Congratulations to all who played Kyoto trade idea last week. The share price re-rated by almost 30%. Good trade!
Africa Energy sold off today based on misunderstood Reuters Article. It is a buying opportunity. Below is research by Pareto Securities describing the situation. We find the AEC most interesting oil play. The summary of the case is summarized in the below article.
Pareto Research published today:
| Misinterpretation of news article creates large buying opportunity |
| Africa Energy just declined 10-15% due to a Reuters article (link) indicating that Total postpones future drilling activity in South Africa. This is based on a withdrawal of an application for Environmental Authorisation for exploration drilling in the Kloofpadda area. In our view, this is not surprising as Total has previously stated that it near-term will focus on the development of the area containing the Brulpadda and Luiperd discoveries. The partners have already secured approvals for further drilling in this region and today’s news will therefore not impact future activity. In our view, the market is misinterpreting today’s news creating a good buying opportunity. We will keep our estimates and valuation unchanged – BUY/TP SEK 4.50 |
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