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No one can deny this has been one of the most humbling and difficult markets investors have seen in a long time, if not their entire lives. Gone are the good old days of being able to throw a dart to pick a successful deal.
While some may say it’s a tough market, the abundance of risk capital on the side lines and the flow of money to new discoveries show that there are still a lot of opportunities out there.
I believe I found a company with huge potential, in a hot area, with the right team in place to make this story a huge success.
The company is Taipan Resources (TSXV: TPN) Taipan’s operations are located onshore in Kenya which is home to the recent billion dollar discovery by Africa Oil Corp. AOI hit over 200m of pay and the market bought this stock up from $2 to over $12 at its peak. The most intriguing part is that they only own 50% of the play (London oil giant Tullow PLC has the other half), which means the overall market is valuing their discovery at over $3 Billion. When I say there is an abundance of risk capital on the sidelines, I am not lying. Africa Oil recently announced a financing which they recently increased to $232.5 million!
Again, there is always money for the next big thing.
Taipan is the 4th largest acreage holder in Kenya and currently holds a 100% working interest in Block 2B and a 20% interest in Block 1 which is operated by Afren plc (LON:AFR). They are the largest land holders outside of Tullow and Africa Oil.
Currently Taipan is in the process of completing a farm out agreement on their 100% owned Block 2B. Taipan has given guidance of completing a agreement farm out by year’s end. With this agreement Taipan hopes to receive compensation for back costs, funding for additional seismic, and a carry on the cost of drilling and testing future exploration wells. The plan is to retain a 50% interest in Block 2B.
Depending on what kind of deal Taipan can strike and with whom, this could be a huge potential catalyst for the story and can go a long way to further de risking Block 2B and the company’s financial position.
Don’t just take my word for it. Taipan Resources, not surprisingly, is the only junior company operating in Kenya to receive analyst coverage. Bill Newman, of Mackie Research Capital, recently initiated coverage on December 5, 2012 and came out with an aggressive 12 month target of $1 / share. The report was titled “Elephant Hunting in Kenya” which I couldn’t have said any better. Some highlights from that report highlight the significant opportunity with Taipan: “Taipan provides investors with exposure to high-impact conventional oil plays located onshore within Kenya’s hot rift basin play” “We believe the potential exists for significant share price appreciation once Taipan secures a farm-out partner and we see significant additional upside if a carried exploration campaign results in a new pool discovery” …with bullish comments like these, it’s no wonder why it was up over 20% on approx 1m shares, and now has an analyst target 300% higher than its current price.
Now that this coverage is in place, I expect the story to see more institutional buyers entering the market, which I believe was demonstrated yesterday when we saw Taipan traded just under 1M shares.
Anyone looking for huge leverage through a potential Africa Oil number two, Taipan Resources is a story that cannot be ignored.
Everything you need can be found at http://www.taipanresources.com/
As always, this is not an investment recommendation and everyone should do their due diligence and consult a competent financial advisor before making an investment decision.
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