calculate the number of wells that might be drilled on 7000 acres on any number of spacings will go back and punch their spreadsheets with a bit more seriousness. With the Hart #8 in production, with one or two other rigs drilling new wells, only the most recalcitrant will be questioning if O&G revenues will be expanding dramatically in the coming months and years.
With the publication of a professional assets assessment, any of the current questions about this investment will be mute. It will be only a matter of how many wells can be drilled in a month or a year. Unlike now, few will be questioning the productivity of AMEP’s lease holdings.
When might such a report be published? I have no idea. Perhaps this summer. Perhaps next fall. Perhaps a year from now. But it will happen. This will allow big-money investment managers to buy into AMEP.
For those who haven’t, go back and read Greeneyedhawk’s DD #4 report. The numbers there are plainly staggering – but well-founded. A professional assets report will affirm these numbers.
Day-traders, AMEP stock buyers who use the hour hand on their watches to guide their buys and sells, will miss the giant gains real investors will enjoy in coming months and years. Those of us who have studied the existing data on AMEP’s assets know today how valuable they are. When the rest of the world reads about them, share prices won’t be in the penny range. In time, AMEP will be a multi-dollar stock, probably listed on the AMEX or another exchange. A great future, for those of us who have the proper, longer-term time frame perspective.
Great new info.
Greeneyedhawk,
Your posting of the updated DD #4 page is an eye popper, indeed.
Your conservative numbers are right in the same low range as my own personal projections – figures that caused me to purchase 2.6 million AMEP shares at an average share price of about 3.7 cents. Even at these very conservative low projections, AMEP is a screaming buy.
But since bulletin board stocks are traded primarily by momentum players, day traders, and other forms of “dumb money,” there isn’t much smart money here yet. That will change in the first quarters of ‘06, when well-numbers and revenues begin to ramp up. Those of us who’ve gotten in early will look pretty handsome next summer. (I’ll smirk a bit – based a good deal on your detailed diligence, as in your recent new post.)
Your fleshing out of the new well-spacing and new pay zones is even stronger evidence that AMEP will be the best stock purchase that could have been made in 2005. Of course, that applies only for astute investors, not day-trading adrenaline junkies. I’m looking forward at least 36 to 48 months before I’ll sell a single share, when the share price should exceed a dollar or more.
But for those of us who have truly invested in AMEP, we need to also ponder AMEP’s eventual dividends. Certainly for the near future, for several years, perhaps, all available corporate revenues will be plowed back into the company for ramped operations, increased lease holdings, and other future revenue-generating purposes. I’m impressed that Charles Bitters takes the long view himself, not squandering current assets on quick loans and other long term encumbrances.
So, when might AMEP distribute dividends, and what might they be? It’s way too early to tell. But the fact that the Barnett Shale wells produce at high rates for decades means that at some time in the future (depending on the rate of well drilling) the AMEP leases will be fully perforated and the company will be continually flooded with quarterly revenues, probably measured in 100's of millions of dollars.
One thing that you haven’t discussed (because it’s still in the future) are the implications of HOA-800 in other wells. Yes, AMEP will be able to generate nice initial working funds from the 193 wells you’ve described. But who would think that’s the end of the HOA-800 story? How many other “exhausted” wells are sitting around the Texas landscape awaiting the oozing magic of HOA-800 technology? What future deals will AMEP be able to make on those wells? Perhaps most will be merely license deals, where AMEP simply gets quarterly bank deposits on hundreds or thousands of old wells brought to production with their proprietary product. A future cash cow? You bet.
Smart investors will not dismiss the great potential of this developing technology. It would interesting to learn the number of vacant Texas wells that could respond to AMEP’s unique and proprietary HOA-800 technology.
It’s clear that nothing about AMEP’s potential is complete or mature. But whatever happens, even at the most moderate or conservative rates you’ve presented, over time the company will reward investors handsomely.
Greeneyedhawk, as you should have, you’ve been extremely cautious for every datum. Your diligence and presentation at these levels clearly shows the value of buying AMEP shares. But in fact, the typical field data for fractured horizontal Barnett Shale wells can be in the 2.5 million cubic ft/day range or above. And making a budget to heat a house next winter with gas at $9/Mcf is dangerous. Ten dollars is almost surely way too low. Twelve to fourteen dollars might be closer.
