Africa Energy Corp V.AFE

Why afe is down?

[Harel1976]

The luiperd discovery is huge but was already over priced when afe was at the 50's. How come total halted the exploration campaign? The big hope in luiperd was to discover oil, if they would then afe was at the 70's and the campaign would continue, but they found gas! The amount of gas in both discoveries is enough for SA for 50 years, they will tie in via 200 km pipeline and start producing as fast as they can- ~4 years time. More gas reserves will be worth 0, nothing to do with the gas, lng project will be un economical in the coming years or more. As long as no oil play will be proved in this basin, thats it. Afe's MC is 290m$cad, with 600m shares dilution its 450m$cad! Afe is now over priced when I compere it to other oilers with producing gas fields.

[Schreibzey]

I think the current pricing is based on the private placement costs related to the related party transaction with Soden, AOI, and the two Lundin enterprises. The current price seems to extend to the 1.4B shares outstanding, so the question is: to what extent is 10% of that block worth. Here's my thought, which is real simple: if the block was worth market cap of $290M at 4.9% ownership, then

[Harel1976]

I compere it to another investment i have, an israeli company that holds 15% of the biggest israeli gas field of about 1.6billion boe, it started producing early this year with high price contracts, chevron is the operator, MC 400m$cad, a lot cheaper then afe which needs to fund around 600m$ of development with first gas in 5 years.

[Schreibzey]

I'm not doubting you at all, trying to simplify in my head. If the Lundins and related parties are doubling down at $0.45/ share, I think there is more than meets the eye. I fully recognize this line of thinking can get me in trouble. 

[Harel1976]

You might be right, perhaps there are things we still dont know, but if not then the market trades on expectations, when the market was expecting 4 wells campaign the hype took the share to highs, now there is not a lot to wait for- the full analysis of luiperd, fid, f.o completion&1 exploration well in Q1 (personally dont like the shallows). Will probably trade in the coming months between

[RHertig]

I thought it was condensate which is worth triple natural gas. I guess it will come down to the test showing how much is liquid vs gas.

[GoJerez2]

The only potential lift will be if the flow rates are excellent and have significant liquids associated with it. They need to be huge to get the excitement back. Theoretically, 75metres of qaulity reservior will produce at great rates. Sadly we are tied to Total and their plans for the play which are different than AFEs Total can wait forever, AFE needs to promote activity just my 2 cents...btw i

[tadjames1]

They are testing as we speak and Garret mentioned there still may be a good chance of oil below the gas leg. Should be results soon. 

[sparticus777]

True GoJerez2, but don't forget the Block 2b well, Gazania. This well should be drilled 2Q next year and as AE holds 27.5% and the likely hydrocarbon is definitely oil, this could be a very big share price mover. Also, I think AE management and the analysts will now begin to emphasize the value of the gas and especially the condensate to a market that over reacted on the Luiperd press release.

[tdon1229]

I read ( on Facebook, I think it was) that the condensate sells at a premium to Brent.