BMO Upgrades Africa Oil, Kosmos Energy

In two separate reports published Thursday, BMO Capital Markets analyst Brendan Warn upgraded shares of

and

Shares of Africa Oil (TSX listed) were upgraded to Outperform from Market Perform with a price target raised to $3 from a previous $2.60. According to Warn, Africa Oil's primary focus is confirming recoverable reserves at South Lokichar with the intent of submitting an FDP by the end of the year. The company has sufficient funding until at least the end of 2015 although further access to capital remains "tight." The analyst also noted that the company's annual site visit in September should grow interest and visibility towards the end of the year. In addition, pipeline route selection, development planning progression, the Kerio Valley new basin test and ultimately M&A potential will "drive the close of the value gap."

Shares of Kosmos Energy were upgraded to Outperform from Market Perform with a price target raised to $10 from a previous $8.60. According to Warn, Kosmos Energy will benefit from low break-even production from Jubilee and delivery of T.E.N and also continue to target high impact near field exploration and appraisal of the greater Tortue complex. Warn continued that Kosmos Energy's first oil and ram-up of T.E.N will take place in the bottom half of 2016 and Jubilee production will increase to around 115,000 bopd in earl 2016. The company has also booked 28 mmbbl of 1P reserves at T.E.N which is break-even down to $50-55/bbl. Finally, the company has "robust" liquidity of $1.7 billion with net debt of $407 million and cash of $360 million as of the end of the first quarter.