30 May 2024
AFENTRA
PLC
UNAUDITED ANNUAL RESULTS FOR
THE YEAR ENDED 31 DECEMBER 2023
Afentra plc ('Afentra' or the
'Company'), is pleased to announce its unaudited annual results for
the year ended 31 December 2023.
2023 SUMMARY
Overview
• During FY2023 and post
period, successful completion of three acquisitions in Angola to
acquire 30% non-operated interest in the producing Block 3/05 and a
21.33% non-operated interest in the adjacent development Block
3/05A:
o Completion of acquisition of interests from Sonangol (14% in
Block 3/05 and 40% in Block 23).
o Completion of acquisition of interests from INA (4% in Block
3/05 and 5.33% in 3/05A).
o SPA
signed with Azule to acquire further equity in Block 3/05 and
3/05A.
o Post
year-end, completion of acquisition of interests from Azule (12% in
Block 3/05 and 16% in 3/05A)
•
Appointment of Thierry Tanoh as an Independent Non-Executive
Director and Chairman of the Audit Committee.
Financial Highlights
• Cash resources at year
end 2023 of $19.6 million (2022: $30.6 million), which includes
restricted funds of $4.9 million (2022: $10.2 million).
• Reserve Based Lending
Facility at year end of $31.7 million resulting in year end net
debt of $12.3 million.
• First cargo of 300,000 bbls
of crude oil sold in August 2023, at a sales price inclusive of the
Brent premium of $88/bbl, generating pre-tax sales of $26.4 million
net to Afentra.
• Crude oil stock as at
year end 2023 of approximately 300,000 bbls[1].
• Net asset level cashflow
generation related to 30% equity in Block 3/05 in 2023 was $67.4
million at an average weighted sales price of $90/bbl.
• Mauritius Commercial
Bank became a lender by entering both the RBL and working capital
facilities, Trafigura retains an interest in the RBL facility and
will continue as an offtake provider.
Operations
• Combined 2023 gross
production on Block 3/05 and Block 3/05A was 20,180 bopd (2022:
18,700bopd).
• Light well intervention
campaigns successfully executed, leading to December 2023 gross
production exceeding 23,000 bopd.
• Water injection upgrades
doubled injection rates, with December rates of ~42,000
bwipd.
• Gazela field (Block
3/05A) production was restored in March 2023 leading to gross
production rate of around 1,300 bopd.
• Future investment
options progressed to unlock the significant resource base
including review of electric submersible pumps ('ESPs'), heavy
workovers, infill drilling and development of Block 3/05A
discoveries.
• Drone surveys performed
to identify fugitive emissions and assist in quantifying
flaring.
• Competent persons report ('CPR') with reserves replacement in
the first half of 2023 in excess of 150%.
Post year-end Summary
• Selected as the
preferred bidder for 45% non-operating equity in both KON15
and KON19 located in the Kwanza Basin
onshore Angola.
• PSA for the onshore
Block KON19 negotiated with Agência Nacional de Petróleo, Gás e
Biocombustíveis ('ANPG') and now await the formal Government
approval.
• Completion of the Azule
acquisition resulting in Afentra holding non-operated interests of
30% in Block 3/05 and 21.33% in Block 3/05A.
• Government of Angola
declared the Punja Development Area in Block 3/05A a marginal
discovery with improved fiscal terms now applicable for the
remainder of its term.
• Sold cargo of 450,000
bbls of crude oil in February 2024. The sales price inclusive of
the Brent premium was $85/bbl, generating pre-tax sales of
$38.2 million to Afentra.
• Net debt at Azule
completion of around $46.2m with crude oil stock of around
840,000 bbls1.
•
Combined gross production for the first four
months of 2024 ending 30 April for Blocks 3/05 and 3/05A has
averaged ~23,000 bopd (Net: ~6,800, bopd).
Commenting on the update, CEO Paul McDade said:
"Last year was another
transformative period for the company as we completed our first two
transactions in Angola. The subsequent completion of the
Azule transaction represented another key milestone for Afentra as
we, alongside our partners, turn our attention to realising the
significant organic growth opportunities that we see in the quality
portfolio that we have assembled. With these initial
transactions, we have successfully proved our suitability as a
credible counterparty for divesting IOCs/NOCs, our ability to
deliver high value accretive deals, and to fund these types of
deals through smart deal making. The market dynamics in
Africa continue to support our inorganic growth strategy and we are
actively screening compelling opportunities that meet with our
commercial criteria. We look forward to updating the market
through what will be an active year ahead for
Afentra."