I’m a longterm holder of AMEP shares. Do I think that the company is going to be selling its Barnett Shale (or other) methane for only 10 bucks in two or three years? Not a chance. In my own spreadsheet projections, I’ve plugged in all of the higher levels, and the numbers over on the right, in the columns showing calculated share values, dividends, and total values are plainly stunning. I firmly believe that two years from now your posted, conservative numbers will be seen to have been well below actual figures.
Again If AMEP can generate only the revenues you describe in your recent posting, the stock is a screaming buy. But if I were forced to pick some future numbers, I’d say that they would easily be double your projections. Let’s sit back for a year or so and watch the numbers grow.
For the many others, who in their own diligence followed yours, I express my great thanks and appreciation. You have personally confirmed, even expanded, all of the positives I’ve based my share purchases on. Great work. My deep thanks.
– Falconer66a
Is ERHE Another AMEP?
I'm not familiar with any of the particulars of ERHE, so I can offer no useful comments on the security.
I've learned that it's quite easy to get involved with too many stocks, and keeping track of the developments of all of them can divert appropriate efforts to the study of my top investment contenders.
I would recommend that others look into ERHE and see if it meets with their personal goals and criteria. I've restrained myself to just a handful of promising stocks in the last few years, having formerly gotten involved in a multitude of stocks that proved unsuccessful. It’s easy to be emotionally taken by the promises of speculative stocks. I found that when I was chasing after six to ten stocks I was making very little from the entire effort.
Consequently, I discovered that I had to thoroughly research every stock I thought I would be interested in – long before I purchased it. I realized also that the vast majority of stocks, especially the OCTBB’s, the penny stocks, were worthless, having only a story but no real future. One can get really caught up in all of this, and in the end, lose a lot of time and money. With a bit of luck, one might come out a bit ahead by April 15th, but the results won’t be spectacular. Been there, done that.
I’ve learned to carefully weigh the known values of a stock before purchasing it. Don’t waste time, money, or energy chasing a dozen bulletin board stocks with great stories. In the end, that’s a no-win game. Instead, keep track of, say, five stocks you’ve decided have promise. Then, as Greeneyedhawk has so expertly done, start compiling all the diverse information you can on a company, good and bad. That’s probably what you are trying to do with ERHE, and I commend you.
Then, before you buy a single share, make certain, from multiple sources, that among other things, the company has:
1) Significant, profit-making assets. AMEP has prime drilling rights to 7000 acres of the finest natural gas reserves in America.
2) Competent, experienced management. AMEP’s Charles Bitters is a shrewd, knowledgeable local oil man who knows the landscape, the regulations, the technology, and everything else about getting hydrocarbons profitably out of the Texas strata.
3) Lack of debt. Young or small companies with big debt loads have giant huddles to leap to become authentically profitable. AMEP’s debts are small and inconsequential.
4) A ready market for its goods or services. The prices on the gas pump or your gas heating bill will authenticate AMEP’s markets.
5) A reasonable share price and outstanding share count. Buying AMEP shares at less than a dime, or even a quarter, is about as good as it can get. AMEP will be a strong buy up to a dollar, and probably well beyond that in years to come. I marvel at newsletters and advertisements that proclaim “astounding 20 and 30% gains possible....” In the two stocks I sold to get my 2.6 million shares of AMEP I had a 300% gain with one, and a 1000% gain with the other. I’m averaged into AMEP at about 3.7 cents. I don’t plan to sell a share until it hits a buck sometime in 2006 or 2007. Am I looking for 20 or 30% annual gains? Not any more.
But the companies that hold the promises of AMEP, and perhaps this ERHE (for others to discern), are very few and far between. You’ve got to be ready to commit resources to them when discovered and found reliable. I learned that lesson by overplaying PRST, Presstek, for ten years. Back in 1995, it had technology that was going to revolutionize the printing world. It had everything except numbers 4 and 5. I tied up thousands of dollars waiting for next quarter’s eventual corporate sales increases. They always came, but at a slow, incremental pace. Don’t get me wrong, Presstek is a very fine company, and it’s price will continue to elevate in the years to come. But it will never compare to AMEP. Now, I know where my money should be.
And that’s a final thought. Conventional investment advice always warns against having too many eggs in one basket. You are to be invested in a diversity of sectors and investment vehicles. And that’s good advice. Anyone investing the majority of his investment dollars in OCTBB stocks is a fool.
