(AFR.L) Afren PLC Buy/Sell

Thanks for that link McBainski, I am quite shocked a how far ahead the US is in that list. I wonder If 2009's figures have been inflated by the action in Iraq and Afghanistan though? I know that during the gulf war the US were using something like 200,000 barrels a day to fuel their aircraft.

I suspect the gap could be closed somewhat in 2010 as China and India grow.

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India & China combined are not even close to US levels of crude consumption: http://www.photius.com/rankings/economy/oil_consumption_2009_1.html

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The jobs report on friday made scary reading....the u-6 figure was 17.5%
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Job figures are also a lagging indicator of the economy. US grew by 3% therefore officially out of recession and a fair few countries never went into recession - not to mention China and India. Consumption of oil by China and India must dwarf US?

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I would also add to the Taffy debate that there has been a lot of positive development news on Ebok together with the Okwok acquisition since the hedge fund puke induced 14p low so talking of a return is frankly scaremongering.

Re the US$ strengthening and sending commodities down you currently have the carry trade supporting the $ (and £ for that matter) which will unwind it just a matter of time. The Indians certainly don't see $ as attractive as they have been selling $ and buying into gold recently.

Of course its a double edged sword given all earnings are in $.

As a matter of interest the first time the Dow went through 10,000 i think was in 1999 when oil was c$20 and gold was under $300. Something tells me America isn't quite the economic force it was 10 years ago (and nor are we for that matter)

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The jobs report on friday made scary reading....the u-6 figure was 17.5%
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This news did not send the market down which is actually a bullish sign.

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http://www.lifeaftertheoilcrash.net/

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took the words out of my mouth

History has proven that unemployment continues to rise while economies have already exited recession. So on that basis a firmer dollar would imply a stronger US economy and as you point out as the USA imports 25% of the Worlds oil would result in rising oil prices... but as we also know firmer oil prices usually result in a weaker dollar (as we saw last year)

almost a chicken and egg situation

I agree with Steadygrowth on the price of oil in the short term but in the medium term once the Chinese have doubled their per capita consumption and not even come close to the average in Europe,,, USA demand will be far less of a factor... In 2005 We heard people talk about the World being 3 yrs into a ten year commodity boom cycle and now possibly 6 yrs into a 20 yr cycle.. China's demand for raw materials is insatiable and there is no signs of them slowing any time in the near future. Look at how aggressive they are in trying to acquire Worldwide commodity assets (Oil/Iron Ore/Farming etc etc)

Afren's long term prospects are fantastic and I am confident of their ability to navigate the sometimes dangerous waters that TC quite rightly refers to. They are African's empowered to do business in Africa...

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Fair enough... maybe just reword things slightly.

Statements like "oil prices will fall" makes it sound like a statement of fact, not an opinion. As for a healthy debate, I more than welcome other points of view as that is the point of these boards.

When only the positives or negatives are highlighted it makes me think there's another motive involved, that's all.

Out of interest, are your comments regarding the sp only focused on the short term?

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why does there have to be a motive?I like debating and being contrarian,but that can be healthy for all

nothing I say here affects the oilprice or the afren sp..I have no ctrystal ball nor do you that's why there are bulls and bears

I can be bullish or bearish if I see an opportunity to make money and that is all stockmarket investing is about.

If afren broke technicals along with the oilprice,I would go short,but I wouldn't be long here at the present price because of the risk I see

The jobs report on friday made scary reading....the u-6 figure was 17.5%

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Nice try, but I have met much better shorters/ derampers than you in my time. I agree with a few of your comments, but you give yourself away with some silly mistakes. Anyway, moving onto the points you raised:

1. "Will fall"?? Can I borrow your crystal ball? Saying that, I also feel in the short-term the oil price might come down a bit - my feeling is $65 at worse.
2. If Afren were producing 100,000 barrels today, the sp would be over £10 not 87p. So not sure what your point is.
3. Actually most companies aren't "finding" any new oil. They are going back to areas that were discovered 20 or 30 years ago, but not seen as economically viable at the time. With modern technology a lot of these reserves can now be extracted at much lower costs and with better recovery rates than ever before.
4. This is there first year of full production. I can assure you that at current rate of 22,000 there will be lots of profit in next set of results.
5. Nigeria is getting better, but that is the main concern I have about this share and have taken that into account before buying into the company.
6. Looking at China's growth rate in the last 6 months that's nothing that concerns me.
7. Once again, may I borrow your crystal ball?

