Amities . l have been discreetly buying this stock since it was 39p . And the more i learn the bolder are the positions i take . .....Floated in Dec 2004 it was oversubscribed and before costs the required $15 million was raised. At the helm is ex BP head of Global exploration and Resavoir management . Furthermore a success story at Global Expo . Now Nick Johnstone wants to set up on his own . And after speaking to him l am not at all surprised . He is like a "Who s Who " of the hydrocarbon world ...He has ALL the prerequisites for success so why work for some other lackey ! .. namely connections from his ertwhistle employers . He has assembled a first class management team from ex colleauges at BP ; and is his business model is simple . AFR farms in on "Big Oils " inception upstream ; and with its scale of economy it works closely with "Big oils" fields on the look out for excellent workovers oppertunities .... Already lt has via a complicated j/v a percentage of the Sao Tome and Principe acreage -Located between the oil rich waters of Nigeria and those of Sao Tome and operated by Texaco / Chevron and Esso; and believed by many to be the new North sea . . 3D Seismic testing and magnetic graphic imagery and satellite imaging has located a labyrinth of channels leading to a main resavoir which is believed to14-15 mmbbls of oil and which would leave AFR with its share of 120/140 million barrels for NO cash outlay .To ensure early cash generation Afren has entered into a production sharing agreement in the developed Ogedeh field { adjacent to the BP operated Olowi marin field which is believed to yield 180 mmbbloe. Furthernore AFR has agreed to drill the lbekelia project for Ascent resources which is expected to produce 2,500 b/pdoe to satisfy AFR percentile share ,ln addition it is a believed resouce of several years . .. , .Not a bad start for a company with little more than six months in the making . ....and well worthy of investigation !! .....@+ J

aldwickk,

That would make sense when put in the context of the Chevron Press Release at your post #69:

extract: The Obo-1 well logged a cumulative total of at least 150 feet (45 meteres) of net hydrocarbon pay in multiple reservoirs and provided important reservoir rock and liquid samples, which need to be evaluated and integrated into the interpretation of the Obo Area to determine the next step of the appraisal process.

Where 'interpretation of the Obo Area' is the key phrase

or am I reading too much into it all? Either way if it is off structure and is still commercially viable, then subsequent drills should bring about the 'gusher'! as TFC aptly put it. :-)

Any views on today's RNS?? Good news or expected, already known etc.?

Am I dyslexic or has the production schedule slipped slightly? I thought 15 - 20 kbopd were due by end of 2007, now it's sometime in 2008.

Never mind - everyone knows that the first rule of investing in holes in the ground is that production schedules are 10% professional best-estimates and 90% wishful thinking.

Under any other market conditions than those of the last couple of weeks, I would have expected the SP to be up on this kind of news. However, at 114 mil market cap already and at present they are doing not much in terms of production, plus maybe the Nigeria factor is putting the brakes on things a bit?

Definitely one to watch, but if the summer continues to depress share prices then it may be worth waiting before buying.

From a brokers's roundup:

Bridgewell reiterates buy Afren

Panmure Gordon has said that Afrens additional reserves could add 30p to its current NAV

TFC, ST, Any current views on AFR and its SP dive, this has shown marked weakeness, was it overvalued or is the market missing something?

Silvermede, it would take a better man than me to be able to see through the current SP histrionics. I guess the market wasn't happy with a valuation over 100 million after hints of the production schedule slipping; add in a generally nervous market and that's probably enough of an explanation.

Today's slide does seem a bit big, though. Possible support around 43p now that 56p has been well and truly breached??

BTW you mentioned in post #76 the NAV increasing by 30p. Out of interest, what was Panmure's original target (or do you have confirmation of the revised one)? It may not help the SP right away, as various oilers are currently trading way below NAV, but would be good to know.