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
About Afentra
Afentra plc (AIM:AET) is an upstream
oil and gas company focused on opportunities in Africa. The
Company's purpose is to support a responsible energy transition in
Africa by establishing itself as a credible partner for divesting
IOCs and Host Governments. Afentra has an 30% non-operated interest
in the producing Block 3/05 and a 21.33% non-operated interest in
the adjacent development Block 3/05A and a 40% non-operating
interest in the exploration Block 23, all offshore Angola in the
Lower Congo Basin. Afentra has a 34% carried interest in the
Odewayne Block onshore southwestern Somaliland.
Inside Information
This announcement contains inside
information for the purposes of article 7 of Regulation 2014/596/EU
(which forms part of domestic UK law pursuant to the European Union
(Withdrawal) Act 2018) and as subsequently amended by the Financial
Services Act 2021 ('UK MAR'). Upon publication of this
announcement, this inside information (as defined in UK MAR) is now
considered to be in the public domain. For the purposes of UK MAR,
the person responsible for arranging for the release of this
announcement on behalf of Afentra is Paul McDade, Chief Executive
Officer.
CHIEF EXECUTIVE OFFICER'S STATEMENT
Value driven growth
Introduction
I am delighted to provide the
following statement that corresponds to what has been a
transformative period for the Company as it completed its first two
transactions, formalising its entry into Angola and the partnership
on the high-quality Block 3/05, and post period completed a deal
with Azule that provides further exposure to Block 3/05 as well as
a meaningful interest in Block 3/05A.
This past year, Afentra has evolved
into a Company with an operational focus underpinned by robust
production, proven reserves, strong operating free cash flow and a
solid foothold in an established country that provides scope for
more growth opportunities in Angola and beyond.
Afentra ends the year as a Company
with December net production in excess of
6,500bopd[2], 2P net
reserves of 32 mmbbls[3] and a strong growth platform from which
to achieve its longer-term growth ambitions. It was also a year in
which we were able to demonstrate the commercial attractiveness of
the transactions that we have delivered with the final completion
statements for INA and Sonangol deals showing the strong cash
generation of these interests from the respective effective
dates.
Strategic Progress
While these initial deals have been
transformative for the Company, they also represent initial
steppingstones to our longer-term growth ambitions as we seek to
build a multi-jurisdictional business of scale in our target
markets in Africa.
The market drivers for Afentra's
purpose continue to intensify as global nations seek energy
security and the African continent continues to echo its right for
a Just Transition that balances the socioeconomic impact of Energy
Transition alongside the environmental focus that underpins the
Global Energy Transition. While the pace of the industry transition
we envisaged is a little slower than anticipated due to sustained
high commodity prices and lack of credible counterparties like
Afentra, that transition is occurring and will only accelerate over
the coming years.
The establishment of Afentra as a
proven and credible counterparty with the technical and commercial
acumen to transact with IOCs/NOCs and bring value adding industry
expertise to any partnership is a message that we have successfully
promoted through the industry since inception. Our brand and
profile is now well established in our target markets which we
believe will ensure we get sight of many growth opportunities to
consider alongside the opportunities that we are identifying and
progressing through direct engagement.
The strategic priority for Afentra
is always value over growth. The Company wants to establish scale,
however, it will do so in a strategic and responsible way, by
delivering value accretive and strategically complementary deals
that demonstrate commercial discipline and support our long-term
growth objectives. In this regard, we take a very prudent approach
to growing the business in terms of only progressing opportunities
that we feel tick all the boxes of our strict criteria assessment,
and ensuring these can be delivered in a way that maintains a
strong balance sheet and delivers long-term value to our
shareholders.
All the transactions delivered to
date have been crafted with this disciplined focus in mind and the
value aspect is always critical. Certainly, the initial deals we
have delivered have been complex and required a great deal of
discipline and flexibility to get them over the line. This is best
reflected in the Azule deal which resulted in an amendment to the
previously announced Sonangol deal to ensure the appropriate
balance of interests on the assets going forward. While this
resulted in longer completion times than we might have hoped for
and a second suspension to trading on AIM given it was classified
as a Reverse Takeover transaction, more importantly it enabled us
to structure deals in a competitive manner that ensured strong
partner alignment which is a critical aspect for the successful
delivery of the forward strategy for the benefit of all
stakeholders.
