American Oil & Gas, Inc. (AEZ)

1) In O & G Production for small cap to mid-majors the name of the game is 2P and 3P leasehold position. Those holding Aces in this regard hold "Company Makers".

2) If you are playing the O & G game, success rate, discovery cost per BBL, IBP and EUR move 2P and 3P to Proved Producing and monetize 1).

3) Players in the Bakken are approaching 100% success rates with discovery costs dropping from $30+ to <$15 a BBL. IBP has in fields adjacent to Goliath moved from 1,500 BBL to nearly 4,000 BBL over the last year with technology. EUR's are driven by simple paybacks below 18 months and expected life cycles of 20+ years.

4) Listen to the presentations of the Bakken players. Print off section maps of Western ND and MT. Plot the producers and identify the lease positions held by the players that are available in their presentations. Note the reported IBP's as these wells are drilled. Get to the basics and ignore all the he said she said and short term market gyrations. This is one case where fundamental trumps technical in the short to intermediate term.... not just the long term.

Conclusion: If you are a producer playing the game you had better be playing the Bakken and you better have accumulated your lease position when leases were cheap!

Summary: AEZ, BEXP, WLL, and a few others are dramatically undervalued even at seemingly astronomical Future PE's. The value of the lease positions (per share outstanding) alone on these players is in excess of 25% of current market price per share. As the leases positions are drilled out and 2P/3P are converted to Proved Producing these players hard cash value becomes 20 to 30 times current prices.

AEZ has a too high valuation compared to its sales potential. It is also one of the most loss making companies.