Just a quick note to let you know that I bought a few more shares of Africa Oil for my portfolio late this afternoon (AOI in Canada, AOIFF on the pinks). The stock has been teased like crazy by Christian DeHaemer, but I think the fundamental land position and partnerships underlying the company are stronger than his last successful-then-crashing aggressive teaser target, Petro Matad in Mongolia.
I like the partnerships with Tullow Oil, where Tullow is the operator. I like the broad exploration portfolio in Kenya. I like the fact that they have their exploration funded through the end of next year. And I like the fact that they’ve offloaded much of their Somalia/Puntland position into a new company — they still own just over half of the new company, but now the Somali stuff doesn’t have to be a big part of the argument, and the Somali stuff — though geologically interesting — turns me off due to the additional political risk. Beyond those general things that support my interest in this still very speculative position (they’ve done very little drilling), the near-term catalyst is that they expect to spud at least one exploratory well in Kenya in the fourth quarter — and since they haven’t announced it yet, that means it will be sometime in the next six or seven weeks.
Could be bad news, of course, but there’s potential for some attention-getting news and that seems a reasonable time to add to my position — if the news moves the stock substantially one way or the other I may trade around a small core position while I wait to see what develops from their exploration over the next year or so.
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