Initiation: Deep water West African explorer
African Petroleum (APCL) is a pure-play, offshore-focused explorer with 10 blocks across five countries on the West African transform margin. Significant discoveries in 2014 made by Cairn (with the SNE-1 and FAN-1 wells) and Total have significantly de-risked exploration in Senegal, Côte d’Ivoire and The Gambia. APCL is actively seeking farm-in partners, discussions have advanced following the third-party 2014 well results, and the company anticipates making announcements in H115. With no wells currently funded, it is too early to assign a RENAV, but we speculate that if successfully farmed out, the three blocks with drilling in 2015-16 may indicate a combined pre-drill valuation of NOK1.1/share. This implies upside, should the company be successful in farming down its portfolio. In addition, a commercial discovery should deliver further material upside.
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