Hi everyone. I started this thread as FDC - but the copmpany recently changed its name to First Africa Oil (FAO). For completeness (nay, posterity) I've copied the original thread here - only three posts, two by me. So, as you can see I haven't given up trying to let you know about this very interesting prospect in W. Africa on and off shore.

Recently there has been a good deal of very heavy buying and selling since the reverse takeover on 7th Feb by Canadian Minerals comapny Energem's oil interests of FAO, in particular the following RNS on 15th Feb:-

The Company was notified on 14 February 2005 by RAB Capital ("RAB") that, following an
acquisition of 144,930,638 ordinary shares of 0.1p each ("Ordinary Shares") on 8
February 2005, RAB currently holds a total of 144,930,638 Ordinary Shares
representing 9.76 per cent. of the Company's issued Ordinary Share capital.

Now RAB has significant positions in FOGL and FGML and I believe many other similar oils/minerals co's and is no fool when it comes to taking large chunks of highly speculative early ventures.

I've cut out a lot of this as now out of date, leaving just the first post and now, by special request from SWW, here is a weblink and a chart.

Good luck.

Stock Dog

http://www.firstafricaoil.com/index.asp



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THE sour part of the sweet & sour game.

Investors did not like the delay in production ie instead of Q1 now Q3 2007

Investors did not forget Chad & Mali option even though that's now in the past

Uncertainty, doubt, fear, irrational decision set in

Many stop loss has now be activated due to poor sp performance and these stop loss activated automatically are holding the share price down

Investors lost faith in management even though new team now in place

Fear of dilution and panic, greed all now activated

My view is that investors are right to get angry with management tactics so far, they are responsible to bring the party into full swing, and now they did not even though they have plenty of oil. As a longterm investor i can wait at least two years but only if things start getting back in place and they are. my eyes are fully wide opened to keep management in check. However, history will be made here when big quantity of oil starts flowing. Having set Q3 as new production date, what would happen if the production starts in Q2 or even on target? Maybe new management just tries to avoid mistakes and give themselves enough time, knowing that they can deliver.

Hitting an all-time low on good volume. ;-0 Nasty

Interesting website they have. Think I'll forget Chad. Far too much war/corruption/instability. Gabon looks interesting, but all unproven as yet?

BULL view

-production may start earlier than Q3 or on target Q1

-Daily oil production may exceed 7000bopd or exceed 10000bpd

-New oil found

-What if there is a share buy back after cash rolling into accounts?

-farm-out deals

-excellent acquisitions

ALL above can happen but that remains to be seen. they are possible and if they happen the share price will jump and fly like a free bird. Management must perform and deliver to earn the respect and the trust of longterm investors.
best luck

Would prefer to be getting in after that all starts, georgetrio. It's all a bit pie-in-the-sky until then?

Maddoctor, further to your Q on the other thread, is not the FAO SP drop due to the fact that their balance sheet is largely made up of intangibles, which are fully valued at the current SP? Given the current slide in the oil price, I'm not surprised that this is taking a bit of a beating.

Agreed, if they manage 7,000 bopd, that should be good for a doubling of the SP, but obviously that is going to take up to 12 months to bring on-stream.

Short-term this stock is a "sit-and-watch" IMO.


Georgetrio, with all due respect, I think your hopes of a share buy-back may be a tad premature. With $50 mil of debts on the balance sheet, I can't see them chucking loads of cash at shareholders, can you?

You'll be lucky to get a divi equalling 0.5% of SP within two years of first oil production, IMO. Management are going to sell this to shareholders as a capital growth story and keep the cash for further projects.

All IMO, PDYOR.

BIG al

Pie in the sky at this stage, yes. Too much at stake here, so i will remain on board till that time. i am angry as every investor but i like the sour part of this game because my grand-mother said: in order to win, one must accept to lose too. sorry to repeat myself. your decision is a cautious one and i can not blame you for that. best luck

soul traders , not one for balance sheets myself since sentiment seems to rule most of the time. The problem for me has been them dangling this 7000bpd on the one hand and on the other an unknown fund raising. I probably should look more at the figures cos i was unaware they are already 50m $ in debt! . Thanks for the replies , i will wait.

SOUL
yes, buy-back will be nice but very ambitious here.

MD, sooner or later the fundamentals catch up with you - such as in the iffy kind of market we're experiencing right now. Add in the time to first production, need to raise more funds before it happens, (they'll need to pay out almost 20 mil to cover current cash burn plus creditors payable within 12 months, which doesn't leave them with much of the $43 mil they raised in June), and you have a lot of downside which has dragged the SP lower.

I agree that this is getting to the point where it looks as if it could be oversold, but to be on the safe side I'd want to know about the terms of any forthcoming fundraisings before committing any cash - (EDIT) they need another $45 mil according to today's RNS, which is a lot of money for a company capitalised at only 60 mil. Probably they'll issue another convertible bond as they might decide that a pure share placing would be too dilutive.

Big Al's view of waiting until the action starts before buying is the safer course at present.

All IMHO; contrary views welcome. I'll stick this on my watchlist, though, as the turnaround could be worth witnessing.

George, "not going to happen" would be a more realistic description, I'm afraid. If this company is remotely ambitious about continuing to develop new oilfields then they'll need all the cash they can get their hands on. It's likely their debt burden will also increase in the near-term as they raise finance for forthcoming oil production (as per my previous post) - which means their flow of free cash is quite possibly going to be more like a trickle for the first couple of years.


Still, WDIK - PDYOR.

just been on the other side and someone has pointed out that the government takes 44.5% of the 7000bpd so looks even less appetising

Yep - I wasn't aware of the exact figure, but some kind of royalty is normal practice. 44.5% is probably the highest I've seen, but I believe even in the good ol' British North Sea, Gordon Brown creams off a 40% royalty.

FYI my fag-packet calculations were done with a post-tax profit figure of 15% of a conservative per-barrel oil price (applied to the whole 7,000 bopd), it takes account of the royalty as well as production costs). Anything more than that and the figures become too fantasaical for my liking.

Maybe I'm thinking too conservatively; I know you'll make up your own mind.

It is not easy for FAO right now but excellent management is the key. Fingers X
Cautious investors will sell at this point. that's ok
Aggresive investors will keep buying, ie myself
Willing investors checking their blood pressure with all these ups&downs.
Very entertaining drama. Enjoy it.

JOHN BENTLEY
New Executive Chairman of FAO as of 1September 2006
He replaced Mr Brian Menell

Mr Bentley, age 58, has over 30years experience in the natural resources business and for the last 12years has worked in the upstream oil&gas industry in Africa. ......he served as CEO of ENERGY AFRICA for five years building it into one of the leading independent upstream companies in Africa with operations in 12 african countries. During this period, the company saw fourfold increase in production and made several important discoveries.
best luck

so you really think that the new CEO has a magic wand?
do you also believe in Peter Pan?

CYNIC,i am so F>>>>> on these!!!

capetown - sorry to but in, but did you not own CSH as well last year and get F>>>>>d there too or was that someone else with a similar name?

If you search you will see I started a thread some while ago, but abandoned it once the details bcame clear as to what they had, where they were going and how they were financing it.

The cash could still do them imo.

Hello, it looks like something is a foot here, down doible figure percentages.

SEAWALKER,only just got in these @2.50,Never owned CSH,

Cant believe they are falling like a stone,

Will hold for the longterm now i guess.

sorry spelt your name incorrectly seawallwalker