AMEP DD #1 ... for new eyes.
NOTES, highlights, & comments from the full 10Q recently released on Aug 15th.
I am reposting my notes, with new comments, for anyone who has not studied the lengthy full 10Qsb. It was a good 10Q when read in it's entirety. Bashers are saying that AMEP is in deep debt, ...not so; the opposite in fact, read for yourselves the true facts filed with the SEC.
Refer to the 10QSB and/or the AMEP CEO Charles Bitters for any further details and/or explanations:
Outstanding shares as of end of reporting Q: 302,030, 234
Last reporting Q was 298,030,234
An increase of 4 M shares.
Note: See 10Q re company converting to a BDC(Business Development Company) when evaluating the following sections, AMEP as a BDC has four wholly owned investees:
AMEP expenses:
($114,822) total loss from operations
($91,761) total loss other expenses (interest expense)
Total Net Loss AMEP ($206,583) ... year ago ($702,071)
Net cashed used in operating activities: ($201,663) ...
year ago ($261,143)
Net cash used in investing activities:
($136,556) ... Year ago ($1,044,115)
Cost and fair value of AMEP investees: $2,733,342
Refer to 10Q; the 'fair value'* is based on the cost of the investee to AMEP (much is the original 'historical' cost)...
Production Resources Inc. (PRI) ... $1,284,598 (historical cost)
Oil America Group Inc. (OAGI) ...... $117,000( bought with 'restricted 144' shares)
Bend Arch Petroleum Inc. (BAPI).....$1,256,188
AMEP strategic Investments INC. .... $75,556
Total AMEP Investments in the investees: ...$2,733,342 (The four investees are wholly owned by AMEP).
*BDC's are valued based on the collective value of their wholly owned(in AMEP's case) investees. Consider the potential 'fair value' adjustment by an independent O&NG engineer, when AMEP can show a profit from just a few wells, of the potential of many on the 7,000 acres over the Barnett, plus the 193 PRI wells being brought back onto production with increases using HOA-800.
Do you think an Oil and NG company with 7,000 acres in the Barnett(BAPI) + 193 (PRI) oil wells being re-worked and put back into production + the current near 2 Million in annual O&NG revenues (does not count the est $570,000 annual revenues from the vertical NASH 1-c well recently completed)is fair valued at $2,733,342? Add in owned and paid for 'Crane Carrier Portable Rig' + NG compressors + Oil storage tanks + surface and downhole pumps + miles of owned sales natural gas lines, and now a money making big 8,000 ft capacity Ideco Rig ??? ...$2,733,342 is fair value?? A potentially big Upside advantage on re-assessment, IMHO.
Calculate how many O&NG wells that AMEP can drill on 7,000 acres of 100% blanket coverage of the huge and prolific Barnett Shale formation, with a well spacing of 80 acres, or even 160, (160 IMVHO).....that is a lot of wells that will produce gas, and Oil in AMEP's case. The Barnett is the hottest formation in the US on shore, ...there is a reason. And with Sept 1st great news on the new Ideco Big Rig bought by AMEP, the 7,000 acres can be exploited for production right away.
Debt as of end of Q was ($18,153)lease payable (bashers say AMEP is deep in debt, that is simply not true).
Bank notes payable ($17,464) [dated Mar 2001, for the previous shell company's computer equipment]
Bank loan for auto ($4,818) [final payment due Feb 2006]
Total convertible Debentures due Dec 1, 2005 ($335,665)
Total Debt is $367,102 counting CD:
($400,000) CD (before debt discount of $64,335)
($22,284) total bank loans (auto + previous shell Co note)
($18,153) lease payable
Total: ($367,102), ....ie ($440,435) less $64,335 debt discount
10Q note concerning the BDC(Business Development Company), when AMEP becomes profitable(less than a year to profitability per the CEO note on the web site), ...per the 10Q:
"98% of AMEP income will be distributed on a quarterly basis to AMEP stockholders (both income and net capital gains)".
Most of the 10Q is old news, as the knowing posters have noted on the RB thread. Considering the quarterly report in it's entirety, it was a very good report. IMHO, the next two Qs will show a turn around based on O&NG revenues with the additional new Bend Arch and PRI wells increasing the production; starting with the successful NASH 1-c, which was just completed and did not contribute to the revenues lastQ, followed by two horizontal wells with 100% NWI(Net Working Interest) by wholly owned Bend Arch, ...and that followed by three horizontal wells by wholly owned OAG. Total of 5 horizontals are scheduled for drilling with AMEP's newly acquired Ideco 8,000 ft capacity Big Rig. Then add in the wells PRI will treat with HOA-800 and bring on line this Q from the 193 well project.
The most important near term activity for AMEP and it's shareholders will be the results of the next two cheap-to-drill re-entries on good heavy 5 1/2" casing that will turn horizontal when it reaches the Barnett formation. Drilling to be done on time with AMEP owning it's own rig, and not have to wait on contractors in extremely high demand. These two wells will be deepened into the Barnett, and will likely be high volume horizontal wells of considerable frac length in the pay zone. The 'test' Nash 1-C well drilled vertically into the Barnett formation was a big success, when considering the following two 100% NWI horizontal wells will be much, much higher producers, per the independent DD on the big volume advantage of horizontal over vertical drilled wells.
From the Nash announcement (vertical well) on Aug 2nd:
"At today's market price of $60.00/barrel for oil and $8.00/mcf of natural gas this would be approximately $1600.00/day or $48,000.00/month or $570,000.00/year gross revenue."
(Now Oil is higher than $60.00, and NG increased from $8.00 to +$11.00 since the above announcement, this vertical well will approach grossing nearly a million a year if there are any further increases in energy prices)
It is very likely IMHO, that these next two potentially higher producing horizontal wells that AMEP will be drilling, plus the Nash, will put AMEP over the top, ...and profitable. It is important to note that AMEP has 100% of the NWI (net working interest) on these next two horizontals going into the prolific Barnett formation. It is also extremely important to note, that AMEP is getting quantities of Oil with the NG; most Barnett wells are NG producers only per the extensive DD on Barnett wells. AMEP is very, very fortunate to have this type of highly desirable Barnett acreage (7,000 acres) that produces high grade Oil with the Natural Gas.
GL all AMEP longs, the next two horizontal wells to be drilled next with the newly acquired big Ideco Rig will be of high interest, and make the patience, ,,,and SP pay off big IMVHO.
Technically, this looks bullish for multiple gains, see technicals on AMEP iHub board, as the way is clear for moves much higher, IMVHO and the technical read. Look at the 3 Yr chart, the SP is coming off a saucer bottom earlier this year, the SP is still historically low. Fundamentally AMEP's cold hard assets and Oil and NG revenues, FAR outweighs the tiny Market Cap, and certainly the $2.7M 'Fair Value' assigned by the 10Q (that will change drastically UP, when the CEO decides to have an independent Oil and NG engineering firm come in and re-evaluate the current and true values of all four of AMEP's investees, ...big upside 'surprise' potential on that news making event).
Sept 1st news on AMEP's purchase of a big 8,000' capacity Ideco Rig could not be more bullish for AMEP, and the 7,000 acres in the highly prolific Barnett to be developed independently ...and in these times of energy shortages. Don't forget about the wholly owned PRI 193 oil wells and pumps project, that is just getting underway, huge upside potential there, where AMEP's PRI will use AMEP's owned and paid for 'Crane Carrier Portable Rig' to re-work and start bring into production from the PRI 193 wells lease.
Going UP, ...MC & SP cheap, it's still early.
GL all AMEP longs
... %^ greeneyedhawk