To be honest I really don't care what you're trying to do and what your motives are because I've done extensive research on which I based my investment in this company. I just think it's important for new investors to make sure they evaluate all positive and negative comments carefully when making their decision. As I've said some of your comments are valid, but some are just scaremongering. Then again some people are also ramping too much and ignoring obvious risks involved. Nothing beats doing your own research.

Just to point out this is all IMO and my decisions are based on a long term investment opportunity and I do own 75,000 shares - if you wonder what my motives are.

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I have no position in afren,I will post when I do...technically afren is still bullish

I don't hate afren,just have concerns like

1/oil prices will fall
2/it hasn't ACTUALLY made 100,000 barrels yet so still jam tomorrow
3/peak oil is a myth 'cos companies like afren keep finding it
4/afren make no profit and pay no dividend
5/nigeria is notorious for political and commercial tension/turmoil
6/commodities are being stockpiled
7/the dollar is set to rally hard forcing commodity prices down

Longer term obviously if afren plan comes off then its a multi bagger,but never underestimate the stockmarket to surprise you

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The other point to note is that whilst oil can be volatile and who knows maybe taffy will be right and it drops to $35 but the point I really disagree with and something that taffy hasn't talked about is the main reason for the massive sell off in the aim this time last year.

Yes the oil price fell and yes the main markets fell also BUT the big issue was the massive decline of the hedge funds on top of that which is highly unlikely to rear its ugly head again (certainly not so soon as I would have thought that conservatism would have taken over a bit more than where we were in the summer of 2008). Whilst the ftse 100 fell significantly (around half) from the start of 2008 to March 2009, the Aim fell significantly more, suggesting that positions needed to be closed to either deal with margin calls elsewhere or to repatriate money back to the clients of hedge funds. The Aim stocks would have been the first to go, as they would have kept the safer stocks of the ftse 100.

Like I said the oil price and the stock market could fall again (they could also rise obviously) but the huge sell off which brought about so many bargain basement prices of primarily aim stocks or heavily indebted main market stocks will probably not occur again (certainly not to the same extent).

Its not taffys idea that oil could fall that I disagree with (its definately possible) and therefore I would agree that a drop in the share price is possible but to state that it could drop to 14p again when the oil price is unlikely to fall back to its lows if it does fall, afrens debt is decreasing, afrens production is increasing and the wider market is unlikely to fall by as much is just basic scaremongering (most likely as before to try and scare people to sell shares to satisfy his short).

Taffy - Are you going to come out and state your position this time prior to closing it just so we know what your position is? I have no problem with you shorting stock but scaremongering to try and increase your position whilst decreasing others positions I don't like.

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obviously the price of oil will affect all the s/p of all the oil companies but i think trying to link the share price of Afren @ 18 pence with Oil at 35 ish is missing the point . When the the world markets went into freefall in q4 08 the ramificatiions for a young aim listed company like Afren were horrendous, but at that stage they were producing almost no oil hence the share price collapsed. Since that time they have proven their value, acquired more assets and are on track to start producing a signifcant revenue stream.

in the short term the USA will ofcourse have an impact on the price of oil but I think the demand from China etc will more than make up in the medium to long term.

As far as the dollar goes,,,, I have no idea... I watch the dollar all day long as I earn in dollars (and spend GBP) so I'm not quite sure how you can state categorically that a weak dollar is unsustainable....

the next 12 months will be fascinating and not just for Afren. I personally feel very comfortable having Afren as a very large portion of my share portfolio, that said its my no means a large part of overall portfolio of investments. Everyone should be aware of the risks they are taking investing in any shares and while the negative views often seem to be shouted down they are valid. Personally I wouldn't advocate being overexposed to investments in Nigeria (apologies to my Nigerian friends!). That said I am very confident that Afren will be a huge success story. Afren is without doubt the indigenous solution......

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Yes romeo you are right. Hence why taffy gave his opinion then i gave mine back. Whats the problem with that? Its a discussion board like you said!By the way, i am not someone that bought in at 90 odd p like you think, been here since 18p so doing quite well. I've no need to ramp and not sure where you think i have

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Always good to have a little sidedoor near.
Careful at the peak ...with the last stages of the current bearmarket recovery run.


