Afren is leading the FTSE 250 risers after the exploration group announced a better than expected oil discovery off Nigeria.
Its shares have jumped 6% to 129.1p on news that its Ogo-1 well found "a significant light oil accumulation". Chief executive Osman Shahenshah said:
The discovery of oil in the Ogo-1 well opens up a new oil basin in an under-explored region and represents a possible extension of the West African transform margin.
Based on evidence to date, targeted resources are likely to be significantly in excess of previous estimates, with some high-potential zones still to be drilled.
Afren owns 22.86% of the block while Lekoil, which has surged 21% to 42.5p, has a 17% stake. On Afren, Andrew Whittock at Liberum Capital said:
The success follows a series of recent discoveries in Nigeria (Okoro Field Extension, Ebok North Fault Block) this year and represents one of few success stories in the sector this year. Ahead of further evaluation of Ogo, our price target is 136p and recommendation hold
Dragan Trajkov at Westhouse Research was more positive, with a buy recommendation:
Very good result for Afren and its partners (Lekoil and Optimum) from the discovery. If we simply use the pre-drill estimate [this] would imply around $200m of value net to Afren or at least 10% impact on the shares this morning.