PS re today's share price skid, I notice that most oilers on my watchlist (about 30 companies) dropped a bit today. The only one that rose was Ramco (by some 50%, but before you get excited it was due to the reversal of some unfavourable court judgment), and you know you're having a weird day if Ramco is wildly outperforming the sector!!

soul traders, TAG was also level on the day, Ramco up, TAG stable.........most other oilers down, a very wierd day then :)

Afren PLC
07 June 2006

AFREN PLC

Acquisition of Heritage Oil Corporation's interests in the Republic of Congo

London, United Kingdom - 7 June 2006: Afren PLC ('Afren' or 'The Company'),
announces it has entered into an agreement with Heritage Oil Corporation
('Heritage') to acquire the entire issued share capital of Heritage Congo
Limited, which holds Heritage's interests in the Republic of Congo
(Brazzaville).

ACQUISITION HIGHLIGHTS

Heritage's Congo interests:

- 25% interest in the Kouakouala A production permit
- 14% interest in the La Noumbi exploration licence
- 30% interest in the Mengo field on the Kouakouala B development permit.

All licences are located close to the M'Boundi Field (1.4 billion
barrels of oil originally in place), one of the largest onshore fields in
Africa, which currently produces over 65,000 bopd.

The cash consideration for the acquisition is US$28 million together
with 2,000,000 warrants in Afren.

IMPACT ON AFREN

Immediate production (25% interest of 1,093 bopd gross Kouakouala field
production)

High impact exploration potential on the La Noumbi licence with 2,830
sq km of under-explored acreage (Afren: 14%)

Share of potential of the Mengo Field which has 2 billion barrels of
oil in place (Afren: 30%)

Strategic entry into Congo

Continuation of pan-African diversification strategy

AFREN POST ACQUISITION

Diversified portfolio of 10 assets in the Joint Development Zone of
Nigeria Sao Tome and Principe, Nigeria, Gabon and Congo

Production: Kouakouala in Congo

Near term development: 15,000 to 20,000 barrels of oil per day by 2008
from Ogedeh, Okoro and Setu Fields in Nigeria

High impact exploration: La Noumbi in Congo and Block 1 of the Joint
Development Zone of Nigeria Sao Tome and Principe

Low cost exploration: Iris Marin, Themis Marin and Ibekelia in Gabon

Brian O'Cathain, Chief Executive of Afren, commented:

'This acquisition is very exciting for Afren, providing a strategic entry into
Congo and further diversification of Afren's West African portfolio. The
acquisition delivers immediate production and cash flow together with high
impact exploration in one of Africa's most prolific on-shore basins. The La
Noumbi licence is adjacent to and on trend with the M'Boundi field, one of the
largest onshore oilfields in Africa. Afren is delighted to be in Congo, and
looks forward to working closely with the national oil company SNPC and the
Congolese authorities to develop other opportunities in Congo.

This complements the recent announcement of a significant agreement with Amni in
Nigeria for the development of two proved undeveloped fields of 30 to 60 million
barrels and follows the announced Obo-1 discovery on Block 1 of the Joint
Development Zone. Since the IPO in March 2005, Afren has expanded its West
African presence to the Joint Development Zone of Nigeria Sao Tome and
Principe, Nigeria, Gabon and Congo, growing its portfolio to ten assets with a
combination of production, near term development and high impact exploration
opportunities'.



7 June 2006

Acquisition of Heritage Oil Corporation's interests in the Republic of Congo

Afren is acquiring the entire issued share capital of Heritage Congo Limited,
which holds Heritage's interests in the Republic of Congo (Brazzaville). This
includes a 25 percent interest in the Kouakouala A production permit
('Kouakouala'), a 14 percent interest in the La Noumbi exploration licence ('La
Noumbi') and a 30 percent interest in the Mengo field on the Kouakouala B
development permit ('Mengo'). All the licences are located close to or adjacent
to the M'Boundi Field (1.4 billion barrel stock tank oil originally in place
('STOIIP')), which currently produces over 65,000 barrels of oil per day
('bopd').

