The Venus-1X offshore exploration well has discovered 11,3bn barrels of oil (BOE) off the coast of Namibia.
This could be the worlds largest deep-water field, but why should you care?
Well locally listed Hosken Consolidated Investments Limited #JSEHCI owns 49,2% of Impact Oil & Gas. Impact is a frontier oil and gas exploration company focusing solely on offshore Africa.
Impact has a 20% interest in Block 2913b where the oil was discovered.
How does HCI benefit?
- 11bn BOE at a conservative price of $80 (Brent Crude currently at $105)
- Assume production cost of $50 a barrel (UK production cost)
- A $30 profit, on 11bn barrels = $330bn profit
- Impact's 20% interest implies a $66bn profit
- HCI owns 49% of Impact thus $32bn profit
- $32bn is R508bn
- HCI 2021 EBITDA of R3bn
This oil find seems like it could have a massive impact on HCI, but honestly I don't know much about oil companies so maybe I'm missing something.
The market did respond to the news, and #JSEHCI is up 6,5% on the day, but that doesn't seem like nearly enough.
Risks:
- Impact said they're an exploration company, does that mean they wont benefit from producing and selling this oil?
- Can the SA gov block this, thinking back to the whole Shell debacle.
- HCI themselves have been loss making in the last 2 years.
I don't own any HCI as the business didn't originally appeal to me. Buying on this news would certainly be less predictable and more speculative than my typical approach to investing.
I'm interested to hear what everyone else thinks?
Tweet link:
Comentarios