In case you didn’t notice it, Africa Oil (AOI in Canada, AOIFF on the pink sheets) made another farm-out deal for a couple of their unexplored blocks this week, with Marathon Oil this time (their major partner is Tullow).

Announcement info is here — basically, Africa Oil gets $35 million to pay for previous exploration they’ve done on these blocks (mostly seismic), and will be carried for the next $45 million or so in exploration costs, and they’re giving up another 15% of one of their blocks that Tullow is already partnered on and 50% of a (so far) less exciting block that was unpartnered.

More good news — lots of cash to speed up their compelling joint venture drilling with Tullow in Kenya and Ethiopia, but the stock was down slightly. As I’ve said several times before (all my Africa Oil comments are here), it’s really, really tough to value an exploration company that hasn’t even proven reserves yet (though they certainly had tremendous results with their first Kenya hole), but you can certainly make a case that the company’s valuation is justified by any reasonably optimistic projection for just their first discovery … and that the discovery is “derisking” the other exploration blocks where they’re hunting for geologically similar prospects. There are lots of risks involved before oil starts to flow — including significant political and infrastructure challenges, so they’re not going to be filling oil tankers with this production next year or even the year after, in all likelihood, but there certainly does seem to be a lot of oil, and if they can get the political and regulatory framework to grow up quickly along with the needed infrastructure, Kenya could become the next major oil state in Africa and Africa Oil has its fingers in a lot of that oil.

Africa Oil remains my largest personal equity holding despite the fact that I took my original investment off the table back down around $6 — and since I recouped my investment already, I’m giving this line a lot of slack to see if the Lundins can either build a major oil company here or generate a return of a few hundred more percent with a buyout from Tullow or a major producer in the coming few years, I’m unlikely to sell unless I think the story changes dramatically but there will very likely be big ...