Africa Oil Corp (AOIFF)

[DanielBostrom]

Morning All,

Much information today. We begin with Amosing: 160 - 200m net pay is equivalent to 160 * 2:46 = 393m barrels or 200 * 2:46 = 492m barrels assuming my estimation of what a net pay corresponds to in terms of bbls in Lokichar. I use an average of Lake Albert and Ngamia pre drill estimates. This is equivalent to : 393 * 6/322.6 * 6.49 / 2 = 23.8SEK/share or 492 * 6/322.6 * 6.49 / 2 = 29.7SEK/share assuming $ 6/bbl as I do.

Or you can use 172m barrels ( auditors estimate) and $ 6.2/bbl (analyst consensus) and it becomes : 172 * 6.2/322.6 * 6.49 / 2 = 10.7SEK/share .

Ewoi then, 20m net pay is equivalent to 20 * 2:46 = 49m barrels or 80 * 2:46 = 197m assuming my estimation of what a net pay corresponds to in terms of bbls in Lokichar. This is equivalent to : 49 * 6/322.6 * 6.49 / 2 = 3SEK/share or 49 * 6/322.6 * 6.49 / 2 = 11.9SEK/share assuming $ 6/bbl as I do.

Or you can use 317m barrels (auditors estimate) and $ 6.2/bbl (analyst consensus) and it becomes : 317 * 6.2/322.6 * 6.49 / 2 = 19.8SEK/share .

All flank plays (where Ewoi is one) are special in the sense that they are shallow but with great aerial extension.

Total net pay in South Lokichar is now at 655- 905m, (today we Lake Albert in net pay ) . Dettat corresponds 1918m barrel with my way of counting ( average of LA o Ngamia and average of 655 o 905) . This in turn corresponds 116SEK/share .

That they would strike oil in Amosing and Ewoi was no surprise to me (I expect that they will exhibit a success ratio of 90% in South Lokichar) but the great surprise for me was drill time. We do not know total drill depths but I use average of previous drillings. We do not really know spud date for Ewoi but it was in any case later than 9 December. If I'm counting on 15 Dec you get be 31 days! It is incredibly much better than previous drilling. Market likes such things but will take a while for it to sink in. The same applies to Amosing . Some day, some analyst will produce the chart below and get a positive surprise. Drill time * hit percentage * size of result = value of the drilling program.

http://postimg.org/image/su2cbb8db/

We seem to have a new policy from AOIs side to under promise and over deliver when just last week AOI guided for Amosing in late January but finished now. Even more for Ewoi . Market likes such things but will take a while for it to sink in.

Tullow updates its estimates of discovered resources in Lokichar from 300 to 600m barrels . They continue in their very conservative spirit. For one who knows AOI / TLW this is not news but for the market it might be.

Pre- FEED o project sanction, I do not see as either positive or negative news, just that work on pipeline continues as planned.

Summary : Today's result raises the value of discovered resources with 40SEK/share my way at counting or with 30SEK/share with audi Thursday and analysts' consensus estimates and now we have oil in Lokichar worth 116SEK/share . TLW doubles estimates of resources in Lokichar . The big news, according to me, however, was the drill of all time - phenomenal, I would say.