It is pleasing to see our unwavering
focus on value creation reflected in the market valuation of the
business through the course of the year, especially in the context
that this initial growth has been delivered without the issuance of
new equity and all while retaining a solid balance sheet with
liquidity and a strong cash flow profile.
We hope to maintain this growth
trajectory as we demonstrate to investors the strength of that free
cash flow relative to our market capitalisation and the
considerable upside that we hope to realise from this high-quality
portfolio alongside our partners.
Angola and beyond
Through Afentra's initial
transactions, the Group is now established in a mature market with
a plethora of growth opportunities. Indeed, since our entry into
Angola, we have discovered that there are more compelling
opportunities across the full spectrum of the industry, from mature
offshore producing fields to the relatively untapped low-cost
onshore exploration concessions.
Since our entry we have also
witnessed first-hand a well-functioning operating jurisdiction
overseen by a Government that is responding to the market factors
of today to deliver the long-term socioeconomic and environmental
requirements for the benefits of the country and its
citizens.
The enhancement of the fiscal terms
and associated licence extension of Block 3/05 demonstrate the
pragmatic approach of the relevant authorities in Angola
recognising the collaborative approach required between Governments
and industry to encourage long-term investment into the industry
for the benefit of all stakeholders.
Afentra places a lot of value on the
strength of partnership alignment and collaboration and recognises
that it is crucial for the progression of any project or industry.
Certainly, over the course of many meetings with the Ministry and
Regulators in Angola, we have gained a firm grasp of their
objectives, requirements and vision for their industry, and we in
turn have outlined the ways in which we can help them achieve those
outcomes and the role that we see Afentra playing in
Angola.
Following completion of the INA and
Sonangol transactions in 2023, Afentra now has a seat at the
partner table and is actively providing its technical insights.
This approach is a critical aspect to Afentra's growth strategy,
especially when taking on non-operated positions, and ensures the
Company can leverage its considerable technical and operational
expertise to help the assets realise their full potential for the
benefit of all partners and wider stakeholders.
By entering Angola's industry,
Afentra has made a pledge to play a long-term role in delivering
its duties for the benefit of the country and its people. We have
demonstrated our suitability as a partner by aligning ourselves
with the full spectrum of the industry from Sonangol, the National
Oil Company, through to smaller local companies. The opportunity
set for Afentra to acquire operated and non-operated interests in
quality assets in various stages of the development cycle provide a
significant runway for Afentra to build a meaningful business in
country and play an important role in delivering the industry
transition that continues to be in the early stages.
It was in that regard that Afentra
participated in the Angolan Onshore Bid Round, submitting bids for
Blocks KON15 and KON19, located in the Kwanza onshore Basin, as a
non-operating partner. We were subsequently selected in early 2024
as preferred bidder alongside ACREP, a local Operator with the
requisite capabilities to make a suitable partner for Afentra in
KON19 and with Sonangol in KON15. While this kind of earlier-stage
onshore licence is not the typical opportunity that forms our
strategic focus, the sub-surface opportunity is highly compelling,
with Blocks lying adjacent to both legacy oil fields that are
currently being appraised for potential re-development and existing
infrastructure allowing rapid commercialisation. Furthermore,
Afentra's participation in this process alongside local players
continues to demonstrate its commitment to the Angolan industry and
this commitment has been rewarded by being selected as preferred
bidder for our preferred blocks and we are currently engaged with
the Regulators to negotiate the licence terms.
Beyond Angola, Afentra continues to
explore growth opportunities in target countries where we see
market fundamentals that mirror our strategic objectives. Our entry
into Angola through various deals has enabled us to assemble a
diverse portfolio of production and development assets. The rapid
build-up of a phased portfolio of activities is a good template
that we would look to replicate with any new country entries in the
future underpinned by our core strategic criteria in terms of value
accretion, materiality and stakeholder alignment.
Operations Summary
The performance of Blocks 3/05 and
3/05A through the year validates Afentra's technical assessment of
the upside potential in these assets and gives great confidence in
the ability of the partnership to realise that value over
time.
