LONDON, March 5, 2015 /PRNewswire/ --
Edison Investment Research, a leading international investment research firm, announces the initiation of full coverage of African Petroleum
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Highlights of the analysis on African Petroleum by Edison's oil & gas analysts Will Forbes, Elaine Reynolds and Ian McLelland include:
African Petroleum (APCL) is a London-based, pure-play African explorer with large working interests (WIs) in 10 offshore blocks across five countries (Côte d'Ivoire, Senegal, Sierra Leone, Liberia and The Gambia). Wells drilled by Cairn and Total in 2014 (including the largest discovery of 2014) have de-risked six blocks held by APCL. The company is actively seeking partners, discussions have advanced following the 2014 well successes and the company could make announcements in Q115 - we note that its large equity positions should give it optionality and flexibility in negotiations. Independent auditors have estimated gross prospective resources of around 7.3bnboe, which should increase in early 2015 as 3D seismic is available across all the blocks.
APCL has enormous potential across its portfolio, with around 7.3bn net prospective resources identified by CPRs, due to be updated in Q115. With no wells currently funded, it is too early to assign a RENAV, so we have looked across three valuation methods. An illustrative 250mmbbl discovery implies a $4-8/bbl value (between NOK0.3-0.8/share) on a risked basis. Recent farm-outs in the region imply gross block values of $50-400m each. Finally, the company has invested $140m in G&G work including seismic (excluding wells). We look to the progression of the farm-outs in coming months as critical for the realisation of value through time. Even with the current oil price and market sentiment, these approaches indicate significant potential upside to the current market cap.
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Formore informationplease contact:
Will Forbes, Edison Investment Research, +44-(0)20-3077-5749
Elaine Reynolds, Edison Investment Research, +44-(0)20-3077-5713
Ian McLelland, Edison Investment Research, +44-(0)20-3077-5756
oilandgas@edisongroup.com
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