But the money we use on AMEP and similar small-cap stocks should be discretionary funds earned after we’ve paid off the house, car, insurance, tax, and other debts associated with modern living. But after that, my point is this. Put your funds to work in only the two, three, or four stocks that are really paying off. Then, and that’s what I’ve done to get my 2.6 million shares of AMEP, use the proceeds of your lesser winners (for me a 300% gain and a 1000% gain) to get in on the a major train before it leaves the station.
AMEP’s locomotives are starting to rev. When the first drill shaft breaks the Texas soil in a week or so, the cars will start to leave the station. Investors who belatedly notice the increased speed of the train as it leaves town will have to rush to the next freight yard to get loading tickets there, and the prices will be much, much higher. Those of us who’ve done our homework and bought freight tickets while the train was still in the yard, some before a locomotive (the drilling rig) was even purchased, are now along for what will probably be the ride of our lives – until another such opportunity is discovered in the next decade. Then – if we’ve done our homework – we’ll be able buy a whole line of cars, not just a few tons of freight in one car.
Such opportunities are rare. All of us wish we would have purchased a few thousand shares of a small company called Microsoft back in the early eighties. I recall seeing it at a dollar fifty, but I passed.
This is America, where the entire world comes to create technologies, products, and services that will grow gigantically. AMEP is the first of these I’ve had the opportunity to buy into early on. There will be others. ERHE may be one of them. I hope so. Keep us appraised.
My best to all.
Expectations Update on AMEP
About a month or so ago, when AMEP was hovering in the 2 to 3 cent range, I posted my long term expectations on the company, outlining why I was certain that its share price would, in time, grow many, many times. For the last few days, the price has settled in the 6 to 7 cent range, a nice doubling or more.
With the recent onset of a narrow trading range, daily trading volumes have declined dramatically, indicating that day traders and momentum players are now playing their games elsewhere. Importantly, AMEP has not dropped back anywhere near the 2 and 3 cent price levels seen a month or more earlier. Beneath all the day trading foam of recent weeks, there has been a quiet accumulation of shares by long-term investors who have intelligently learned of the remarkable future for American Energy Production, Inc. The due diligence postings of Greeneyedhawk (Nos. 1 though 5, posted quiet frequently in the last few weeks) are, frankly, case studies in how a penny stock must be parsed out.
The fundamentals of AMEP, as described so expertly and with such detail by Greeneyedhawk, remain undiminished, the current share price plateau notwithstanding. For those new to the stock, and who have read Greeneyedhawk’s due diligence postings, and have begun to consider taking an initial position, now would be an ideal time. There is a reduced chance that the price could slip for a short period as low, perhaps, as the 5-cent range. But the far greater probability is that it will hover in the 6- to 7-cent range for a time, then elevate quickly toward a dime or higher. Even the day traders are checking in each day, searching for the first drilling news with the new rig. That news could be released any day now, and when the Texas earth is punctured by AMEP’s giant rig, anticipation will give way to ever-increasing share prices. With rights to drill into 7000 acres of the finest natural gas reserves in the US, the mere grinding of an AMEP drillbit into rock will wash off a great deal of market uncertainties for the company.
Right now, AMEP is primarily promise, not product. Most penny stocks remain so because they seldom deliver on their promises. But the promises of AMEP are simply astounding. To learn of them, read Greeneyedhawk’s postings. Presently, only a minority of investors fully realize where this company is going to be in a year or two. Most penny stock investors appear to be traders, not investors, so don’t let current share prices or trends enter into a decision to buy or sell the stock. This message isn’t for traders. Like my previous posting, this is for the consideration of authentic investors, folks who want to allocate personal funds with the considered expectation of great rewards after a year or more. This is one of the very few penny stocks that will deliver.
I don’t spend much time reading the frothy blather of most of the postings on the Raging Bull AMEP board, and some of that has sloshed over here recently onto this board. I’m looking for solid, first hand information. To date, all of that shows that even today, AMEP is grossly underpriced. That will all change in a few weeks, when the first AMEP Barnett Shale production hydrocarbons will go to market.
When that happens, a host of potential investors will begin to punch in possible future revenue numbers for the wells AMEP will be drilling. For my self, I’ve already filled up a spreadsheet with the possible ranges of daily barrels and cubic feet of production per well, based upon a few well production figures on other, non-AMEP Barnett Shale wells. The results, even at the lowest ranges, are just remarkable. When AMEP’s first Barnett well actually yields some daily production numbers, even the day-trading bumpkins will calculate a projected, increasing revenue stream with each new well. Most of those people can multiply by 12, and will then begin to see where this company will be in a year.