As detailed in the Operational
Review, the intervention programme is resulting in production
optimisation and showing the effectiveness of the work programme
that was rolled out last year, with 30 successful light well
interventions completed in 2023, and a similar number of
interventions planned for this fiscal year. With gross production
of over 23,000 bopd in December, and a spot day rate in excess of
25,000 bopd, the Block 3/05 asset is clearly responding well to the
production optimisation initiatives and we look forward to a
continuation of that program through this year.
As previously alluded to, Afentra
seeks to play a proactive role in partnerships in which it holds
non-operated positions and, since entering into the various SPAs,
it has undertaken various feasibility studies to enhance the
emissions profile of the field infrastructure. The enhancement of
the environmental profile of all assets in which Afentra has
exposure is a key strategic driver for the Company and we look
forward to progressing our proposed initiatives along with our
existing partners in Angola.
Outlook
The Company has had an active start
to the current fiscal year as we progressed the Azule transaction
which completed in May 2024, received improved fiscal terms for the
Punja Development Area in Block 3/05A and were selected as
preferred bidder for the two onshore concessions. As we progress
through the year the focus will be to support the Block 3/05 and
Block 3/05A partnership with the delivery of the work program
planned for the year which we expect to deliver further production
optimisation and deliver value through reserve
replacement.
As a result of the ongoing work
programme, we expect to deliver strong free cash flow from our
portfolio which will demonstrate the transformative and value
accretive nature of the transactions that we closed in the last 12
months. We also look forward to supporting the Operator with our
proposed initiatives and solutions that enhance the environmental
profile of Block 3/05 as we seek to deliver that important aspect
of our purpose and strategic intent.
In parallel, we continue to progress
the business development opportunities that fit with our strategic
ambition to build a multi-jurisdictional African focused E&P
company that is well positioned to capitalise on opportunities that
result from an accelerating industry transition across the
continent.
In summary, 2023 was a highly active
and value enhancing period for Afentra that provides a strong
growth platform from which we feel confident that we can deliver
sustainable value for our shareholders while delivering benefits
for our wider stakeholders.
I'd like to conclude by thanking the
Afentra team who have worked tirelessly on all fronts to deliver
the Company's evolution, the shareholders for their support and
patience through the complex regulatory processes required to
complete these initial transactions, and our stakeholders in Angola
with whom we have developed strong mutual respect and an effective
working relationship that we hope to build on further as we
demonstrate our investment into their energy sector and long term
commitment to the country.
We look forward to updating the
market as appropriate as we seek to deliver another year of growth
and positive impact.
Paul McDade - Chief Executive
Officer
ASSET SUMMARY
Status of deals
It has been a transformational year
for Afentra with the completion of its first two acquisitions from
INA (May 2023) and Sonangol (December 2023) resulting in the
Company, at year end, holding material non-operating interests in
Block 3/05 (18%), in Block 3/05A (5.33%) and in Block 23 (40%)
located offshore Angola.
A key part of the Sonangol
acquisition was the successful negotiation with the Angolan
Government to approve the extension of the Block 3/05 licence to
2040 and improved fiscal terms to the production sharing agreement
('PSA'). These now provide the stability and commercial environment
for the future investment we plan to maximise the recovery and
value of these world class assets.
Post period, the Company received
approval from the Angolan Government and completed the acquisition
of a further 12% non-operated interest in Block 3/05 and 16%
non-operated interest in Block 3/05A from Azule Energy Angola
Production B.V. ('Azule'). The completion of this third acquisition
increases Afentra's interests in Block 3/05 to 30% and Block 3/05A
to 21.33%.
Current equity interests are
illustrated below:
|
Block 3/05
|
|
Company
|
Interest
|
|
Sonangol (Op.)
|
36%
|
|
Afentra
|
30%
|
|
M&P
|
20%
|
|
ETU Energias
|
10%
|
|
Naftagas
|
4%
|
|
Block 3/05A
|
|
Company
|
Interest
|
|
Sonangol (Op.)
|
33.33%
|
|
M&P
|
26.67%
|
|
Afentra
|
21.33%
|
|
ETU Energias
|
13.33%
|
|
Naftagas
|
5.33%
|
Material interests in high quality assets
Offshore Blocks 3/05 and 3/05A,
located in the southern Congo Basin are high quality, shallow
water, production assets with stable and robust cash flows with
significant growth potential from production optimisation and
near-field development prospects.
