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Agriterra (LSE:AGTA), the farming Company that is actually an Oil Company through its legacy investments from White Nile Petroleum, has seen its first taste of rumours on the bulletin boards as a Paris based website, African Intelligence, has reported Tullow Oil is interested in snapping up its 20% stake in the 30,000sqkm South Omo block.
The South Omo block is on trend with recent finds in Kenya and Uganda dotted along the rift valley, aptly named the string of pearls. The block is shared between Tullow oil with 50% and Africa Oil 30%, and is expected to spud late this year in the first part of a three well drilling program.
Talking about the rumours, no veracity can be exacted at this moment in time – and it’s strange that the news would have emanated from a Parisian website suggesting a nefarious pump and dump or misinterpreted Chinese whispers, although the credentials of the website do stack up. On the flipside, Tullow moving in now would make sense – buy and consolidate before you try – so ultimately a bit of news that’s true nature is on the toss of a coin.
Assuming a value of $0.25-0.5 a barrel of the 540mbbls gross unrisked prospective resources could mean a cash pile of $135-270 million dollars heading Agriterra’s way – let’s hope Phil Edmonds makes the catch and let’s hope the Sudanese compensation arrives soon too. On a valuation perspective, this is a Buy, as the upside potential is huge purely because of the Ethiopian oil, and a Punt, as you are playing the frontier exploration game.