I know a bit about geology, and have discerned typical production numbers from Barnett Shale wells using the new extraction technologies AMEP will be using. The numbers are absolutely compelling. This stock won’t stay at less than a dime for long, and when actual well production numbers are first released, share prices will climb to fifty cents or a buck.
The next question new investors would then have to answer is how fast and how many wells can AMEP drill in a year. I don’t know. I’ve heard of wells being completed in as little as 18 days or so, with others taking as long as a month. At the least, that’s a dozen a year, with a corporate income of multiple millions of dollars.
I needn’t go on. For day traders and momentum players, my comments and perspectives are irrelevant. As I said before, check back in a few months or a year or more, to see if my perspectives are valid. I’m not much interested in the AMEP share price next week or next month. Let’s see where it is, say, in February or March. Better still, see if any of my thoughts had any validity when you check the price in February, 2007. The 2.6 million shares I purchased at an averaged price of 3.7 cents or so during the summer and early fall of 2005 – against the emotional personal advice of a number of prominent bashers – will look pretty handsome.
I’ve been investing in stocks now for eleven years. None have come close to the potential of AMEP. This is a rare, once in a quarter-century opportunity. For readers pondering an AMEP purchase, now is the time to do some very serious thinking. Get out the calculator, or click up the spreadsheet, and start calculating where this company will be with between 40 to 80 natural gas wells (or more), each producing anywhere from one to three (or more) millions of dollars of income for the next 10 to 20 years. And then, what if the HOA-800 technology takes off? How many abandoned or exhausted heavy oil wells in Texas and other states simply await AMEP’s proprietary extraction technology? The mind boggles. Those with the longest vision will be the best rewarded.
Greeneyedhawk’s due diligence postings can be found at:
#1 http://investorshub.com/boards/read_msg.asp?message_id=7967259
#2 http://investorshub.com/boards/read_msg.asp?message_id=7967267
#3 http://investorshub.com/boards/read_msg.asp?message_id=7970002
#4 http://investorshub.com/boards/read_msg.asp?message_id=7973289
#5 http://investorshub.com/boards/read_msg.asp?message_id=7863459
My Perspectives on the Great Potential of AMEP
For those new to AMEP, for those who are unsure of the company’s future, you need to consider a few facts. If you are a short-term trader looking to gain a quick in-and-out profit, stop reading now. Just come back in a few months, say in early 2006, and then calculate what you would have then made had you held on to even a fraction of those shares you flipped when AMEP started appearing on daytrader’s boards. This message is for those who wish to invest (and get rich), instead of just trade a stock with some momemtum.
Presently, AMEP is an opportunity that rarely presents itself. While diligent study of a few moving penny stocks will reveal potential one- or two- bagger gains, AMEP in a few years will be a 10-, 20-, or 30-bagger or more. Why?
For the reasons any stock authentically gains value, the company continues to grow in net worth and revenues. Right now, AMEP has insignificant revenues, as they have only a few producing oil and gas wells. Those who bet against AMEP must think that this situation will continue. It won’t, for a number of major reasons.
What is required for a young O&G (oil and gas) company to grow and prosper? Everything that AMEP has (and few others do). Here’s are the things not yet factored into AMEP’s stock price.
1. Rights to drill oil and gas wells on 7000 acres over the blanket Barnett Shale formation. Don’t take my word for it. Do a Google search on “Barnett Shale.” Every published report on this large formation shows that it has remarkable – and now – newly accessible reserves of natural gas. For decades, many wells were drilled right through the Barnett Shale in search of hydrocarbons in lower strata. Until recently, no one knew how to efficiently extract either oil or natural gas from the tight Barnett strata. But in the 1990s, a number of Texas oilmen learned how to pressure inject liquids into the Barnett, fracturing (“fracing”) the tight shale layers. The results of these new fracing techniques are plainly astounding, with virtually every new well producing copious amounts of methane, natural gas. A few wells also produce oil, including AMEP’s first test well.
