In October 2020, Africa Energy (OTCPK:HPMCF) and Total (NYSE:TOT) announced one of the top five hydrocarbon discoveries in the world this year with the Luiperd-1X well on Block 11B/12B offshore South Africa. Total is the main owner and operator of Block 11B/12B, and Africa Energy has a 10% effective interest.
This is my third article on Africa Energy. The reason for writing a third update on the same opportunity is simple. You rarely see such an overlooked opportunity.
My first article was published one month before the discovery was announced. In this article, I introduced Africa Energy, one of the most interesting companies in the Lundin Group. At that time, I estimated an 80% chance of success for Luiperd. The thesis was right. One of the largest gas-condensate discoveries was confirmed by the operator Total, and likely exceeds their pre-drill estimates of "greater than 500 million barrels of oil equivalent," which qualifies as a giant discovery.
My second article called Africa Energy - One of Top Five Hydrocarbon Discoveries Reinforces Strong Investment Case was published on November 5, 2020. I provided details of the discovery and presented a valuation of the discovered deposit. The valuation is based on the numbers supplied by Norwegian research analysts that follow the company.
Before reading below, I recommend a review of the previous article, as it provides a background for this update.
On December 7, 2020, Total and Africa Energy released results of the Luiperd well testing. The results were very positive. Today, Africa Energy held institutional investor calls and presentations to explain those results. A retail investor event will most likely take place early next year. In this article, I summarize my understanding of the well testing results.
In summary, the well flow rates were much better than expected at 33 million cubic feet