The Blocks are operated under PSAs
by two joint ventures (JVs) with a common Operator, the national
oil & gas company Sonangol. Since 2022 the Afentra team has
developed a close working relationship with Sonangol and the JV
partnerships, actively contributing to all workshops, technical
meetings and operational meetings as well as conducting offshore
site visits to the extensive infrastructure located on Block 3/05.
Our aim is to work collaboratively and proactively with the JV and
other industry stakeholders in Angola, leveraging our deep industry
expertise to optimise production operations, re-develop the asset,
explore new development opportunities and reduce emissions from the
fields.
Production optimisation and increased reserves in 1H
2023
We were pleased to
report that in 2023 gross combined production in Blocks 3/05 and
3/05A increased by around 8% to an average of 20,180 bopd with an
exit rate in December 2023 exceeding 23,000 bopd. This uplift in production was achieved through a
combination of an increased operational uptime of 87% in 2023, the
successful delivery of 30 light well interventions ('LWIs') and
increased water injection volumes. The result of these efforts
was reflected in gross 2P reserves for Block 3/05 increasing to 110
mmbbls5 and a reserve replacement ratio in excess of 150% in the first
half of 2023. These reserves are from existing producing fields so
do not rely upon the construction of new infrastructure which
limits incremental emissions.
Continued momentum to maximise the value of the assets in
2024
Based on the success of the 2023 LWI
program coupled with activities to deliver steady and increasing
water injection rates, further investment will be made in 2024
toward production optimisation. This investment will be focused on
an additional LWI program of up to 45 wells and further upgrades to
the water injection systems. Additional production
enhancement is also possible by utilising artificial lift solutions
such as electrical submersible pumps ('ESPs') and Afentra is taking
the lead on technical studies and making proposals to the joint
venture regarding its application in selected wells. Going forward
infill drilling, development of appraised discoveries and near
field exploration provide the opportunity to significantly increase
production in the medium term.
Long-term field life extension and focus on reduced
emissions
The extension of the Block 3/05
licence through to 2040 alongside improved fiscal terms has
supported the JV's decision to make further investments in the
infrastructure in order to extend the field life of the
assets. The bi-annual shutdown, which will take place in the
second half of 2024, will provide an opportunity to undertake
maintenance and upgrades on the field power systems. This is an
important initial step to upgrade the existing infrastructure to
deliver safe, secure and reliable production for a further 20
years, resulting in long-term value for all
stakeholders.
Afentra is pleased to report that
early progress has been made during 2023 on emissions management
with the installation of new reliable power generation capabilities
enabling the substitution of diesel with gas which has resulted in
reduced emissions. A drone survey was undertaken in November
2023 covering all of the Block 3/05 offshore infrastructure with
the objective to identify fugitive emissions and to assist in
quantifying flaring to better define the emissions profile of the
asset. In addition, emissions metering systems will be installed
during the bi-annual shutdown to establish an accurate baseline to
inform emission reduction initiatives going forward. This forms
part of a holistic gas management program to identify, measure and
reduce greenhouse gas ('GHG') emissions.
Material near field development opportunities in Block
3/05A
In Block 3/05A the extended
production test on Gaz-101 that began in March 2023 is set to
continue, enabling further definition of the development concept
for the Caco-Gazela discovery. The deployment of a downhole gauge
is being used to monitor the pressures which can then be used to
interpret connected oil volumes and assist in selecting the
appropriate development concept for the Caco-Gazela fault
blocks.
In addition, post period following a
request by the Block 3/05A partnership, the Government of Angola
have declared the Punja Development Area located in Block 3/05A as
a marginal discovery. As a result,
the applicable fiscal incentives will be applied to this discovery,
significantly enhancing the commercial value of this potential
development.
The existing Block 3/05
infrastructure provides the opportunity for production growth
potential through lower emission near field tie-back developments.
The JV partnership continues to review a number of these
opportunities working toward value generating appraisal and
development proposals.
Onshore Blocks with low-cost development
potential
Afentra submitted bids, as a
non-operating partner, for onshore Blocks KON15 (1,000
km2) and KON19 (900 km2) as part of the 2nd
Kwanza Licensing Round launched in 2023 by ANPG. In early 2024
Afentra was chosen by ANPG as a preferred bidder for 45% interest
in both Blocks and is now engaging with the respective Operators of
KON15, national oil company subsidiary, Sonangol P&P; and
KON19, Angolan independent, ACREP, to discuss the engagement with
the relevant authorities to negotiate the licence terms.