In short, AMEP has gigantic Barnett holdings, with remarkable reserves of natural gas that will be released with modern fracturing techniques. Not only will the Barnett rights produce high natural gas yields, the evidence from the earlier fractured Barnett strata of other companies shows that gas production continues undiminished for years. Then, when the gas begins to wane, a re-fracturing restores copious production yields. The Barnett Shale is as good as it gets when it comes to accessible natural gas reserves, and AMEP’s 7000 acres will produce tens, or even hundreds of millions of dollars of revenues in the coming decade.
3. How could that be? It all depends on how many wells can be drilled or refurbished over the Barnett. From my readings, it is not clear if the Texas Railroad Commission (the agency that regulates oil extraction) will allow wells on 80-acre or 40-acre spacings. Either way, AMEP , and those of us who own hundreds of thousands of sub-nickel shares, are going to rake in piles of dollars. If only an 80-acre density is permitted, that’s 87 wells. To be conservative, let’s presume that AMEP will be able to drill only 75 wells. What revenues might those wells cough up? No one can know for sure just yet, as they haven’t been drilled (using new equipment and techniques below). But it appears that with the present high natural gas prices, AMEP wells over the Barnett could easily produce a million dollars a year each. That, of course, is a corporate income of $75 million. For a stock now selling at less than a nickel, diligent investors (not day traders) can discern the potential.
In fact, newly drilled or refurbished Barnett gas wells may yield close to two million dollars each year. Only actual drilling results will tell. But anyone who worries that AMEP wells on the Barnett will be “dry” simply don’t understand that modern fracturing techniques always produce gas, and in large quantities in this formation.
If you wish to dream, start punching in potential yields from closer 40-acre well spacings. ‘Nough said.
4. The real problem with the Barnett Shale, or any other hydrocarbon-yielding formation in Texas is not in the rock strata. It’s with the paucity of available drilling rigs. There just aren’t any. Any producer or contractor with an operating big rig is presently drilling. Until recently, AMEP was going to have to get in line and wait with all the other small producers and twiddle their thumbs until a drilling contractor became available – at a very high price. But in Mexico, AMEP just purchased a moth-balled big rig that is capable of drilling down 8000 ft, far deeper than the Barnett strata. More importantly, the new rig is able to drill horizontally at depth, sending a hole sideways up to 3000 ft into the gas-bearing shale. AMEP is now able to combine the new fracturing techniques with lengthy horizontal boring technology. Instead of being able to extract only the nearby gas surrounding a single vertical borehole, which of course can’t be any longer than the depth of the formation, AMEP can now extend horizontal holes out as far as 3000 ft, entirely through paying rock. Let’s see what the returns really turn out to be when the new rig completes its first few horizontal boreholes. Will these wells yield two, three, or four million dollars of annual methane? One thing is certain. Not a one will come up dry.
AMEP has the best acreage, in large quantity. It now has its own state of the art drilling rig, which apparently will be able to drill a fully producing well in a few weeks or less. It appears that AMEP should be able to drill a minimum of 15 wells each year. If each produces $2 million of corporate revenue, that’s $30 million total, and since the outstanding shares count is about 300 million (read the financials, as one “guy” always suggests), in a year AMEP may be taking in revenues equivalent to 10 cents a share. Project that growth out for a few more years, even at a moderate 15-wells per year drilling rate, and you will understand why those of us who have followed AMEP for several years see this as an investor’s opportunity of a life time.
5. The problem with natural gas is that it can’t be poured into a tanker and hauled off. It has to be pumped into high pressure steel pipe, which to install is time consuming and expensive. Guess what. AMEP apparently has rights to use existing NG pipelines on much or most of its Barnett Shale lease lands. These pipes were installed by others to transport hydrocarbons extracted from other, more conventional non-shale strata. The ability to move natural gas to market through existing nearby pipes is a great plus.
6. Many of us who have been around AMEP for a year or more were first attracted to the company by its unique development and rights to a proprietary oil well additive, some strange solution that causes thick, tightly-bound heavy oil to flow more freely. AMEP has rights to the substance’s use in all of Texas, and if it works, it has the potential to reopen old, worn out wells where the only remaining oil is heavy oil. Recent reports from AMEP show that using a combination of heat and the additive has resulted in a 300% increase in oil flow in old, abandoned heavy-oil wells that it operates.
In the near future, AMEP’s additive isn’t likely to produce substantial revenues. But as AMEP’s well managers continue to perfect the additive’s use, there is tremendous potential for hundreds of abandoned wells that could be returned to production with this new extraction technology. The potential results could be worth many tens or hundreds of millions of dollars, if the technology proves applicable across the hundreds of abandoned heavy oil wells in Texas.
