Scotia ITRADE COMMENTS ON AOI https://scotia.bluematrix.com/sellside/EmailDocViewer?encrypt=8d76b0c9-1845-418a-9abc-62809073f0e0&mime=html&co=scotia&id=replaceme@bluematrix.com&source=mail
Africa Oil Corp.
Investing in Namibian Drilling Program
OUR TAKE: Neutral. AOI invested $31M in Impact Oil & Gas (Impact), which modestly increased its working interest in the company. The funds will be used to complete the appraisal drilling on the Venus discovery as well as exploration drilling on the Nara prospect. We view successful results from the Venus appraisal program as a major catalyst for AOI. See our note titled Upgrading AOI on Venus Appraisal Upside for more information.
Funding provided for Namibian exploration program. AOI invested $31.4M in Impact as part of Impact’s $95M open offer. This investment has increased AOI’s interest in Impact from 30.9% to 31.1%. Impact will use the funds to pay for its share of the appraisal drilling on the Venus discovery and exploration/appraisal drilling on the adjacent block (the Nara prospect). Management noted that the Venus-1A appraisal well was spud on March 4th and flow tests will be performed in Q2/Q3. This open offer suggests that Impact’s value is ~$1B ($320M/C$430M net to AOI), which is roughly in line with our risked valuation of Impact.