The consideration for the acquisition is US$28 million in cash and 1,500,000
Afren warrants, with a term of five years and an exercise price of 0.60 per
share and an additional 500,000 warrants in Afren, with a term of five years and
an exercise price of 0.80 per share, the issuance of which will be contingent
upon the satisfaction of certain conditions.

The acquisition is expected to close later this year, subject to certain
conditions precedent, including customary governmental approvals and the waiver
of pre-emption rights by its partners which the Company expects will be met.

This follows the recent announcement of a significant agreement in Nigeria for
the development of the Okoro and Setu fields; two proved undeveloped offshore
fields of 30 to 60 million barrels, which will be the focus of an intensive
development programme alongside the Ogedeh development, together generating
combined production of between 15,000 to 20,000 bopd by 2008.

Afren intends to further expand its presence in the Congo in the near term and
to continue to diversify into other proven African hydrocarbon provinces, as
part of its objective to become the leading pan African independent Exploration
and Production Company. Afren's strategic entry into the Congo follows a recent
visit by a senior Afren team led by Dr Rilwanu Lukman with the President of the
Republic of Congo.

A location map of the assets can be viewed on the company's website:

www.afren.com
.

Kouakouala Field

The Kouakouala field was discovered by Elf in 1993 and brought on stream in May
2000 by the current operator Maurel et Prom, who has a 50 percent stake. Tacoma
Resources, a subsidiary of Burren Energy, holds the remaining 25 percent stake.

Kouakouala provides Afren immediate revenue with gross average field production
of 1,093 bopd in the first quarter of 2006 from four producing wells. The
partners in the field are discussing options to prolong field life and increase
production and reserves, including the implementation of a water injection
programme and the drilling of additional production wells.

La Noumbi

The La Noumbi licence consists of 2,830 sq km of under-explored acreage and lies
directly to the south of the Gabon border and to the north of the Kouilou
permit, which contains the prolific M'Boundi field. The licence is operated by
Maurel et Prom, who have a 49 percent stake, with Burren Energy holding a 37
percent stake through Tacoma Resources; Afren is acquiring the remaining 14
percent interest. The La Noumbi Production Sharing Contract was ratified by the
Congolese parliament on 24 March 2006.

This licence offers an exciting high impact exploration opportunity. Several
structural leads have been identified, the most mature of which is Doungou.
Doungou is on trend with and interpreted to be in a similar structural setting
to M'Boundi and has potential reserves of 50-75 mmbbl. A number of other
significant leads and prospects have been identified on the licence.

The forward programme will involve carrying out further seismic acquisition and
the reprocessing of existing data. This will be followed by the drilling of the
most attractive targets, with three firm and three contingent wells required
under the terms of the Production Sharing Contract. Preparations are underway
for the drilling of the first exploration well on the Doungou prospect later
this year.

A number of oil export options are being examined including a tie-back to the
M'Boundi field and the possibility of a pipeline to the coast, where offloading
to an FPSO could occur.

Mengo Field

The Mengo field was discovered by Elf in 1979 and has in place volumes of 2
billion barrels of oil. The field was shut in by Elf in 1993 following
disappointing production rates, mostly from vertical wells. Afren intends to
work with the Mengo partners (Maurel et Prom and Burren) to bring the latest
technology to the field, including high angle wells and fracture stimulation
techniques and will look carefully at potential future improved drilling and
operational management processes for Mengo. Future production from Mengo will be
subject to a 15 percent overriding royalty to Heritage Oil Corporation.

Enquiries:

Afren +44 20 7182 1800
Brian O'Cathain
boc@afren.com
Osman Shahenshah
os@afren.com

Impressive! If the last financials are anything to go by, then the co should also have all or most of the cash it needs to pay for this acquisition and hence won't need to go fundraising in too much of a hurry.

