CAMAC Energy Initiated With a Buy at Aegis Capital Corp.
NEW YORK, NY--(Marketwired - Sep 23, 2014) -
Initiating Coverage. Aegis Capital Corp. is initiating coverage on CAMAC Energy, Inc. (NYSE: CAK) with a Buy rating and a 12-month price target of $1.00 per share. CAMAC Energy is an independent oil exploration and production company focused on energy resources in Africa. Its asset portfolio consists of nine licenses and an area of 43,000 square kilometers (10 million acres) covering offshore Nigeria, offshore Ghana, offshore Gambia, and offshore and onshore Kenya. The Oyo Field in the OML 120 block, 46 miles offshore Nigeria, currently contains the company's entire proved reserves of 9.9 million barrels of oil. The Oyo-5 and Oyo-6 wells in the Oyo Field produced oil at ~2,000 barrels a day in 2013 and ~1,600-1,700 barrels a day during 2014. The firm has recently shut-in these two wells in order to complete Oyo-8 and Oyo-7 wells for oil production in 1Q 2015, each of which is expected to produce ~7,000 barrels a day. The firm may drill the Oyo-9 well in 2H 2015 and could potentially exit 2015 at a production rate of ~20,000 barrels a day. Though oil productions from Oyo-8 and Oyo-7 wells represent the near-term catalysts for the company's shares, positive results from the prospective fields in the Miocene formation, which is deeper than the currently producing Pliocene formation, should drive up the firm's value substantially in the mid-to-long term. The firm currently plans to drill the first Miocene exploratory well in 2H 2015.
Prolific Region, Large Oil Reserves. Nigeria has the second largest oil reserves in Africa after Libya and is the continent's primary oil producer. Nigeria's 37.2 billion barrels of oil reserves is also the 10th highest in the world. Over the past few decades, the oil industry in Nigeria has been characterized by a number of advantages, including the high quality of the oil, meaning it sells at a premium to the North Sea benchmark crude price (Brent), and relatively low production costs. The OML 120/121 blocks in Nigeria are a prolific oil producing region with Exxon Mobil Corp. (NYSE: XOM) (Not Rated), Royal Dutch Shell plc (NYSE: RDS) (Not Rated) and Chevron Corp. (NYSE: CVX) (Not Rated) operating producing fields in the surrounding blocks. The industry experience and the local relationships of the firm's management team and board of directors should help the firm implement its strategy to acquire and develop high-potential exploration and production assets.
Aegis Capital Corp.: Research Yi Chen ychen@aegiscap.com
646-502-2463
