Aim newcomer Lekoil (LEK) got off to a flying start last summer when its first ever exploration well discovered more than three-quarters of a billion barrels of oil-equivalent (boe) resources offshore Nigeria. Geological understanding of the field is limited, however, and equity markets are refusing to ascribe anything close to full value for Lekoil's 30 per cent economic interest in the licence until joint-venture partner Afren (AFR) conducts more work to prove the oil and gas could be commercially extracted.
- Massive oil discovery offshore Nigeria
- BlackRock buying shares
- Fully funded after $100m equity raise
- Low-risk, high-impact work programme
- Operating in Nigeria comes with major risks
- Corporate governance concerns
But having raised $100m (£60m) of equity at 55p a share in November, Lekoil is now fully funded to join Afren's appraisal work programme in 2014, which could substantially de-risk the play and even double or treble the current resources. Considerable upside therefore remains on the table despite the 70 per cent rise from Lekoil's 40p May 2013 float price.