Africa Oil Corp (AOIFF)

[zravji]

Canaccord Genuity raises to speculative buy from hold

Opportunity knocks? Following the sell-off in Africa Oil’s share price subsequent to the company’s most recent operational update, Canaccord Genuity Energy Analyst Christopher Brown has upgraded his rating on AOI shares.

The company announced a couple of disappointing well results within its core area of the Lokichar basin, and Brown believes the shares are currently oversold on a loss of confidence in potential deliverables. In Brown’s opinion, as the company operates in a rift basin (which can be complex and highly unpredictable), it was a matter of time before AOI eventually drilled a dry hole or water-bearing well. As such, Brown has no fundamental changes in his valuation based on Thursday’s results.

As the company progresses through its pre-FEED work, Brown highlights that a 20-well program for 2014 should provide numerous potential catalysts. Of note, AOI is well-funded, ending 2013 with $493.2 million in cash and working capital of $439.8 million.