Significant additional discovery in the Africa Oil Ngamia well

By pj2nola, May 7, 2012

With this additional discovery and the primary target at 2700 still remaining, does the valuation of the company increase to several billion dollars? Could you please re-visit the company valuation model based upon a much higher confidence level of even larger reserves..

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6 Comments on " Significant additional discovery in the Africa Oil Ngamia well"

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Travis Johnson, Stock Gumshoe
Hi Prabhat, I’ve never been able to put together much of a valuation argument for Africa Oil other than one based on the de-risked reserves and the comparables of the fairly recent Uganda asset sales — which means it’s all very up in the air, since the question of how much to pay for a barrel in the ground varies widely depending on reservoir size, government policy, transportation options, etc., and, of course, though we have a much higher certainty of commercial production capacity now with the excellent updated results (100 meters of “pay dirt” versus the prior very good… Read more »

Hit $10.03 today and backing off a bit now. Wish I could figure out a way to trade it or had a clue where it might be headed. $2 .1 billion cap now.


It is unclear if these oil finds could be translated to commercial potential, and what the long term prognosis of such a find. We keep hearing that East Africa is the ‘last’ unexplored basin, and this could be a game changer.
Now that the market cap is over 2.1 Billion dollars, it is unclear if this rise is justified. I wonder if anyone has any insight on the ‘best’ case scenerio and the worst case scenerio.
Thanks Travis, for pointing this one out. I bought a small amount, and has done well so far.

Travis Johnson, Stock Gumshoe
It’s true, they haven’t yet done the analysis or even completed drilling the first well yet — but clearly there’s a building optimism from Tullow (their partner) as well as among investors, and they announced today that they’ve found yet more oil in that first well as they’ve hit one of their primary target zones … and they’re not even to the target depth on one well yet (that announcement is why they’re up another 10-15% today). The first Somalia well they’re drilling, in contrast, has been a bust so far (they found one “pay zone” but it wasn’t enough… Read more »