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Bullboard - Stock Discussion Forum Africa Energy Corp V.AFE

Alternate Symbol(s):  HPMCF

Africa Energy Corp. is a Canada-based oil and gas exploration company focused on South Africa. The Company owns approximately 49% of the common shares and 100% of the Class B shares in Main Street 1549 Proprietary Limited (Main Street 1549), which holds a 10% participating interest in the Exploration Rights for Block 11B/12B offshore the Republic of South Africa (Block 11B/12B). Block 11B/12B... see more

TSXV:AFE - Post Discussion

Africa Energy Corp > Pareto Research Update on AFE
View:
Post by cjohansen76 on Sep 02, 2022 10:23am

Pareto Research Update on AFE

Imminent positive news

We expect operator Total to deliver the application for Production Right on Block 11B/12B shortly. This will be an important milestone for the development of the large resources, which with the fast-track development concept have potential to provide South Africa with much needed natural gas from 2026-27 onwards. In addition, the much-anticipated Gazania-1 well targeting >300 mmboe of unrisked resources will start drilling later this month with results expected in October. If successful, we think this can double Africa Energy’s share price while its existing discoveries provide support for the current valuation. BUY/TP SEK 4.5 reiterated

Application for Production Right on block 11B/12B by 6 September

We expect operator Total to deliver an application for Production Right on Block 11B/12B (10% WI) offshore South Africa by the latest 6 September. This will officially take the project into the development stage and be a positive milestone. The partners have already stated the ambition of fast tracking the Phase 1 development by utilizing existing infrastructure, which also reduces costs and enables first gas by 2026-27. Importantly, there is existing demand in South Africa for the gas volumes implying that there should be limited third party risk related to build out of new infrastructure. The timing of the gas sales agreement is uncertain and will be the next significant milestone following the Production Right application. See our July report (link) for further details on the development.

Exploration drilling at Gazania-1 to commence in late September

Another key event near-term is the drilling of the Gazania-1 exploration well (27.5% WI) offshore South Africa, which is carried by the partners (zero costs to Africa Energy). The well is expected to spud in late September with results 25-30 days thereafter. The well will test two prospects and target a total of >300 mill boe of gross unrisked resources, but also smaller discoveries are expected to be commercial (threshold around 50 mill boe) due to a favorable operating conditions and fiscal terms. We estimate an unrisked value potential of SEK 2.5-3.0/share based on our long-term oil price assumptions of USD 70/bbl.

BUY reiterated & Target Price SEK 4.50

We estimate Africa Energy’s NAV at SEK 5.7/share at USD 70/bbl Brent long term and a gas price of USD 6/MMbtu. Of this, existing discoveries and cash is valued at SEK 2.8/share. This implies a low valuation of the additional derisked potential at Block 11B/12B and the upcoming Gazania-1 exploration well, and/or a significant discount on the Phase 1 development that should narrow as the project progress. The company had USD 7.2m of cash at the end of Q2 and have had a low burn rate of USD 1.8m/quarter in H1’22. This implies that Africa Energy is financed well into 2023, providing time to deliver on the abovementioned milestones, and that a potential funding need should be limited (funding for 1 year equals less than 2% of the market cap). In addition, we highlight Africa Energy as an increasingly attractive acquisition target given the vastly improved attractiveness of gas resources over the last year. BUY/TP SEK 4.5 reiterated.
Comment by toptiger on Sep 02, 2022 3:14pm
looks real good to me. you might be carl from our aoi fbook page, just a guess
Comment by papaloapan on Sep 04, 2022 5:09pm
Trying to understand Pareto's number .. A current unrisked value of 11b.12b of 4.5 SEK (US$0.42)  and the value of current discoveries 2.8 SEK (US 0.26). Current unrisked value of Gazania at 3sek ($0.28) and could double stock price with a hit. We have 10% of 11b/12b with 3.4 trillion cft  of gas (586mm boe and likely much more having drilled only 2 of 5 planned wells) and 27.5 ...more  
Comment by toptiger on Sep 05, 2022 3:30am
think they are underestimating the gas value, it is or should be nearer 6 tcf and saw a video over weekend that says 20 tcf all done is not unreasonable as keith says, big fields get bigger
Comment by papaloapan on Sep 05, 2022 3:02pm
I agree.  Assuming they move to sell once the plan is filed and offtake agreement done, the question is what to they get for the exisitng discovery, and what do they get for the prospective.  (or can they separate them)
Comment by toptiger on Sep 06, 2022 3:38am
hopefully they are patient, dont want any quick fire sale, hopefully total know the field can only get bigger, so this could really be worth neaer $1 at some point, though thats a bit of a stretch.....but it is there, especially with gazania
Comment by Patriot on Oct 08, 2022 11:17am
Nobody cares abuot this stock anymore .It is so diluted nobody wants it.Management has all the shareholders trapped and no way out but sell at a loss.4,500,000,000 shares .We would be over a dollar now if we were not so diluted.Just my opinion.
Comment by cjohansen76 on Oct 09, 2022 11:55am
No, they have 1,400m shares out.  They farmed-out block 2b for a carried well and have not raised money since 2020.  The stock is up 60% this year in a terrible market.  Gazania drilling results and the Total gas agreement are coming any day now...
Comment by Patriot on Oct 10, 2022 11:31am
This post has been removed in accordance with Community Policy
Comment by Patriot on Oct 10, 2022 11:35am
ca Energy Corp Symbol AFE Shares Issued 1,404,817,250 Close 2022-10-03 C$ 0.385 Recent Sedar Documents View Original Document That is not 1.4 million
Comment by cjohansen76 on Oct 10, 2022 12:23pm
Yep, that's 1,400m (not 4,500m like you said).
Comment by Patriot on Oct 10, 2022 12:33pm
That is 1.4 Billion where I come from
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