Energy Summary for Jan. 5, 2015
2015-01-05 20:00 ET - Market Summary
by Stockwatch Business Reporter
Another stock with news expected soon is Lundin company Africa Oil Corp. (AOI), down 25 cents to $2.24 on 518,600 shares. It was one of the worst performers in 2014, falling to $2.41 from $9.29, for a decrease of 74 per cent. Successes at its core South Lokichar basin asset in Kenya (owned with joint venturer Tullow Oil) were offset by several failures to "open" (drill successful wells in) other basins nearby. Most recently, in late October, Africa Oil and Tullow were unsuccessful in opening the North Kerio basin, which was frequently called a "twin basin" to South Lokichar because of their geological similarities. High hopes were riding on their Kodos-1 "basin-opener." Unfortunately, Kodos-1 proved to be in a bad part of the reservoir, and was plugged and abandoned. The companies decided to try again with the Epir-1 follow-up well. They are also working on the Engomo-1 well, which will target the North Turkana basin. Both were scheduled for testing in the fourth quarter of 2014. Africa Oil could use a hit. It has just enough money to last it through mid-2015, meaning it will soon need to arrange either a farm-out (its preference) or a financing (best done on the back of good news). Major shareholders have already agreed to participate in a financing should it come to that, but the terms will not be nearly as pleasant as they were for the last two private placements, done at $7.75 a share in late 2012 and $8.25 a share in late 2013. A good result at Epir-1 or Engomo-1 should perk things up. Africa Oil is staying quiet right now, but Tullow is scheduled to provide an operational update on Jan. 15, so investors may learn something about the new wells then. They may also get more details about the companies' plan to reach a final investment decision (a precursor to production) in early 2016 at their South Lokichar basin