>>The bearish story for natural gas is becoming very well known. Lots of bearish natural gas analysts are around - rightfully so. With record levels of natural gas storage and weak industrial and generation demand spot prices have dropped to seven year lows.<<
http://www.marketoracle.co.uk/Article13596.html

>>September and October are historically the months with the lowest total natural gas demand as the heating season has not started and demand from electric peaking plants is subdued with the end of summer’s heat and air conditioning loads. Natural gas drilling activity, measured by the rig count, has fallen to under 700 from 1,606 rigs running last year – a drop of 56% from year ago levels.
Short term we have no argument with the bearish view of natural gas. But over the longer term, six to eighteen months out, we have run across some interesting - and very bullish - forecasts. A growing number of companies have also dropped hints during quarterly conference calls that they think natural gas markets will improve in 2010. If so, the natural gas equities in our opinion will run further and faster than the commodity.<<

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It would be nice, MrPoshmann, Shuggle... if you`d allow other posters a balanced opinion, or even an opinion totally different to your own. Thanks. This is what makes an "opinion board", right?!

So why hammer someone as soon as he posts the smallest doubt about a further commodity rally? And before hunting me down again, let me tell you that i love Afren and have been called in here by great posters like Hub, GoMad and Riddler here on iii or lse-uk at 40 / 50 / and 60p entry points. That is fair enough. So why ramping everythig when the SP was 96.25p three days ago? That ramp is unfounded. So far I am glad that I have not had to buy at ze top ..and watch things go down.

Why oil looks set to slide further
http://www.moneyweek.com/investments/stock-markets/investors-are-right-to-be-worried-stockmarkets-heading-for-a-correction-93912.aspx

>>Stocks were far from the only assets feeling the jitters yesterday. Crude oil futures took a tumble too, sliding to below $66 a barrel. US inventories of pretty much all oil and petroleum products rose last week, according to the Energy Information Administration. This shows that "oil consumption is in no way recovering as well as the broader economic conditions are," according to Sucden Financial Research analyst, Nimit Khamar.
This notion that broader economic conditions are recovering is an interesting one. Things might be getting 'less bad' but in truth, the only 'indicator' that's really taking off is the stock market. Bulls often like to point out that the stock market doesn't necessarily need the economy to be strong for it to put in a good performance, which is a fair point. But at the same time, investors tend to assume that a rising market means that the economy must be getting better.<<

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US unemployment - unemployment is trailing, not leading, indicator in the downturn - no evidence (yet) that it will exert sufficient downward pressure on economic activity to trigger a 'double dip'.

China growing at 9%.

No evidence provided for sp fall to 35p.

Outlook for Afren when sp fell to 13p was entirely different from current situation - EBOK - that is the nature of E&P company sp moves.

Share prices will rise and fall and we cannot predict all eventualities, but your analysis is entirely unconvincing.

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25% of world oil demand is from the US..did anyone actually READ the friday jobs report?

"Today's release of the October jobs report showed the loss of another 190,000 jobs had pushed the official unemployment rate to 10.2%, only the second time since the Great Depression that unemployment was quoted in double digits (factoring in workers who had given up job hunting altogether or have settled for part-time work would push that rate to 17.5%). That didn't stop Wall Street pundits from trying to fashion a silk purse of this sow's ear. The 'green shoots' crowd focused on the slowing pace of job losses, the nascent economic 'recovery' (even if it is jobless), and the projected improvement in 2010. No mention was even made of the quality of what few jobs were being created.

The analysts completely ignored the continued trend of replacing goods-producing jobs with those jobs that require production from other sources. For example, we lost 61,000 manufacturing jobs last month, but added 45,000 jobs in education and health services. In particular, the addition of health workers is nothing to celebrate. Just as a family's economic position is not improved by higher medical bills, the country as a whole does not benefit from increased health-care spending. Until this trend reverses, our unbalanced economy will not regain its stability, a real recovery will never take hold, and the overall job outlook will get much bleaker."

other points
1/if oil is so scarce why do thousands of companies like afren keep discovering billions of barrels of it
2/rising price has alot to do with dollar weakness which is unsustainable
3/what the **** happens when they turn off the stimulus?

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