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Current CAK Stock Info

CAMAC Energy Inc. (NYSE MKT: CAK) is a U.S. based oil and gas company engaged in the exploration of offshore oil and gas leases in deep water Nigeria. The Company was founded in 2005 and has offices in Houston, Texas, Nairobi, Kenya, Banjul, Gambia and Lagos, Nigeria.

Contracted an FPSO

On January 8, 2014, CAMAC Energy announced the signing of a five-year contract for the floating, production, storage and offloading system (FPSO) Armada Perdana. The contract has an effective date of January 1, 2014 with an automatic two year extension unless CAMAC decides to terminate the contract with proper notice. The two parties are aiming to reach an agreement on or before January 31, 2014.

The Armada Perdana is owned by Bumi Armada Berhad, a Malaysia-based international offshore oil field services provider. The company owns four FPSO vessels in addition to the Perdana, which has been assisting CAK in the development of the Oyo Field since its inception in 2009. The vessel can process 40 MBOPD, with a storage capacity of 1 MMBO. CAK management said the vessel’s high utilization rate will be instrumental in the development of the field.

At the time of the release, CAK was producing roughly 2 MBOPD and 40 MMcf/d from its Oyo field assets. The company is proposing a $300 million bond offering which will provide the capital to complete the Oyo-7 well, in addition to drilling and completing the Oyo-8 and Oyo-9 wells. The three wells are expected to bring online a total of 21 BOPD, or roughly 7 BOPD apiece, purely from the Pliocene formation. The company predicts $194 million in 2014 capital expenditures for Oyo operations on wells 7 and 8. An additional $87 million is estimated for the Oyo-9, which is spud and due for start-up in August 2015.

Infrastructure in Place for 2014

Source: CAMAC’s December 2013 Company Presentation

Source: CAMAC’s December 2013 Company Presentation

The FPSO will join a drillship in CAK’s contracted fleet. CAK reached a long-term agreement with Northern Offshore Ltd. (ticker: NOF.OL) on December 9, 2013 to retain the services of the Energy Searcher drillship for up to two years. The vessel is expected to be delivered to the Oyo field in H1’14 and has a drilling depth of 25,000 feet. It was constructed in 1982 and received upgrades in both 2011 and 2012. A full list of specifications on the rig can be found here.

 Full Ownership Obtained

The vessels represent another chapter in CAMAC’s investment in the Oyo field. The company gained 100% working interest in the area on November 20, 2013 – roughly one week after the presence of hydrocarbons were confirmed in the Miocene formation of Block 120. The formation had not yet been discovered in the Block and is regarded as the most prolific play offshore Nigeria. Shell’s (ticker: RDS-B) nearby Miocene-producing Bonga field has produced 450 MMBO since being brought online in 2005.

CAK’s is currently focused on exploiting only the Pliocene, so the Miocene upside is an added bonus. Tests on the Oyo-7 ranging from October 2013 to November 2013 revealed 133 feet of pay in the Pliocene and approximately 65 feet of hydrocarbons in the Miocene. In its Q3’13 conference call, CAK mentioned the will to mitigate risk and it is actively searching for a financial partner to join in its deepwater projects.

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.