Over the past 3 positive weeks would suggest a Return to the trend of early January fuelled by forthcoming news and rumour of TO which suggests a positive gain of another 10p by weekend. If TO confirmed I would expect to see another £2
...defies Iraq! by Danny Fortson in The Times today, Chevron to buy into Kurdistan two exploration zones from Reliance Industries for $200m. Also Total in talks to buy a stake in fields owned by Western Zagros. Also he writes that Tony Hayward's Genel is scouring Africa for exploration opportunities ( no doubt as far away from water as possible )
I think Afren is a very undervalued and credible T/o target but I give very little credence to the rumours atm. It is so undervalued any suitor would have to pay a significant premium. Also Kurdistan, whilst a real treasure trove, is also not without geopolitical risk. Afren's debt position is stable but a little high - in a couple of years they will be on the acquisition train themselves!
the article was that Exxon and ENI are looking into taking over Afren? I am always sceptical of rumours, you see it all the time in the sports pages of teams interested in signing players only for it to have no substance. What is best for Afren shareholders - a takeover from Exxon or ENI or no takeover bid? I have huge confidence and faith in Afren making us a lot of money over the next 5 years. Afren has a quite brilliant portfolio of assets and production is going to keep increasing over the next few years. I really believe 5 years down the line Afren will be trading at £5 per per share, whereas a takeover would be great for short term large gains but surely that would be the end of our investments here.
All nigerian blocks that Afren hold except the JDZ Block are either on-shore or in shallow water. Just so there is no confusion with the post below. If this PIB passes we basically pay a 50% tax rate in all licenses.
As stated in this document, Ebok is classed as a Marginal field (Stated on Afren Website) and thus incurs 50% tax. Okoro Setu is part of the indigenous license programme and should also incur 50% tax. Okwok is under the same Marginal Field contract as Ebok and incurs 50% tax. Ofa is also taxed at 50%.
For OML and OPL blocks afren has signed JVA's (Joint Venture Agreements) where tax is charged at 65.75% for the first 5 years, then 85% there after.
It looks to me now like the new Petroleum Industry Bill (PIB) will put all taxes in shallow waters and onshore at 50%, inline with the current tax rates on Marginal Field Tax rates, (PSC) Production Sharing Contract also at 50%. This will attract more people to carry out Joint Ventures and share the overall risk of developing oil blocks. They have also reduced the tax rate on deep water oil blocks from 30% to 20% :)
So this means when Afren start producing on OML 115 and OPL 907 and OPL 917, they will pay less tax, this PIB is probably what they have been waiting for in order to start drilling and developing these blocks.
The Nigerian Oil Law looks like it contains specific tax rates for certain types of exploration and production acreage. Also the oil and gas law has the tax figures in writing, so it acts as protection for all oil and gas companies in nigeria. Afren will pay 50% tax on its production, we are either paying 50% or 60% currently, so this is good. Now deep water plays you pay 20% tax, due to the inherent risk of drilling in deep water (BP). Its good because the industry is finally getting rules and guidelines in black and white on paper. Will be interesting, i will try and get my hands on a full copy of the final draft.
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