That’s for the future, if it develops. The real AMEP story today involves a propitious confluence of other favorable factors, including the high and elevating price of natural gas, the large Barnett Shale reserves AMEP has the rights to, existing distribution pipelines, two company-owned drill rigs, a smaller one that will rework existing well casings, and the new Ideco big rig capable of drilling wells deeper and longer than any needed in the Barnett shale.
What are the possible liabilities for investors in this company? There are a few bashers who continue to post the same “concerns,” especially one particular “guy” basher. He claims that he invested in AMEP some time ago and sold out for a $200 loss. He claims that AMEP is only a share-printing mill, and that’s all they can sell, worthless new shares. For much of the last year, AMEP did produce and sell large amounts of shares, now totaling just over 300 million (according to official financial reporting documents). At the time, all of us were a bit concerned at the outstanding share expansion. But now we can see that this was extremely brilliant, as it gave the company funds to quietly purchase rights to the Barnett Shale before landowners learned of the new fracturing technologies. By shrewd business practices, AMEP got into the Barnett Shale patch before anyone else knew it was going to be worth millions. An oil or gas company without rights to drill doesn’t have a future. AMEP has both the acreage and a great future.
The basher guy also likes to point out that AMEP has some unpaid debts. But these belong to a precursor company, now extinct, from which AMEP bought stock listing rights. In short, AMEP not only has large valuable drilling acreages, machinery and knowledge to drill with, it doesn’t have any debt of consideration.
The stock price closed today (16 Sep 05) at just under three cents. Authentic investors will have to do their own due diligence and decide if this is an appropriate investment. I’ve read the comprehensive reports of Greeneyedhawk, Drillbit, and others on this board. I now own over 2.5 million shares of AMEP. If you are a basher, don’t even respond to this posting until September 2006, when I will first begin to consider taking a few profits. I’m a long-term investor, not a day-flipper or basher. Those who share my investment interests in this stock and elect to purchase some shares will be well rewarded. Few investments offer such high potential returns at such a low, essentially absent, risk. Of course, do your own due diligence, and invest only what you can afford to lose. This is still a penny stock, both a great opportunity and also a requirement for exhaustive research and diligence. I hope this helps investors make a wise investment decision.
It’s pretty clear that just the company’s Barnett Shale lease rights far exceed the present share price. With the exception of two or three day’s involvement of stock flipping momentum players, the AMEP share price has been moving up nicely in the last months. But how will the market react should the company hire an outside consultant to professionally assess the value of its leaseholdings? Likewise, how will the market react in a few weeks or months when the first horizontal bores are completed and copious amounts of gas come pouring out? Fourth grade arithmetic will then show the potential of new wells over 7000 acres.
Right now, those of us in the know are buying as many shares as we can, knowing that we shall reap the greatest gains when others finally begin to accumulate shares based upon actual well yields, not the anticipated ones I’m working with. Some of us are in very early, with giant share counts. In the last two years, I’ve had a significant 3-bagger and a stunning 10-bagger, with the returns of each going into AMEP. I can see it at anywhere from $2 to $5 or more in five years. While the traders and bashers do their daily machinations, I’m just sitting back and smiling. In the last year, I’ve already got a 2-bagger with AMEP. Check back with me in a year or so. Let’s see who made the right decisions.
My best to all.
Rick,
Some readers might have been impressed with your astute commentary on the probable future of AMEP, particularly your copious pronouncements of excessive and nefarious share count dilution by company insiders. I’m sure that you presently make no claim that today’s corporate announcement of limited share offerings is bogus or fraudulent. So tell us please, in detail then, the dangers we now encounter.
You just posted (elsewhere) this message:
“Of course, none of you are the least bit interested in what he meant by "other financing alternatives." Anyone want to venture a guess as to what those might be? You will learn the hard way, no doubt.”
I’m very interested in these “other financing alternatives.” Please enlighten me, so I’ll know what to look out for. I watched you claim for months that severe dilution was going on, with the strong implications that any purchased shares would decline to sup-penny and eventually be worthless. Those prognostications appear not to have been based on either facts or recent price trends.
