If the vendor has a project of dubious value and he wants to sell, he has to tell a good story to keep up the interest in his company. He did say that AOW did not have managers with experience in US oil industry but he knew that from day 1. If that was his problem he would not have started the negotiations. And AOW said that they would use the vendor's experience, and initially his people were keen to come on board. So when the due diligence did not satisfy AOW, he needed a good story to strengthen his future negotiating position. If the industry knows that AOW did not get satisfactory answers to due diligence, who else will bother looking at a purchase? But at this point in time the oil price has increased nicely and his assets may not be "distressed assets" as they were when negotiations commenced back in October or earlier. The need to sell may have decreased. AOW's strategy was to pick up distressed assets at rock bottom prices and to build up a portfolio of such assets. I believe that there have been a lot of oil properties available at bargain prices. It will be a little bit more difficult at current oil prices but I think that AOW have the capability to achieve the desired result, and we understand that there are other assets under investigation at this time. The strategy that AOW employ is still good.
AOW Price at posting:
6.5¢ Sentiment: Buy Disclosure: Held