These two Blocks which are located
adjacent to legacy fields that are currently being re-developed,
offering an excellent opportunity to secure
acreage over prospects that have follow on potential within the
prospective post-salt and pre-salt formation plays in this area.
Using legacy datasets these prospects and leads can be readily
explored and appraised, which should lead to short cycle
development opportunities to bring on production within short
timeframes.
These licences will expand Afentra's
footprint in this attractive Angolan market by diversifying our
portfolio which is principally focused on low cost, long-life
stable production and low-risk development
assets.
Block 23
Block 23 is a 5,000 km2
exploration and appraisal Block located in the Kwanza basin in
water depths from 600 to 1,600 meters and has a proven working
petroleum system. Whilst the large Block is covered by modern 3D
and 2D seismic data sets, with no outstanding work commitments
remaining, much of the Block remains
under-explored.
The Block contains the Azul oil
discovery, the first deepwater pre-salt discovery in the Kwanza
basin. This discovery made in carbonate reservoirs has oil in place
of approx. 150 mmbbls and tested at flow rates of approx. 3,000 -
4,000 bopd of light oil. The work program
consists of re-processing 3D Seismic to re-evaluate the
prospectivity.
|
Block 23
|
|
Company
|
Interest
|
|
Sonangol (Operator)
|
60%
|
|
Afentra
|
40%
|
Somaliland, Odewayne Block
The onshore Odewayne Block in
Somaliland is an unexplored frontier acreage position covering
22,840km2 offering the opportunity to explore an
undrilled onshore rift basin in Africa.
During 2023 the Operator and Afentra
collaborated to update their understanding of the petroleum systems
and undertook satellite seep studies. Analysis of seeps and a water
well have confirmed the presence of trace hydrocarbons and that the
upper Jurassic is the likely source rock and potentially mature in
the sub-surface. The next phase of evaluation of this large licence
is being considered to further understand the petroleum system and
exploration potential.
|
Odewayne Block
|
|
Company
|
Interest
|
|
Genel Energy
(Operator)
|
50%
|
|
Afentra
|
34%
|
|
Petrosoma Limited
|
16%
|
Value driven growth
In conclusion, Afentra has made
substantial progress, securing material non-operated interests in
two high-quality assets, and demonstrating its commitment to
working collaboratively within its JV partnerships and with other
industry stakeholders. On Blocks 3/05 and 3/05A the successful
light well intervention project coupled with the increased
reliability of water injection during 2023 has resulted in a
realisation of the potential upside of the assets and over 150%
reserve replacement in the 1H of 2023. 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.
FINANCIAL REVIEW
Deal completions and revenue generation highlight a successful
year
2023 was a year of financial
transformation for Afentra. We completed our two inaugural
transactions in Angola and also successfully executed our first
crude oil lifting generating $26.4 million of revenue in Q3. These
were major milestones for the Company which help to solidify our
position in Angola and demonstrate the successful progress of our
strategy to deliver sustainable shareholder returns. In addition,
post period, having received approval from the Angolan Government,
the Company completed the Azule acquisition transaction (our third
in Angola) in May 2024.
With regards to Company debt
financing, we effectively utilised and managed our debt facilities,
meeting all required covenants and completing on the INA and
Sonangol transactions with an aggregate debt to equity split of 63%
/ 37% resulting in a year end debt position of $31.7 million and a
net debt position of $12.3 million.
We also entered into our first hedge
arrangement in December 2023 purchasing a $70/bbl floor for the 70%
(315 kbbls) of the February 2024 crude oil lifting at a cost of
$1.50 per bbl to secure downside protection at the time of
relatively high volatility observed in the markets.
For 2024, our focus on M&A
remains unchanged as we continue to seek to build our portfolio via
value accretive opportunities, in Angola, as well as in other
jurisdictions in the West Africa region.
From an asset perspective, our
second crude oil lifting (450,000 bbls) on Block 3/05 in February
2024 generated $38.2 million of revenue. We will continue to strive
to be a proactive and collaborative non-operating partner in the
Angolan Blocks 3/05 and 3/05A, bringing forward our technical and
commercial expertise to safely and efficiently deliver cash returns
and investment opportunities, as well as ensuring that value is
protected, all executed within a sound internal control
framework.
