Apologies to all this one should have gone out on Jekyll & Hyde pre-IPO. Unfortunately the ‘Securitate’ deemed it too sensitive and conflicted. Hence why it’s now going out on Guerilla Investing. Some minor changes post IPO… You can join the UK’S Premier Tip Sheet Jekyll & Hyde by CLICKING HERE
Get Anglo African Oil & Gas (LON: AAOG) on your watch lists and research it! START HERE. They came to market yesterday. What I like about this one is that the placing ended up hugely over-subscribed. It’s always a good sign. They have great potential going forward very quickly to increase production in 2017. The management are a decent lot and have been working for two years on their IPO. The Directors intend to distribute free cash to shareholders through regular dividends, once production reaches a sustained level of 1,000 bopd and provided that oil prices are not less than USD 30/barrel. Now that’s some thing no other AIM oiler will do. It’s a good pointer. Also some of their close neighbours such as ENI have production of circa 5000 barrels’ a day from basically the same geology/horizon as Anglo plan to drill.
Anglo currently produce 38 bopd but it is in their potential to increase this to circa 750-5,000 bopd that could push their SP much higher. Now if they get anywhere near this figure then the SP will correspondingly move upwards. Everything is now in place. Assets, infrastructure, funding and more importantly sentiment. Which is very strong. The only drawback when I first penned this piece was their website which looked like it’s came out of Noah’s Ark. Thankfully the powers that be responded to this concern and updated it to a nice healthy one. In line with the rude health that AAOG are now in.
The assets are located in the Republic of Congo (RoC). Development of the near offshore Tilapia field could significantly increase production in the near term to circa 250/750bopd. “The company also aims to conduct exploration and appraisal of proven deeper reservoir targets to raise production to in excess of 5,000bbl/d in the medium term. The acquisition of Petro Kouilou would result in AAOG gaining extensive onshore surface infrastructure comprising: 5,000bbl storage tank, separator, in-field pipelines and other associated facilities. These facilities would cost US$15-20m if they were constructed today. Consequently, the company will not need to spend any other capex than that associated with the proposed work programme. The new wells can simply be connected and new production can brought onstream almost immediately. Low-cost workover programme. AAOG intends to workover two wells on Tilapia field at a cost of US$300,000 which would increase production from 38bbl/d to 250bbl/d. On the assumption of a successful IPO this work would be conducted during 2017.”
So the drivers of the share-price are many and varied. There’s existing production, increasing production, multi million-barrel potential from existing production and multi million-barrel exploration potential. The IPO price was 20p. If you can get in as close to this as possible then hold for news on increasing production/exploration. How high could it go? On any where near 5,000bopd it will rocket. On a bread and butter 250-750 bopd it should get to 50/60p. 25p-40p should be your near term target. Remember profit is the game. It doesn’t matter if you make £100s or £1,000s derisk as you go. Good solid little oiler that could/should be financially self -sustaining by the end of 2017. By that time the bopd will be many multiplies of where it is today.