RE: investec report Just rereading the investec report.. they just don't know what they are talking about.. Look at this research report from Citibank from July, I think this guys gets it.
In Swedish Kroners -range from 95 t0 135 or $14.00 to $20.00....just for Lockichar Basin.
Will change upwards with each positive confirmation drill.
AFRICA OIL – POSITIVE UPDATE FROM NGAMIA WELL
* Ngamia well encounters additional net pay - The Ngamia-1 well (Block 10BB) has potentially found additional net pay of up to 43 metres in the Lower Lokhone sands. Neither Tullow nor Africa Oil have provided an estimate on the resource range at Ngamia, preferring to wait until testing is completed following the drilling of the nearby Twiga prospect. However, with up to 150m of net pay now encountered (versus a pre-drill net pay estimate of 17m and pre-drill resource estimate of 35-45m boe), we believe the discovery could potentially exceed our current resource range of 200-250m boe. We currently include SEK20/share risked for Ngamia in our base NAV of SEK95/share, but unrisked it could be worth more than SEK27/share.
* Ngamia resource potential to be confirmed following testing - Unlike Africa Oil, Tullow has not provided a potential net pay estimate for the Lower Lokhone section until testing is completed. The Ngamia-1 was drilled to a total depth of 2,340 metres, which was around 360 metres shallower than pre-drill estimates. The well encountered the basin bounding fault higher than expected, which is interpreted to have cut out some 100 metres of prospective reservoirs. Further away from the fault Tullow and Africa Oil expect to encounter the complete reservoir section and for reservoir thickness and quality to improve. The partners plan to test a number of the zones in the Upper and Lower Lokhone Sands to confirm the resource potential.
* Ngamia discovery de-risks material follow-on potential - The Ngamia well has de-risked at least 8 similar prospects that lie directly on the Lokichar trend in Block 10BB (Kenya). We have included gross prospective resources of 1.2bn bbls for these prospects (SEK64/share risked) in our base case NAV of SEK95/share, but unrisked we believe these wells could be worth up to SEK135/share. In addition, Tullow and Africa Oil have indicated over 100 leads and prospects have now been identified in 7 separate basins in the Kenya and Ethiopia Tertiary rift basin acreage.
* Africa Oil offers attractive risk-reward - Africa Oil has built a unique acreage position (300k sq. kms) across four separate rift systems in East Africa (Kenya, Ethiopia and Puntland), which we think will be almost impossible to replicate. We see significant upside potential for the shares and the company has sufficient funds to complete planned E&A activity until 4Q12. However, with no producing assets, we estimate Africa Oil needs c.US$150-200m to fund its share of exploration costs as activity accelerates in 2013-14. Industry interest to gain entry in the region remains high and Africa Oil could raise some funds (c.US$20-30m) through farm outs (i.e. Block 9 in Kenya). However, we believe it likely that Africa Oil will also need to raise equity of c.US$150m. Given the upside potential from the planned drilling programme and the support from the Lundin family (which owns c.10% of the company), we believe an equity raising should be achievable despite uncertain markets. We already incorporate the dilution of a US$150m equity raising (at the current share price) in our base NAV of SEK95/share.