Financing Highlights:
RBL, $34.8 million Financing drawn to fund INA and Sonangol
asset acquisitions. Key Terms:
• 5-year tenor effective
from May 2023
• 8% margin over 3-month
SOFR ('Secured Overnight Financing Rate')
• Semi-annual linear
amortisations
• The key financial
covenant for the RBL is the ratio of Net Debt to EBITDA (less than
3:1)
Working Capital Facility, up to $30 million revolving
facility. Key Terms:
• 5-year tenor effective
from May 2023
• 4.75% margin over
1-month SOFR
• Repayable with proceeds
from liftings
|
Selected financial data
|
|
2023
|
2022
|
|
Sales volume
|
(kbbls)
|
300.0
|
-
|
|
Realised oil price
|
($/bbl)
|
88.0
|
-
|
|
Total revenue
|
$ million
|
26.4
|
-
|
|
Year end cash net to the
Group
|
$ million
|
14.7
|
20.4
|
|
Restricted funds
|
$ million
|
4.9
|
10.2
|
|
Borrowings
|
$ million
|
(31.7)
|
-
|
|
Net debt
|
$ million
|
(12.3)
|
-
|
|
Adjusted EBITDAX
|
$ million
|
11.1
|
(5.2)
|
|
Loss after tax
|
$ million
|
(2.7)
|
(9.1)
|
|
Year end share price
|
Pence
|
37.0
|
26.4
|
Non-IFRS measures
The Group uses certain measures of
performance that are not specifically defined under IFRS or other
generally accepted accounting principles. These non-IFRS measures
can include capital investment, debt and adjusted
EBITDAX.
Income Statement
2023 production from Afentra's
interests in Blocks 3/05 and 3/05A, post the completion of INA and
Sonangol transactions, averaged 3,509 bopd (2022: nil).
2023 revenue of $26.4 million (2022:
nil) consisted of 1 lifting from Block 3/05 of 300kbbls at a
realised price of $88.0/bbl.
Cost of sales during the year
totalled $12.6 million (2022: nil).
The profit from operations for 2023
was $2.4 million (2022: loss $9.0 million) as a result of the
inaugural lifting in August 2023. During the year, net
administrative expenditure increased to $11.5 million (2022: $9.0
million) predominantly as a result of exceptional (one off) costs
associated with the RTO process ($1.6 million in the period) and an
increase in staff costs and share based payment charges ($1.8
million).
In 2023, a portion of the Group's
staff costs and associated overheads have been expensed as
pre-licence expenditure ($4.8 million), or capitalised/recharged
($34k) where they are directly assigned to capital projects. This
totalled $4.8 million in the year (2022: $3.1 million) reflecting
continuing M&A project activity.
Finance income was received
(interest on deposits) in the year of $240k (2022: $86k). Finance
costs increased during 2023 to $3.5 million (2022: $197k),
primarily due to the operation of RBL and WC facilities.
The loss for the year was $2.7
million (2022: loss $9.1 million):
|
|
|
$' Million
|
|
|
|
|
|
Loss for year 2022
|
|
(9.1)
|
|
Increase in revenue
|
|
26.4
|
|
Increase in cost of sales
|
|
(12.6)
|
|
Increase in G&A and pre-licence
costs
|
|
(2.5)
|
|
Increase in finance
expense
|
|
(3.2)
|
|
Increase in tax expense
|
|
(1.8)
|
|
Loss for year 2023
|
|
(2.7)
|
Group adjusted EBITDAX totalled
$11.1 million (2022: $5.2 million loss):
|
|
2023
|
2022
|
|
|
$' Million
|
$' Million
|
|
|
|
|
|
Loss after tax
|
(2.7)
|
(9.1)
|
|
|
|
|
|
Net finance costs
|
3.3
|
0.1
|
|
Depletion and depreciation
|
2.9
|
0.2
|
|
Pre-licence costs
|
4.8
|
3.5
|
|
Share based payment charge
|
1.0
|
-
|
|
Taxation
|
1.8
|
-
|
|
Total EBITDAX (Adjusted)
|
11.1
|
(5.2)
|
The basic and diluted loss per share
was 1.2 cents per share (2022: loss 4.1 cents per share). No
dividend is proposed to be paid for the year ended 31 December 2023
(2022: $ nil).
