RE: Insight29 Sep 2020 16:22
This post from ADVFN
city analyst1: I’ve been invested in COPL for a considerable period and have always been intrigued by the lack of understanding of certain sections of the private investor community of the investment case here. The investment case here is significant. But understanding what it looks like requires a divergence of knowledge; Nigerian oil politics alongside the Afro-Indian power set-up. So here’s a brief summary: • Shoreline CanOverseas Petroleum Development Corp. (ShoreCan) has executed agreements with the multibillion capped Essar Exploration & Production to resolve their disputes concerning an exploration work program offshore Nigeria. • Essar will carry ShoreCan for a 10% interest (capped at $5 million net) on all costs relating to drilling of the first well to be on the OPL 226 production-sharing contract. • ShoreCan, in turn, has the option to increase its shareholding in Essar Nigeria from 10% to 30% by paying 20% of the latter’s historic expenditures through drilling of the first well. • The option is exercisable within 90 days of completion of the first well, as defined in a plan approved by concessionaire NNPC and Nigeria’s regulator (DPR) under Phase 1 of the PSC. • ShoreCan is controlled by Nigerian oil magnate Kola Karim, currently in the top five of Africa’s super-rich list, and described by Forbes magazine as one of the 10 most powerful men in Africa. • Essar Nigeria is controlled by Kola’s Stanford University room mate Rewant Ruia. With an estimated net worth of circa $2.6bn (Forbes), Rewant is a highly influential player in Nigeria’s oil industry. Afterall, he is a member of the founding family of Essar. So, what does this all mean? It means, Kola and Rewant will have their way and the NNPC will sign-off the exploration licence. It’s done and dusted. This is how business is executed in Africa, especially when Buhari and Rewant are frequent attendees of Kola's polo tournaments. Thus, take cue from the smart money piling-in ahead of OPL 226’s first drill and go LONG. The share price will look very different by the time the clocks go back.
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