Therefore, those few who retain the slightest hope of understanding the dangers of investing in AMEP by considering your authoritative announcements eagerly await your informative annunciations of the “other financing alternatives.” We’ve been impressed with everything you’ve posted so far. Clue us in, please.
Falconer66
I’ve got a good number (in mid-six digits) of AMEP shares. So I’m very interested in AMEP developments. I was first attracted to the company with its unique heavy oil extraction material, the HOA-800 product. The reported increase in production yields from depleted wells was very interesting – and could result in some very nice revenues in the future.
But the AMEP story has changed dramatically in the last few months with the emerging Barnett Shale play. The current story is no longer the HOA-800 additive. That’s a future AMEP chapter.
The emerging story is the Barnett Shale formation and what it portends for astute AMEP investors.
An AMEP press release (http://www.americanenergyproduction.com/PR-04-07-27.html) states that one of its first Barnett Shale wells had the potential of producing $5000/day of revenues. Another PR notes that AMEP has drilling rights on over 8000 acres of Barnett Shale (http://www.americanenergyproduction.com/PR-04-09-14.html). A recent posting stated that well densities in these properties will be as much as one well per 40 acres. That would be a total of 200 AMEP wells over the very productive and untapped Barnett Shale.
What might these data mean to an AMEP investor? The outright multiplication of each of these numbers is too great to realistically imagine. Two-hundred Barnett Shale wells producing $5000 of revenue each per day totals out at one million dollars each working day. That, of course, yields a revenue total of $365 million each year. With, perhaps, 250 million outstanding AMEP shares, that’s an amazing future return on a 2-cent stock.
I’m not anticipating the realization of any of those large numbers, nice as any would be. But what if AMEP is able to achieve just a quarter of the total?
It’s fair to presume that 200 wells would be drilled (drilling leases provide for drilling). But let’s presume that instead of $5000 of daily hydrocarbon sales from each well, only $2000 is earned. That’s a 60% reduction from the initial yields of the first test well. Fair enough. What final numbers then result?
Two hundred wells breathing out $2000 of methane and oily liquids each day means that AMEP takes in daily revenues of a mere $400,000. For the year, that totals $146 million. I’m not an experienced O&G investor, so I don’t know how much of that can be expected to flow past taxes, operating expenses, and other costs down to the dividend-generating bottom line. I’ll let others offer their projections on the final potential dividends.
But whatever the figure, the potential returns are enormous. Let’s presume, for example that only one quarter of these revenues are left for dividend distribution. One quarter of $146 million is $36.5 million. At 250 million shares, that's a potential annual dividend of 14 cents. If the share count inflates to 300 million (perhaps to internally finance more Barnett Shale acreage) the dividend drops to a mere 12 cents.
The potential of AMEP is apparent. I’ll buy a 2-cent stock that can yield a dime or more of dividends any day – even if I have to wait a few years for this yield to develop.
Bashers will state that I haven’t read nor understood the company financials, that there are inordinate outstanding obligations, and that the company will fold after enough vaporous shares have been issued to gullible investors like me. They will claim that several reputable posters on this board (who actually know the O&G business inside and out, and have visited AMEP field sites) are nefarious insiders perpetuating purported schemes.
As an investor, each will have to personally decide if AMEP is an appropriate investment. For those with questions, check everything and decide. If the bashers’ posts seem relevant, put all of this on delete and never come back. If the bashers seem reasonable, you have no business considering any OTC stock whatsoever.
But if AMEP appears to be what I believe it really is, a rare opportunity to participate handsomely in a rather pure play of the developing Barnett Shale hydrocarbon resource, stay tuned. Fourth-quarter production results will appear in January or February, and there is every reason to believe that, once again, they will be orders of magnitude above previous results. Wells will be drilled into the Barnett using new fracturing techniques, resulting in high successes, both in percent of successful wells and in large production outputs.
A long series of posts by an astute AMEP investor has shown how numerous other O&G companies are rushing to get Barnett drilling rights. It’s not just AMEP operators who have discovered the great potential of the Barnett. AMEP has gotten in early and has rights to 8000 acres.
If you think any of this is a sham, go back to Index funds or large cap blue chips. CD’s are yielding 3% at some banks. But if you’ve got some funds that your budget allows to go for promising investments, AMEP is where some of that should be.
The key is that AMEP actually has drilling rights, and actually has wells in the Barnett, with distribution pipe nearby. I’ll be watching this closely in 2005.
My best to all.