Merrill Lynch initiated coverage of Afren plc today, setting a 110 pence target and buy recommendation.
Merrill argued that Afren was successfully 'scavenging' West Africa for high quality assets, and that the company's well defined strategy, strong visible production, reserve growth profile and 'well connected and proven management' meant that Afren was currently trading on a 'undemanding' valuation.
Merrill calculated that Afren's current portfolio of assets cost US$128 million to acquire, but had a net asset valuation of US$457 million.