Our opinion on the current state of EFORA(EEL)

Efora Energy (EEL) is an African oil and gas company that has been a part of the industry landscape since its incorporation in 1993. The company was listed on the Johannesburg Stock Exchange (JSE) in October 1994 and has engaged in various sectors of the oil and gas industry, ranging from production to distribution across several African countries.

Efora operates in key regions including Egypt, Nigeria, the Democratic Republic of Congo (DRC), Zimbabwe, and its home base, South Africa. In Egypt, Efora owns the Mena International Petroleum Company, which is focused on developing the Lagia oil field in the Sinai Peninsula. In the DRC, the company holds a significant stake in Semliki, which in turn owns a portion of block III in the northeastern part of the country near the Ugandan border, currently in the exploratory phase. In Nigeria, Efora has a joint venture with Energy Equity Resources (EER) that is centered on lifting and trading Nigerian oil.

Africoil, a subsidiary of Efora, plays a critical role in its operations by distributing approximately 45 million liters of oil products monthly through its two depots in Boland and Beitbridge, with the majority of its sales occurring in South Africa.

However, Efora has faced significant challenges. The company’s financial performance has shown dramatic fluctuations, as evidenced in the results for the six months ending on 31st August 2021, which were reported on 27th November 2023. These results highlighted a staggering 95% drop in revenue and a headline loss of 0.32 cents per share, an improvement, however, from a loss of 25.08 cents in the previous period. The trading update for the six months to 31st August 2022 projected an earnings turnaround with HEPS expected to be between 0.68 cents and 0.74 cents, contrasting with the loss in the prior period.

Despite these efforts at recovery, the company’s shares have been suspended since 9th October 2020 due to delays in publishing its financial statements, reflecting ongoing issues with governance and financial management. On 31st January, Efora announced its intention to produce both interim and final accounts for 2023 by 28th February 2024, signaling potential moves towards resolving its compliance issues.

Investing in Efora Energy carries significant risk, largely due to its volatile financial performance, operational challenges, and the overarching regulatory issues demonstrated by the suspension of its shares. Potential investors should exercise caution, keeping an eye on the company’s ability to meet its financial reporting obligations and on any developments that might affect its operational stability and market standing.