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Re: wlbne post# 22493

Tuesday, 05/08/2007 9:26:14 PM

Tuesday, May 08, 2007 9:26:14 PM

Post# of 44006
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

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