Near-term cash generation from Kouakouala A seems likely to be useful rather than company-making (!), but the whole package seems to offer great prospects, IMO.

Any other views?

From HB's Market Comment Broker Roundup:

Bridgewell reiterates buy Afren (revising the total net asset value to 94p)

Panmure has upgraded Afren to buy from hold (raising the target to 70p from 60p)

Certainly the SP should regain some ground, but we'll just have to wait & see!

Thanks Silvermede. Interesting stuff.

Obviously these things are not set in stone anyway, but it does go some way towards explaining why the SP hasn't rocketed today - initially I'd have thought that today's news would be grounds for a major re-rating, or that the price target was way over 1, but on the other hand if the new assets are so very valuable in their current state then why would AFR pick them up for such a small consideration?

I do wonder what effect a reserves audit might have on the SP - 2 billion barrels (or 30% thereof) are worth quite a lot after all. Maybe we'll get one in due course.

Will continue to watch as I think this has huge potential, which seems to get better all the time.

ST, Apologies for being off thread & not sure if you are into miners but if you get the time have a look at the SCR Thread, post No. 51, which has a link to some excellent reasearch on the company, and although some risk has huge potential. :-)

No need to apologise, Silvermede, I am delighted that you've shared the info. Have printed the article off and will peruse at my leisure and offer some thoughts on-thread, plus will DMOR.

And, getting back on thread, I am frankly amazed that today's news has only shifted the AFR SP by 0.25p. Bearish sentiment, etc.

ooooh 'eck . . . Well, if there weren't bears in the Congo yesterday, there are now.

AFR Bid: 49p Offer: 50.5p Change: -2.5

Afren covered in today's Times as the Smaller Stock To Watch

Small mention for Afren on p26 of todays Shares mag...house broker Bridgewell have upped their sum of the parts valuation by 19% to 93p...makes the shares look cheap at 50p, but I'm already fully committed.
LL

Amities ,,/ Take a chill pill . We are drilling in areas believd by many as the "New North Sea" . We have probabily the best management money could buy. Access to BP Database These boys dont give up six figure salaries and all its perks for a whimsical jaunt through Nigeria and the Congo. Had the past 3 RNS s come a few weeks earliar AFR would have took off ....................................................................................................................But the oilies are getting a good larruping at the moment . The market is fickle, seemingly illogical and irrational but believe me there is logic in their madness . Namely to get YOUR money in their pockets What amazes me { from my vantage point } is how little investors understand about world of hydrocarbons or mining . Anyway thats another point except it makes for a herd of very nervous holders . ....ln our case we all know the geopolitical situation in the Delta and particularly why AFR are taking a thumping . and yet i hope people realise mms are forfilling orders from institutions--Many from when it was in the 50s .Expectation sent AFR to 80 ..........Lastly .......Had those RNS s -all good-come a month ago when sentiment dominated the market AFR would have took off . But i take consolation in the simplest of facts . We are an Expo/ Producer now ; and not a pure expo play . Re-rating ? And believe me oil will rear its ugly head again .Most analyists talk of $70 as the norm now . Over 10% of the oil exported to the USA produced by Saudi is virtually impossible to produce gasoline .lts high sulphur slop which perhaps illustrates Saudi cannot produce more sweet light ...People would have laughed at you 3 years ago at mere suggestion oil will be $1oo p/bb by winter 2006 ,,,,,,,,,,,,,,,,,,,,,,,,,,,and it will be after the American driving season ,,,,,Someone once said if you want the best chance of success then entice "Big Oils" geologists ; and better still ex "Big Oils" power barons like the ex head of Opec Well we have them ,,,,,,,,,,,,,What with a new North sea sitting }where BP further down the coast have struck eight times out of eight} ; Lets play ball ....,,,,,,,{ SO as to to not be accused of ramping i admit i have substantial holding in this one } ......@+ J

Off topic " J " whats your view on EEL now ?