TIDMAET
RNS Number : 6783A
Afentra PLC
24 January 2024
24 January 2024
AFENTRA P L C
Operations and Financial Update
Afentra plc ('Afentra' or the 'Company'), the upstream oil and
gas company focused on acquiring mature production and development
assets in Africa, provides an operational and financial update for
2023. Afentra currently holds non-operated 18% and 5.33% working
interests in Blocks 3/05 and 3/05A, respectively, offshore Angola
with working interests to increase to 30% and 21.33%, respectively,
following completion of the impending Azule transaction.
Operational Highlights
-- 2023 average gross production for Block 3/05 and 3/05A was 20,180 bopd
-- Strong operational performance and successful well
interventions have positively impacted performance with gross
production of over 22,000 bopd in December 2023
-- Drone survey completed as part of a holistic gas management
program to identify, measure and reduce GHG emissions
-- 30 successful well interventions were completed in 2023, a
similar number of interventions are planned for 2024
-- Water injection performance improved throughout the year with
42,000 bwipd(1) being achieved in December, further work planned
for 2024 is expected to significantly increase water injection
rates
-- Production was restored at the Gazela field on Block 3/05A in
March and averaged 970 bopd, gross, through 2023
-- Progressed the review of future investment options to unlock
the significant resource base including installation of ESPs, heavy
workovers, infill drilling and development of Block 3/05A
discoveries.
Financial Highlights
-- Cash resources at year end 2023 of $19.6 million, which
includes restricted funds of $4.9 million (2)
-- Debt drawdown on Reserve Based Lending Facility of $33.6
million resulting in year end net debt of $14.0 million
-- Block 3/05 license extension and fiscal terms improvements
approved by government enhancing economics and supporting future
investment programs
-- Company sold its first cargo in August 2023, 300,000 bbls of
crude oil at sales price of $88/bbl, generating pre-tax sales of
$26.4 million
-- Crude oil stock as at year end 2023 of approx. 300,000 bbls,
which with subsequent production supports crude oil lifting of
450,000 bbls planned for late February
-- Afentra has proactively hedged 70% of its February cargo,
this provides floor of $70/bbl and full exposure to the crude oil
price upside
-- Asset level cashflow generation related to 30% equity in 2023
was $67.4 million at an average weighted sales price of
$90/bbl.
Azule Acquisition
-- The Government approval process is ongoing with the
acquisition expected to complete later in Q1 2024
-- The transaction has an effective date of 31 October 2022 with
accrued net revenue being reflected in final payment on
completion
Paul McDade, Chief Executive Officer, Afentra plc commented:
"2023 was a transformational year for Afentra with the completion
of acquisitions from both INA and Sonangol of non-operating
interests in Blocks 3/05, 3/05A and Block 23. Afentra identified
these as assets with very significant upside potential and targeted
acquiring a material ownership in the production licenses. In 2023
we made substantial progress towards that strategic goal and the
asset partnership has been able to demonstrate the clear potential
upside in the assets as the work programme designed to optimise
production is accelerated. The strong operational performance and
well intervention program in 2023 allowed us to increase gross
production to 22,000 bopd by year end. In 2024 the operational
activities and planning for future work programs will build on this
early success and lay the foundations for continued production
growth for many years ahead. The license extension to 2040,
together with the revised fiscal terms, will enable the unlocking
of further significant resources whilst reducing the emissions
profile.
The Company has achieved these successes whilst maintaining a
robust financial position, at year end we had net debt of $14
million with an oil stock of 300,000 bbls, despite executing these
transformative transactions without the need to issue new equity.
Our first successful sale of crude in August 2023 will be followed
by a further sale of crude, approx. 450,000 bbls, planned for late
February 2024. This sale will further strengthen our financial
position ahead of the completion of the Azule transaction.
We look forward to the completion of the Azule acquisition in
the coming months, and to another strong year of operational
delivery in Blocks 3/05 and 3/05A as these assets underpin our more
ambitious growth strategy in Angola and other target markets in
Africa ."
Operations Summary
Block 3/05 (18% )(3) : Two successful light well intervention
campaigns ('LWI') were carried out in 2023 involving 30 wells. This
involved successfully re-entering wells to carry out matrix and
tubing washes, perform water shut offs and re-perforations. These
delivered incremental production leading to average monthly gross
production increasing to over 22,000 bopd in December and have
demonstrated the benefits of low cost well interventions.
Investment in water injection upgrades have doubled injection rates
since 2022 with December rates reaching 42,000 bwipd and further
significant improvements expected in 2024. The improved water
injection is expected to positively impact oil production in the
medium term as reservoir pressure increases. A drone survey to
identify fugitive emissions and assist in quantifying flaring was
carried out in November to better understand the emissions profile
of the asset . This forms part of a holistic gas management program
to identify, measure and reduce GHG emissions.
A full CPR was completed as part of the re-admission of the
enlarged group to trading on AIM with an effective date of 1 July
2023 and published in the Company's admission document. Based on
this report reserves replacement in the first half of 2023 has been
in excess of 150%.
Block 3/05A (5.33%) (3) production was restored at the Gazela
field in March with the Gaz-101 well averaging 970 bopd, gross,
through 2023. This extended production test will help to establish
the long-term resource potential and appropriate development
strategy. Development concepts for the Caco-Gazela and Punja
discoveries were progressed with a focus on balancing near term
production growth, phasing of investment, alongside maximising
value.
