What a massive week it has been for the Oil and Gas game in East Africa, especially in Kenya. I am writing to you from the InterContinental hotel in Nairobi, having just attended the 3rd East Africa Oil and Gas week. The three day conference has been a stunning success, with about 350 attendees from around the world, from various areas in oil and gas – all with an interest in doing deals in East Africa… and it is clear from the conference that Kenya is open for business. Thanks To Global Pacific & Partners for organising it. For anyone with an interest in oil and gas in East Africa, and the explorers trying to strike it rich in this region, this conference was the ultimate event, just check out this line up of presenters: As you can see, the 3 days was completely filled with presentations and networking opportunities. So the conference has begun, we are about half a day in to proceedings and I am sitting in a room full of O&G players listening to the days presentations, when suddenly a wave of murmuring and whispering starts moving across the room. People start getting out of their seats and quickly walking out of the room while dialling their mobile phones. Something was definitely going on. The news spread like wild fire. Kenya had struck oil… The buzz around the conference was amazing. Aside from some minor oil shows 20 years ago, this was the first ever oil strike in Kenya – the news was announced at a press conference by the minister of Energy, Kiraitu Mirungi, and was subsequently confirmed via official company announcements from the two companies that have a 50:50 stake in the well, Tullow Oil PLC and Africa Oil Corp. Both these companies were presenting at the conference the next day. Needless to say, this news stole the show. The atmosphere for the rest of the three days was electric. Everybody wanted a piece of East Africa.
The Cocktail Reception (co-incidentally sponsored by Africa Oil Corp) on the night of the Kenyan oil strike news was quite an event as everyone was in celebration mode, especially the representatives from the Kenyan Ministry of Energy and The Kenyan National Oil Corporation, and who could blame them. What are the odds of being in Kenya, in a room full of key Oil and Gas executives, subject matter experts, analysts, government representatives, stakeholders and investors when Kenya’s first ever oil discovery is announced, and then going for drinks with everyone that night – you can’t make this stuff up! At the Cocktail reception that night, aside from the requisite schmoozing and arbitrary chit-chat which is the order of the day at these sort of events, I tried to seek out and talk to the directors from some of the companies I am currently invested in.
I also thoroughly enjoyed speaking with the representatives from the various private “security” firms that were present at the conference looking for business – these guys are mostly ex-military, and come out with some pretty crazy war stories after they have had a few beers… one of these guys had lived In Mogadishu for 3 years and thought it was very pleasant! I managed to have a beer with James Phillips from Africa Oil Corp, a very friendly guy who was visibly pleased about the discovery that was announced that day. James provided some very interesting insights into the “waxy” type crude that was pulled out from Ngamia-1, and the implications this would have on the current decisions around building the pipeline to transport the crude to port. According to James, the pipeline would have to be directed through warmer regions, otherwise the oil will basically “turn into a candle” given its waxy nature.
I took this opportunity of talking about transporting the Kenyan crude to market after the discovery to swing the conversation to Horn Petroleum (HRN) and their current drilling in Somalia, and how any discovery there would be exported, given the lack of existing or even planned infrastructure. His answer was simple – that is not our problem. I was told that the plan behind the Horn Petroleum entity is to make the discovery, and sell it on. Getting the stuff out of the ground and to market will ultimately be the buyer’s problem to solve, and there are definitely buyers out there who have the resources to make it work. James was very keen to see the cash injection from the exercise of the HRN warrants as soon as possible, and he made no secrets about this. This is what I was hoping to hear, and those of you who have been following my attempt at a 127% trade in 60 days on HRN will know why. On a side note, as of Monday 2nd April, HRN hit $2.00 and the 127% profit trade was successful, and in only 48 days, leaving a whopping 12 days to spare.
I have reworked my exit strategy a little bit on this trade to ride the momentum a bit, more on this in another post coming soon. Now that the 127% profit trade in 60 days has proved to be successful, maybe it’s time to take a look at my attempt at 1000% profit trade in 3 years on a different stock. Actually, I think I am going to have to change the title of that post, because this stock is already up over 120% since I posted the tip a few weeks ago – crazy stuff. I have been getting plenty of emails thanking me for this tip – people are saying it is easily the best $4 they have ever spent, and there is still 900% to go! One guy told me he had doubled the $200,000 he had invested– I wish I had that much to invest! One more thing before we get back to the conference – if you want to learn how to pick your own winners, take a look at my 16 crucial guidelines for picking and trading speculative stocks. Anyway, back to the conference – The key note presentation from the Kenyan Ministry of Energy about “Kenya’s 20 year journey to find oil” provided some great insights into the implications of the previous days oil discovery. The oil discovery dominated at least the first eight pages of every major newspaper in Kenya that day, and was all over the TV and Radio: The speaker from the Ministry of Energy joked about how every Kenyan was expecting a cheque in the mail that afternoon from yesterdays newly discovered oil wealth, and that managing public expectations was a key part of the process, given that from discovery to monetisation will take many years. Avoiding the resource curse experienced by other African producers was high on the agenda. As expected, The Tullow Oil presentation was well received, especially when Ian Cloke showed the little sample cup filled of the actual crude that came out of Ngamia-1. It was very interesting to hear about Tullow’s plans in the region, and the lessons learnt from their experiences trying to sell 66% of their billions of barrel finds in Uganda, to Total of France and CNOOC for $2.5 billion. Total and CNOOC both had groups of delegates at the conference, As did the Ugandan Govenrment. Simba Energy presented on their very early stage acreage around Africa, and US listed Camac energy informed the conference about their recent acquisitions in Kenya. I had a good chat to one of the directors of Madagascar Oil, who are currently developing heavy and conventional oil assets in onshore (you guessed it) Madagascar. There are just too many others to discuss. I also spoke to the director of one of the other East African oil exploration companies I am invested in. I’m not going to tell you who it was because I want you to spend $6 on buying access to my full stock portfolio, where I reveal all the speculative stocks I am currently invested in (sorry to be a pain, but getting to Nairobi wasn’t cheap). After speaking to this director, all I will say is that I was very happy with what I heard. This company has small stakes in some very impressive acreage in offshore Kenya, and not only that – they are partnered with some of the biggest explorer-producres in Africa, who are doing all the hard work in the drilling.
During the presentation, the director of this company told the conference about the upcoming drilling of one of the most massive prospects in the East African region later this year – I think he must have said “5 billion barrels” at least 6 times in his presentation. We get the point! It’s HUGE! This stock is up over 130% in since posted, and climbing fast! I have barely covered the tip of the iceberg of the content presented at the conference. The conference was top class and Kenya and East Africa are definitely open for business. The oil discovery in Kenya has really confirmed that this is the hottest new oil and gas region in the world. Good luck with your investments, Next Oil Rush