Africa Hydrocarbons (V.NFK) & DualEx (V.DXE) plunge 46% & 53% before news release

Chris Parry Chris Parry, Stockhouse.com
0 Comments| November 22, 2013


Africa Hydrocarbons (TSX:V.NFK, Stock Forum) and it's venture partner DualEx (TSX:V.DXE, Stock Forum) have seen their stock prices plunge Friday on news of well problems - hours before being halted pending any official news release.
 
The news involved the BHN-1 exploration well in the Bouhajla Block of the Sidi el Kilani field in Northeastern Tunisia, in which NFK has a 47.5% interest with the remainer owned by DXE. NFK boasts the play as their primary asset.
 
Africa Hydrocarbons explained (albeit a bit late), “The Operator, DualEx Energy International Inc., has attempted to complete three separate intervals of the Abiod formation. These intervals were chosen based on log data interpretations suggesting the intervals had the highest occurrence of natural fractures, higher matrix porosity and hydrocarbon saturations. Following perforating, attempts were made to inject acid into the formation to clean up the near wellbore zone and enhance the reservoir's natural permeability. The acid injections could not be completed suggesting the perforation of the wellbore was ineffective. As a result, the Operator acquired additional log data and is planning further diagnostic measures to ascertain whether the wellbore was perforated as expected. The wellbore will now be suspended while awaiting the arrival of wellbore imaging equipment into the country, which is expected within 30 days. “
 
The release continued, “The operational issues regarding the completion will delay the evaluation of BHN-1 however the Company believes this unexpected result needs to be thoroughly investigated in order to resolve the problem for the next completion attempt if the analysis indicates the absence of effective perforations.”

Dualex CEO Garry Hides said, "Although this situation is unusual and not as expected, we are committed to ensuring that a proper and thorough evaluation of the BHN-1 well is undertaken. [...] Should this analysis confirm the absence of effective perforations, a second completion program will be initiated."
 
With NFK and DXE stock having lost nearly half their value before investors were made aware of the well news, questions must now be asked as to how the news leaked and whether insiders benefitted unduly from non-public knowledge.
 
V.NFK had drifted in the last week, losing around 16% of value in the last five trading days, but it hit the floor right off the start of trading Friday with significant selling volume.
 
When the stock was halted, the company had dropped $0.115 to $0.13, down from $0.245.
 
This is not the first time the stock has been involved in a selling run, with a dip in July from $0.08 to $0.025 giving investors fits. The company had enjoyed a significant rise since, eventually turning a corner at $0.28.

Trading resumed at 1:30pm eastern and saw more selling, with shares falling to $0.11 at one point before clawing back to the halt level.

DualEx shares, which have basiclly doubled since October, lost all those gains before the trade halt and news release, and another $0.05 subsequent to trading being resumed.


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