11/26/2012 01:59 EST | Updated 01/26/2013 05:12 EST

Africa Oil stock drops to three-month low after drill results disappoint

VANCOUVER - Africa Oil Corp. shares were down about 20 per cent to their lowest level in nearly three months on Monday following a drilling report from a 50-50 partnership in Kenya that disappointed some analysts.

The junior exploration company (TSXV:AOI), which has its head office in Vancouver, announced early Monday that it had received drilling results from the Twiga South-1 exploratory well operated by its partner, Tullow Oil PLC.

Africa Oil said that the drilling had encountered 30 metres of net oil pay in sandstone reservoirs at the Twiga South-1 well.

"This second discovery, immediately following the basin-opening Ngamia-1 well result earlier this year, reaffirms the considerable prospectivity of the Lokichar Basin," said Keith Hill, Africa Oil's president and chief executive.

However, analysts were underwhelmed by the mildly positive news because drilling at the nearby Ngamia-1A exploratory well, which has a similar geological formation, had previously indicated 100 metres of pay.

One of the analysts said the latest results cast some doubt on the companies' ability to repeat the success of the Ngamia well.

Africa Oil's stock was down $2.17 at $8.45 at midday on the TSX Venture Exchange.

The stock hasn't been this low since rising above $8.30 on Aug. 15.