Afren Rises on Higher Oil Estimate at Nigerian Discovery
Afren Plc (AFR), a U.K. energy explorer in Africa and Iraq, rose to a two-year high in London trading after finding more oil off Nigeria than previously forecast.
Afren climbed 8.1 percent to 161 pence, the highest closing price since July 2011.
The company more than tripled its estimate of recoverable oil at the Ogo prospect, drilled with Optimum Petroleum Development Ltd. and Lekoil Ltd. (LEK), to 774 million barrels from 202 million barrels. Nigeria, Africa’s biggest oil-producing nation, accounts for most of Afren’s sales, providing it with cash to invest elsewhere including South Africa and Kurdistan.
“The discovery looks to be one of the most important made in West Africa in recent history and to describe it as ‘transformational’ would not be hyperbole,” Daniel Ekstein, an analyst at UBS AG, wrote in a report. “Developing the light-oil phase is likely to be relatively straightforward.”
Afren, which said last month that 2013 production will be at the upper end of its forecast, has gained 23 percent this year in London.
“Based on the well data, the partners have identified volumes in excess of our pre-drill estimates,” Chief Executive Officer Osman Shahenshah said today in a statement. Drilling at the prospect has been suspended after the well took a “hydrocarbon kick,” Afren said.
To contact the reporter on this story: Brian Swint in London at email@example.com