Bottom CallAEI has been on my watch list for over a year and a half. I had alarms in at $0.99, reviewed it, and decided to wait.
Unfortunately its Egyptian test wells didn't hit in the targeted Jurassic layers, but AEI had hydrocarbon showss in the Cretaceous. Plugged and abandoned and going back to check the seismic for traps, etc, blah, blah, blah.
But finding an active hydrocarbon system in the basin is the key, IMHO.
It also has the Bakken potential in ND
So, value and growth potential are there.
With a 2P of 40MM barrels, a 77MM PV10, 20MM debt, EV/PV10 of 77%, discovery of an active petroleum system in its Egyptian acreage, the Stanley field as an excellent Bakken play, and getting close to a TD Sequential Buy signal, I'm going bottom fishing even though I'm a day or two early as I assume there are still sufficient shares to pick up at this level.
What really woke me up was the Bakken developments as it relates to AEI's Stanley field in Mountrail County as reported by IHS:
"Mountrail County
Two new Bakken oil fields were opened recently in a previously non-producing area of Mountrail County, North Dakota—an area significantly east of the Nesson Anticline where considerable horizontal drilling in Bakken is taking place.
EOG Resources Inc opened Parshall field with the completion of a 463-bbl-per-day horizontal Bakken discovery northwest of the town of Parshall. In its first six months on line (May-October 2006), the discovery produced 27,786 bbls of oil, 7,893,000 cu ft of gas and 60 bbls of water. October output averaged about 126 bbls of oil and 21,100 cu ft of gas daily.
A mile northwest of the discovery, EOG reportedly completed a second horizontal Bakken well producing 883 bbls of oil daily. A mile south of the discovery, the company reportedly completed a third horizontal Bakken project initially producing 1,800 bbls of oil daily.
EOG, which holds approximately 125,000 net acres in the North Dakota portion of the Bakken play—in addition to about 65,000 net acres in Montana—has locations staked for 10 more horizontal Bakken tests in the Parshall field area.
Parshall field is 10 miles west of Plaza field and about 15 miles south-southeast of Stanley field, both Madison oil pools. It's about 27 miles east of Antelope field on the Nesson Anticline, where Bakken is one of several oil pays.
Approximately 15 miles west of EOG's Parshall field and 10 miles east of Antelope field is another new, remote Bakken oil accumulation—Whiting Oil & Gas Corp's Sanish field. That field's horizontal Bakken discovery was drilled north of New Town on the Fort Berthold Indian Reservation. It produced 7,600 bbls of oil, 3.44 million cu ft of gas and 3,064 bbls of water between July and mid-October.
Nearly seven miles to the north-northwest is Whiting's second horizontal Bakken producer in the Sanish field area. It produced 6,099 bbls of oil, 7.3 million cu ft of gas and 3,331 bbls of water between July and mid-October.
Whiting estimated original oil in place at 8,653,600 bbls per 640 acres, with an estimated ultimate recovery of 175,000 bbls per typical well, or about two percent of the original oil in place. The company indicated that a single-lateral Sanish field well would initially yield 150 bbls of oil and 105,000 cu ft of gas daily and hold reserves of 175,000 bbls of oil and 140.0 million cu ft of gas. It would cost $4.0 million and return net income of $2.54 million based on a $60/bbl oil price. Its rate of return was estimated at 13 percent, with payout anticipated in 5.3 years.” From
energy.ihs.com/NR/rdonlyres/4527C727-9C2A-4D7F-847B-F1F2143440B2/0/AAPL_Final_121906.doc
It was hard to find any data on the size of the Stanley field in any of AEI's disclosures. I've got a call in to the company to see what the acreage is.
According to one dated ND survey, the Stanley field can have 39 wells in the Madison at 160 acre spacing, which I calculate works out to about 6240 acres. pg 20 or 21 at
https://www.dmr.nd.gov/downloads/1P90ReservesProject.pdf
That's a very nice Bakken play.
AEI plans to spud it's first Bakken horizontal at Stanley in the fall.