Danny Deadlock blog..... from SH

Junior oils doing very well in Africa

While the junior oil & gas stocks struggle for attention and fair value in North America, Africa seems to be the flavor of choice in 2012. The Chinese have made huge investments there over the past several years but juniors are now beginning to reap the benefits of early entry.

Africa Oil (TSX: V.AOI, Stock Forum; $7.90)

www.africaoilcorp.com

Africa Oil is a newer company with assets in Kenya, Ethiopia, Mali and Somalia. In late 2011 you could buy AOI for $1.20. By May the stock had risen almost 1000% to $11.40. While it has given back a good portion of those gains, the rate of return in 2012 has still been dramatic.

If you look at the image below from 2006, you will see that Ethiopia and Kenya are not even listed as significant oil plays. Yet discoveries over the past couple years means that map will now change dramatically.

You will also note that a good portion of the oil in Africa is in regions with huge political risk or questionable human rights practices – Egypt, Libya, the Congo, and Angola (I am sure that list can easily be expanded).

Even in light of the risks, money is not afraid to pour into these exploration and production plays. Junior mining exploration plays in Africa are trading at very depressed prices (even the golds) yet investors both big and small throw caution to the wind and pile into African oil.