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Cobalt International Energy Shares Launched Higher: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of oil explorer Cobalt International Energy (NYSE: CIE  ) hit pay dirt this morning, rising 32% after signing a deal to drill for oil off the Angolan coast.

So what: Cobalt and six other oil companies signed contracts for blocks in Angola's pre-salt ultra-deepwater fields, believed to be similar to what has been discovered off Brazil's coast. The company will be the operator of Block 20 with a 40% working interest, partnering with Sonangol Pesquisa e Producao S.A. (30%), BP Exploration Angola (20%), and China Sonangol International (10%).

Now what: If this field is as big and successful as some believe, the company will be in a prime position with Block 9, Block 21, and now Block 20. The company is planning to drill its first well in 2013, and after finding encouraging results in Block 21, production should expand. Other firms such as Statoil (NYSE: STO  ) and Total (NYSE: TOT  ) were also awarded blocks today, but as one of the smallest players, the upside for Cobalt is tremendous. I think shares can continue rising as production results come out and investors get a better feel for how much oil will be produced in the region.

Interested in more info on Cobalt International Energy? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Motley Fool newsletter services have recommended buying shares of Statoil A and Total. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (2) | Recommend This Article (4)

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  • Report this Comment On December 20, 2011, at 3:57 PM, IBDvalueinvestin wrote:

    Those were my sentiments as well.

    Good find. Like they say its better to get in late or never at all on this kind of potential for a company.

  • Report this Comment On December 21, 2011, at 4:36 PM, Saratogahawk wrote:

    Interestingly, CIE has one of the most dominant positions in Angola and Gabon. This area is distinctly tied geologically to the Campos Basin off the coast of Brazil. That Basin has already demonstrated billions of barrels of proved and provable reserves. If Angola produces similarly CIE could have 40% of billions of Africa barrels. With only 350 million shares outstanding CIE could easily be worth 10-100x its current price. It has the cash to do the drilling, has the necessary partners including Angola (SINOGOLA) and has the experience. With its large GOM lease holdings CIE has substantial upside and probably no downside from here.

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Related Tickers

10/28/2016 10:21 AM
CIE $1.01 Down -0.05 -4.72%
Cobalt Internation… CAPS Rating: **
STO $16.63 Up +0.03 +0.18%
Statoil CAPS Rating: ****
TOT $48.22 Down -0.16 -0.33%
Total CAPS Rating: ****