3SOF

Well, as usual, very interesting and amusement posts on AMEP.OB. TRUNK clarified that the AMEP on cumulina's article wasn't the same we're dealing here.

It's good to be back on the daily updates  , but I had a bug on my database and needed to spend the whole Saturday building it up again (of course, the computer did it, not me, I was still in bed getting better). Because of this the chart is a bit different than the usual, since these are all new charts that I needed to annotate again.

Anyway, I'm still holding AMEP.OB, as you can always check on the 3 Stocks on Fire portfolio page, which you can find on the lateral menu of www.3stocksonfire.org.

The stock did break the ascending support on the downside, but that doesn't worry me much, as I've said in previous analysis. That ascending trendline was too steep. We all know oil is rising a lot, as expected, but that didn't fuel AMEP stock. That could be (and it is) a cause for concern, since if it doesn't go up with this kind of market in oil, when will it go up? Another thinking we could make was «is there something wrong with the company, and that's the explanation why it doesn't go up with oil?»

These are all legitimate thoughts, but from my market experience I believe this is not the case with AMEP. What's going on with AMEP.OB is that it is a penny stock, a micro cap stock. Penny stocks don't change daily with macro developments, and certainly not with the general market. They have a life of their own.

AMEP's thread is a very long one, but somewhere on this thread I've said that 50% of the move in a bull market is made in 10% of the time, and frequently that's the speculative bubble time. Now, these micro caps are left on the floor until just about a couple of months or weeks before the market top. They don't discount developments. They're forgotten. That's why they suddenly rise 5 or 10 fold or more, and that's the best sign you can get that the bull market (in this case the speculative bubble in oil) is near its end.

When all big and medium size caps are fully priced (or completely overpriced), investors turn, all at the same time, to these forgotten stocks, they're cleaning the dish (I don't know if you have this expression in English, but you know what I mean).

So, AMEP might be able to just stand here for some weeks or months and then rise 1000% in just 1 week or two. That's how it works.

But, no stock pick or stock strategy, being it very small or not, should be on a portfolio without a safety net. So, even believing this stock will go up a lot, I don't want to see it closing below the 50 day moving average, which is a good support suggested by aitech61 (I'll applaud him).

Results for the second quarter were out today after the close. Nothing special, of course being a BDC (Business Development Company) AMEP.OB still has no revenues, but I believe it will.

Net loss for the 6 months ending June 30, 2005, was reduced from $4,003,511 in 2004 to $661,246 this year.

Reading the report (or some of it, if I was to read it all it would take me all night) I understand that the medium term success of the company is not only connected to oil prices but also to the ability of its subsidiaries to actually produce and sell oil.

Off course, the higher the oil price the better the prospects for the company when it starts selling oil. But it must start, at least a little, before the bubble bursts.

We'll see ... in the meantime I'll hold the stock as long as it closes above the 50 day moving average, which tomorrow will stand at $0.0175.

AMEP 10Q NOTES, highlights, & comments from the full 10Q (additional notes)
I read the complete full version of the 10QSB several times and took notes. The following are my personal highlights, notes, and comments; refer to the 10Q 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 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).
*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 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 Crane Carrier Potable Rig + NG compressors + Oil storage tanks + surface and downhole pumps + miles of owned sales natural gas lines ...$2,733,342 is fair value?? A potentially big Upside advantage, IMHO.

Debt as of end of Q was ($18,153)lease payable
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) [less $134,335 debt discount]

Total Debt: ($367,100)
($400,000) CD (before debt discount)
($22,284) total bank loans (auto + previous shell Co note)
($18,153) lease payable
Total: ($367,100), ....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 good report. IMHO, the next two Qs will show a turn around based on O&NG revenues with the additional new wells increasing the production; starting with the successful NASH 1-c, followed by two horizontal wells.
The most important 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. These two well 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 horizontal wells will be much higher producers, per the independent DD on the big volume advantage of horizontal over vertical drilled wells.
From the Nash announcement (vertical well):
"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."
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 acerage (7,000 acres) that produces high grade Oil with the Natural Gas.

GL all AMEP longs, the next two wells will be of high interest, and make the patience pay off IMVHO.
BTW, I appreciate the technicals posted here by David Randolph and others.
... %^ greeneyedhawk

thanks greeneyedhawk!  that was awesome, not sure how you got so much info on the company, but incredible dd and applauded your first post.

Indeed, well done.  Applaud.

Nice chart should be nice gainer by yearend.


XX

Not a good look for the opening (.0178/.0179).   May hit David's exit point, or perhaps take a nice bounce off that point and finally start an upward trend.  This stock is definitely trying my patience.  Hanging in there for now.

Quote from: atalltexan on August 16, 2005, 09:26:24 AM
  This stock is definitely trying my patience.  Hanging in there for now.

Mine too and I have it in both my accounts.
P

Shaking out the weak hands is one thing, but there must some underling issue with this company that we're not seeing for it to continue to fall in the face of record oil prices.

I'm holding all of mine.. Nite has been buying everything up.. just taking out the trash, but I'm willing to wait longer term

Ugly selloff, but looking for a pivot bounce point $0.013

Couldn't resist.  Bought additional at .0138.  Will balance out my cost on this holding.

Intraday bounced $0.013 (bottom white line) and broke downtrend line (upper white line). Lets see how rest of the day this behaves, probably a good buy Texan.

Great graph AussieTrader!
What soft are you using?

It's quotetracker, I believe. It's a free software, I love it too. Go to www.quotetracker.com and download if you want (I believe aussie has some paid features).

If AMEP.OB could close above $0.0175 this would be an amazing reversal day ... we'll see, I'll come to evaluate by the close.