written by reader Africa Oil AOIFF drop

by bkkben | November 27, 2012 11:34 am

Anybody having an idea as to what caused the fast drop in AOIFF yesterday – some rumors and then profit taking from the good run it had so far this year?
Cheers!

Source URL: https://www.stockgumshoe.com/2012/11/microblog-africa-oil-aoiff-drop/


12 responses to “written by reader Africa Oil AOIFF drop”

  1. This was pretty clearly profit taking on the announcement of initial results from their second well — sounded to me like the news was positive in that the reservoir was confirmed to some degree, but perhaps it wasn’t as exciting as some had hoped since there wasn’t the overwhelmingly large find that they had in their first hole. With a stock that’s up 500% in a year, a “kind of what was expected” result is probably enough to get a 20% selloff as folks book some profits.

    They’re having a conference call to discuss the results right now — I’m not a geologist, so I’ll be interested to see what analysis comes out of this regarding the potential for the amount of oil, and we’ll be seeing more interim results as two more wells spud next month and they do further testing on these first two wells, so there will probably be additional volatility. I’ll try to listen to the recording of that call later in the week.

    As long as each result seems to confirm a substantial amount of oil and “de risk” the reservoirs that they think are available in these rift basins in East Africa, I’m holding on with these “free” shares (I took my initial investment off the table early in the year, following the first good results) — but despite the fact that these shares have no cost basis for me, they are my largest holding (or second largest now, following that drop), so I am watching them but giving them a lot of leeway.

    I don’t know if AOI is going to want to grow into a producer over the next three or four years, or if they’ll want to sell out to a major to do the development and production work — if the latter there could be an abrupt payday for shareholders, if the former there could be a couple years of ups and downs since I expect the process of building infrastructure and capacity to produce and export oil will be difficult and slow.

    They’ll have a secondary offering to raise money at some time in the next few months, so that will impact the shares as well … though who knows what the price will be at that time. I’m neither buying nor selling right now.

  2. John Harris says:

    I bought in at $1.50 and sold about 3/4 of my initial lot somewhere over $7 (with a stop loss that was risky for any thinly traded stock – but I was having a hard time beleiveing it was not just a pump and dump stock, so I put in the trailing stop. It took a quick dip one day (down to around $3) and stopped out but by the time my shares actually sold the dip recovered and I got a nice profit – so now like Travis, I am holding on to free shares and will let them ride. But I too looked at the news yesterday and nothing seemed to justify the drop. Thanks for you explanation Travis.

  3. Franklin says:

    Travis, thank you, indeed, for your response!

  4. bkkben says:

    While I appreciate the concept of “free shares” (great teaser type of wording btw ;0) I still believe more in “zero based decision making” as in; if I had the current value of my stocks in cash today, would I buy or sell this stock? I do not have any “free shares” now so I can not use that “feel good” argument to just hold.

  5. Don Fidlow says:

    the AOIFF drop off was an overnight (prearranged ) private placement at $7.50 p/ sh. AOIFF netted $ 300 million . To kee p them and Tullow ( its 50% owner & drilling partner ) in drilling money fo r years

  6. fischershaw says:

    Or is it that the party is over and the stock is returning to the $1.50-$1.75 level? Not to be too pessimistic, but I imagine that some hype followers are pulling out after having inflated the price.

  7. fischershaw says:

    Ah, then the perfect storm: Fiscal Cliff, end of year, hype followers pulling out. So then a possible buying opportunity approaching…

  8. jim peters says:

    VIDEO 16th Feb North Africa and the Eastern Mediterranean – an exploration “Spring”?
    http://www.directorstalk.com/orth-africa-and-the-eastern-mediterranean-an-exploration-spring/

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