If you buy the share now at this levels you just pay for Kenya PSC and get all the other assets for free. Next farm out project is Chad, Simba has 100% interests in three prospective oil & gas blocks within the Doba, Doseo and Erdis basins.
* Guinea, Bove Basin
* Liberia
* Mali
* Ghana
* Chad
Valuation: Farm-out underpins share price
In total, the MoU values the exploration carry (and back costs) at US$39.6m, implying Simba’s stake is worth US$20.4m or C$0.09/share, underpinning the current price, once confirmed. The farm-out removes the short-term risk of a substantial equity raise in the near term and should give Simba confidence in its negotiations on farm-ins in Chad and Guinea. We note Griffiths Energy/Caracal’s proposed IPO should increase investor interest in Chad in the coming months (see our January note for further details on Chad). Following this announcement we have made adjustments to our NAV, reducing the value of Kenya in line with the farm-in value, but increasing that of Chad, and we introduce Guinea for the first time. Our RENAV, based on farm-in valuations, now lies at C$0.16/share. Over time, exploration success could increase this value substantially.
/ Edison