The Share Centre adds Afren to its ‘buy’ list

Helal Miah, investment research analyst at The Share Centre, explains why Afren is attractive to high risk investors looking for a balanced investment.

“Oil and gas exploration company Afren has a good track record of exploration and development of oil fields, which has helped grow revenues at impressive rates in recent years. The group has been building on its impressive production growth rate and further development works should ensure that Afren is able to generate higher margins and double digit production growth in the next five years. In East Africa, resource estimates have been upgraded and these discoveries signify the high grade and volume prospects in the core region.

“The group’s operations are spread over a number of countries in East and West Africa and also the Kurdistan region of Iraq. Despite increased security concerns in Iraq leading the company to temporarily suspend operations, Afren have stated that it will return as soon as it is safe to do so. The company stated that the impact on its balance sheet and day to day operations should be minimal.

“Earlier this year the shares plunged after it emerged that the CEO, COO and other directors were sacked following an independent investigation regarding unauthorised payments. However, given the lower price and a p/e multiple of 8x, the shares once again look attractive. With the situation a little clearer, we have added Afren to our ‘buy’ list for high risk investors.”