2024 & future operations The license extension to 2040 and
revised fiscal terms have improved the attractiveness of the
planned further investment which will unlock the significant
remaining resource base. In 2024 an additional LWI campaign will be
carried out with over 30 activities planned across both blocks.
Water injection capacity is expected to steadily increase through
2024 with a target to double the 2023 average injection rate. A
comprehensive shutdown is planned for Q3 2024, this will include
power and water system upgrades, platform maintenance and
re-certification of the Palanca FSO through to 2029. The
installation of new gas flare meters during the shut down will
enable an accurate baseline emission profile to be generated. With
these plans and the 2023 drone survey and Q1 2024 methane Infra Red
study of the asset, the joint venture partnership is beginning to
deliver on and develop the future gas management workstream.
Planning is continuing on the selection of the initial phase for
ESP installation, heavy workovers and selection of B3/05 &
B3/05A infill wells. Drilling candidates include the undeveloped
Bufalo Nord field, Gazela discovery and a near field exploration
well at Pacassa South West. A decision on these investments will
occur in 2024 enabling the purchase of Long Lead Items (LLI) for
delivery of the programs in 2026. In Block 3/05A the extended
production test on Gaz-101 will continue, enabling further
definition of the development concept for the Caco-Gazela
discovery. A sea bed survey will be acquired over the Punja
discovery to enable planning for a future gas pipeline as part of a
potential zero-flaring well head platform development concept.
Angolan Onshore Bid Round: Afentra submit ted bids for Blocks
KON15 (1,000 Sqkm) and KON19 (900 Sqkm) located in the Kwanza
onshore Basin as a non-operating partner and has been informed that
it has been selected as preferred bidder for a non-operated 45%
equity in both blocks.
Odewayne block : offshore Somaliland (34% interest fully carried
by operator, Genel Energy), the operator and Afentra completed
updated petroleum systems and satellite seep studies with borehole
planning in progress.
Financial Summary
During the course of 2023 Afentra has successfully utilized the
first two tranches of the RBL Facility to complete the acquisitions
of INA's and Sonangol's interests. Afentra finished 2023 in a
strong financial position with a net debt position of $14 million
post completion of both acquisitions. Cash reserves at year end
were $19.6 million with $33.6 million drawn on the RBL Facility.
During the year Afentra made drawdowns on the Working Capital
Facility which has been repaid in full post the August cargo
lifting. As at year end 2023 the WC Facility had full availability
of up to $30 million.
The asset generated cashflow of $67.4m based on lifting revenues
less cash calls and Petroleum Income Tax paid. This asset cashflow
contributed to the reductions in the final completion payments for
both the INA and Sonangol transactions and will also contribute
towards the Azule transaction completion adjustments.
Afentra sold its first cargo of 300,000 bbl in August at an
average price of $88/Bbl and since that time had accumulated a
further stock position at year end of approximately 300,000 bbl
comprised of entitlement production related to INA and Sonangol
purchased working interests. With the accumulated stock position
and further production over the course of January and February 2024
Afentra has scheduled its first 2024 lifting of approximately
450,000 bbl for late February 2024. With the planned lifting in
February, and in light of the recent volatility in oil prices
Afentra has proactively hedged 70% of the scheduled February cargo,
providing downside protection below $70/bbl and leaving Afentra
with full exposure to the crude oil price upside.
The Company intends to fund the anticipated completion of the
Azule transaction in Q1 2024 largely via a drawdown on the existing
RBL Facility, supplemented by the WC Facility and cash resources,
as required. The final capital structure for the combined Angolan
acquisitions will be optimised at completion of the Azule
transaction. Afentra will provide a further financial update at the
time of Azule completion estimated to take place in late Q1
2024.
As previously communicated, both INA and Sonangol acquisitions
have contingent structures with contingent payments subject to oil
price and production hurdles. Each of the contingent payments is
tested at year end against the agreed thresholds. The Company
expects to pay a total of $4.6 million in crystallised contingent
payments (related to 2023) to Sonangol and INA during Q1 2024.
As previously reported approval was given for the extension of
the Block 3/05 License to 2040 along with improved fiscal terms and
the r edistribution of the China Sonangol International's
interests, thereby increasing Afentra's interest in Block 3/05A
from 4% to 5.33%; this interest will further increase to 21.33%
upon completion of the Azule acquisition.
Investor Presentation
Afentra's management team intends to host an investor
presentation via the Investor Meet Company platform in late Q1,
with a date to be set in due course. During the presentation the
management will provide more detail on the operational programme
and objectives for the current fiscal year.
(1) Barrels of water injected per day
(2) Restricted cash relates to the $4.9m deposit held in Escrow
associated with Azule transaction.
(3) Afentra's interest in Blocks 3/05 and 3/05A will increase
from 18% to 30% and 5.33% to 21.33%, respectively, upon completion
of the Azule acquisition .
For further information contact:
Afentra plc +44 (0)20 7405 4133
Paul McDade, CEO
Anastasia Deulina, CFO
Buchanan (Financial PR) +44 (0)20 7466 5000
Ben Romney
Barry Archer
George Pope
Peel Hunt LLP (Nominated Advisor and Joint Broker) +44 (0)20
7418 8900
Richard Crichton
David McKeown
Georgia Langoulant
Tennyson Securities (Joint Broker) +44 (0)20 7186 9033
Peter Krens
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