Afentra tipped for upside as it lands large onshore block in Angola

Afentra plc’s recent acquisition of Block KON4 in Angola could nearly double its shares, as analysts predict substantial growth. This onshore block includes significant oil and gas discoveries, enhancing Afentra’s portfolio and exploration potential. Major analysts recommend buys, citing low-cost development opportunities and anticipated shareholder engagement.

Afentra plc, listed on AIM as AET and OTC as STGAF, is making headlines as analysts project that its shares could nearly double following the acquisition of a significant asset in Angola. The newly secured Block KON4 is noteworthy, as it includes some of the country’s most prominent oil and gas discoveries, thus enhancing Afentra’s presence in the Angola region.

The company now holds a 35% stake in Block KON4, an area situated in the onshore Kwanza basin. This block features the Quenguela Norte field, which is historically known as Angola’s largest onshore discovery. Notably, it has over 200 million barrels of oil and previously reached peak production levels of 12,000 barrels per day, a testament to its potential.

Additionally, Block KON4 encompasses eleven previously producing oil fields and two gas fields, contributing to an impressive historical production record of 90 million barrels. Stifel analyst emphasized that “Afentra continues to leverage its unique position in Angola, this time building exposure to the underexplored onshore Kwanza basin.”

Stifel recently reiterated a “buy” recommendation for Afentra, with a target price of 106p, significantly above the current share price of 54p. The analyst mentioned that they are not factoring in any value from the onshore Kwanza licenses yet, but sees substantial possibilities for future value creation through both low-cost developments and exploration efforts.

Cavendish also backs Afentra with a “buy” rating, setting a target at 88.8p. Meanwhile, Shore Capital’s fair value estimate suggests the shares could be worth around 101p. Analyst James Hosie from Shore Capital remarked that, despite having a proven hydrocarbon system, the Kwanza basin remains under-explored compared to other onshore West African basins that have seen the discovery of billions of barrels of oil.

Furthermore, Hosie pointed out that “KON4 adds further exploration potential alongside the opportunity for earlier production.” Cavendish’s James Midgley added that this acquisition brings near-term activities for the company, maintaining engagement and news flow for shareholders. He also indicated that they would incorporate the onshore permits into their net asset value calculations once Afentra confirms an operational work program.

In conclusion, Afentra’s acquisition of Block KON4 marks a pivotal moment for the company, with analysts predicting substantial growth potential. The block not only enhances Afentra’s existing portfolio but also opens doors to low-cost development and exploration in an under-explored basin. With positive endorsements from multiple analysts and forecasts of increasing share value, Afentra seems well-positioned for future success in Angola’s oil and gas sector.

Original Source: www.proactiveinvestors.co.uk