White Nile could take £100m hit

MONEY men in the City believe almost £100m will be wiped from the value of White Nile, the oil minnow set up by former England cricketer Phil Edmonds, when its shares re-list next month.

Market makers said the opening price for the stock, suspended at 138½p almost three months ago after a 13-fold surge in just five days, could be as little as 75p.

Edmonds hopes the shares will resume trading within two to three weeks after the formal signing of a 25-year licensing deal with South Sudanese authorities on Monday.

White Nile has the rights to a 60% interest in a 67,000 square kilometre exploration block near the Kenyan border and believes it could be sitting on as many as five billion barrels of crude.

But number crunchers in the City are taking Edmonds' words with a pinch of salt. Simon Guy, a trader at IG Index, said: 'I think the whole thing is a bit of a farce. There's no proven reserves, no method of transporting the oil, there's a dispute between the South Sudanese and the North and Total in France is still claiming rights to the same block.

'The other problem is that we have heard two, three, four times already about the shares coming back, and they never have. There have been so many surprises that I'll doubt if they actually will.'

White Nile has also been targeted by short-sellers including Simon Cawkwell, who stands to make £200,000 if its shares drop back towards their original listing price of 10p. He said the company's current value, £205m, was unjustifiable. 'It will collapse,' he added.

Stock Exchange officials delayed the re-listing until the operating licence was in the bag. White Nile now plans to begin seismic work on part of its exploration block. The first well may be a year away.

Edmonds is backed by a number of heavyweight fund managers including RAB Capital, Edinburgh-based Artemis and American specialist US Global. US Global chief investment officer Frank Holmes said the White Nile model, which will see the South Sudanese take a 50% stake in the Plc and thereby gain access to the capital market, could be repeated elsewhere.

He said: 'It's a model other African countries should emulate. Putting their assets in a quoted vehicle and raising money to develop them - it's a wonderful solution.'