Nigerian oil: Afren indeed - FT.com Afren's trading statement on Tuesday reminded investors that Nigeria still matters a lot to this company: the country accounts for almost all of its current cash flow. Now Afren forecasts its oil production will be more than 47,000 barrels per day, at the upper end of its guidance for 2013. Not surprisingly, this good news buoyed the share price for this £1.7bn company, which had slumped 15 per cent this month. About time, too. Afren's shares have persistently traded at low cash flow multiples and at a significant discount to net asset value per share. But the problem does not lie with Afren's connection to Nigeria, which seems a hot commodity these days. That stock market has been on a tear, up 27 per cent in the past year alone in US dollar terms. Perhaps the problem lies with the noise around the local sector? A draft Petroleum Industry Bill in Nigeria has caused consternation to some international oil companies there. They worry that the government's share of oil pumped will rise - not just to a minimum of 73 per cent (up from 61 per cent) but to above 90 per cent. Perhaps divestment plans could accelerate. Shell, for example, intends to sell some of its portion of onshore and near-shore leases in the eastern Niger delta with a capacity of 225,000 barrels of oil equivalent per day. All good news for local players. A 2010 Nigerian law, known as the Local Content Act, provides advantages to indigenous groups bidding for oil assets there. Privately held Seplat, Aim-traded Lekoil and Afren's sister company First Hydrocarbon, among others, have all benefited. Investors have lapped up African equities during the past year. Yet despite the popularity of Nigerian shares, no premium accrues to the assets of Afren. Nigeria may be known for its oil, but oil investors prefer not to value Nigeria.