RedChip Visibility, a division of RedChip Companies, Inc., announced that the company has issued a research update regarding American Energy Group Ltd. ( AEGG.OB). American Energy Group is a leading, non-operating oil and gas company with upside from drilling activities in Pakistan.
Clay Mahaffey, CFA of RedChip Research, stated, “In our Initiation Report dated May 15, 2007, I presented a case for an $8.00/share, 24-month target price. Since then the stock has fallen from $1.00 to a low of $0.44/share. This was due to two factors: 1) Failure to meet the assumed near-term catalyst schedule and, 2) Reaction to political turmoil in Pakistan. Unfortunately, blood is literally running in the streets in the country; but, nevertheless, this looks like a classic buying opportunity for aggressive investors.”
Mr. Mahaffey continued to say, “The political situation is essentially irrelevant to the gas reserves, but perceptions of political risk, whether right or wrong, exist in the minds of some. In my opinion, the collapse of Pakistan and a radical Islamic take over is highly unlikely since the Army and Musharaff have all of the power and are prepared to take whatever steps are necessary to restore order; they have done it before. In addition, there is no risk that petroleum companies will be nationalized under Musharaff since, under his control, the government started to privatize the largest exploration company in Pakistan — Oil and Gas Development Limited (OGDC) — last year.“
“Consequently, little has changed to justify changing the original estimated, ultimate value of $8.00/share made in May 2007. However, the assumed capital budget and timeline were overly optimistic. A more realistic 12-month price target is $4.00, assuming certain modest milestones are met.”
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