Statement of financial position
At the end of 2023, Non-current
assets totalled $174.0 million (2022: $21.9 million), the increase
entirely related to the acquisition of the Company's interests in
Block 3/05, Block 3/05A and Block 23.
At the end of 2023, Current assets
stood at $36.7 million (2022: $31.0 million) including; inventories
of $13.4 million (2022: $ nil), cash and cash equivalents of $14.7
million (2022: $20.4 million), restricted funds of $4.9 million
(2022: $10.2 million) and trade and other receivables of $3.6
million (2022: $419k).
At the end of 2023, Current
liabilities were $38.8 million (2022: $2.9 million) including
borrowings of $6.8 million (2022: $ nil), contingent consideration
of $4.6 million (2022: $ nil) and trade and other payables of $27.3
million (2022: $2.7 million). The increase in trade and other
payables is related to the Company's share of Joint Venture working
capital items (Block 3/05 and Block 3/05A).
At the end of 2023, Non-current
liabilities were $123.8 million (2022: $160k) including borrowings
of $25.0 million (2022: $ nil) and contingent
consideration/provisions of $98.9 million (2022: $33k).
Group net assets at the end of 2023
totalled $48.0 million (2022 $49.8 million). Movements in the
component parts of Group net assets are predominantly as a result
from the acquisitions made in 2023 and the associated movements in
assets, liabilities and debt. Increases versus 2022 balances in
both non-current assets ($152.3 million) and current assets ($29.5
million) are offset by corresponding increases in non-current
liabilities ($123.2 million) and current liabilities ($53.3
million) resulting in an overall $1.8m decrease in Group net assets
in 2023 vs 2022.
Cash flow
Net cash inflow from operating
activities totalled $12.3 million (2022: outflow $6.7 million), the
increase predominantly due to the acquisitions of Block 3/05 and
Block 3/05A and the revenue from the Company's first
lifting.
Net cash used in investing
activities totalled $45.9 million (2022: $10.3 million) the
increase predominantly due to the acquisitions of Block 3/05 and
Block 3/05A.
Net cash generated in financing
activities totalled $28.0 million (2022: used $225k) primarily as a
result of the net drawdowns on debt facilities.
During the year there were minimal
cash investments on the Odewayne Block in Somaliland due to the
Group's interest being fully carried by Genel Energy Somaliland
Limited for its share of the costs during the Third and Fourth
Periods of the PSA.
Accounting Standards
The Group has reported its 2023 and
2022 full year accounts in accordance with UK adopted international
accounting standards.
Cautionary statement
This financial report contains
certain forward-looking statements that are subject to the usual
risk factors and uncertainties associated with the oil and gas
exploration and production business. Whilst the Directors believe
the expectation reflected herein to be reasonable in light of the
information available up to the time of their approval of this
report, the actual outcome may be materially different owing to
factors either beyond the Group's control or otherwise within the
Group's control but, for example, owing to a change of plan or
strategy. Accordingly, no reliance may be placed on the
forward-looking statements.
Anastasia Deulina - Chief Financial Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
FOR
THE YEAR ENDED 31 DECEMBER
|
|
|
2023
|
|
2022
|
|
|
|
$000
|
|
$000
|
|
|
|
|
|
|
|
Revenue
|
|
26,390
|
|
-
|
|
Cost of sales
|
|
(12,571)
|
|
-
|
|
Gross profit
|
|
13,819
|
|
-
|
|
|
|
|
|
|
|
Other administrative
expenses
|
|
(6,647)
|
|
(5,484)
|
|
Pre-licence costs
|
|
(4,810)
|
|
(3,491)
|
|
Total administrative expenses
|
|
(11,457)
|
|
(8,975)
|
|
|
|
|
|
|
|
Profit/(loss) from operations
|
|
2,362
|
|
(8,975)
|
|
|
|
|
|
|
|
Finance income
|
|
240
|
|
86
|
|
Finance expense
|
|
(3,508)
|
|
(197)
|
|
|
|
|
|
|
|
Loss
before tax
|
|
(906)
|
|
(9,086)
|
|
|
|
|
|
|
|
Tax
|
|
(1,799)
|
|
-
|
|
|
|
|
|
|
|
Loss
for the year attributable to the owners of the
parent
|
|
(2,705)
|
|
(9,086)
|
|
|
|
|
|
|
|
Other comprehensive expense - items to be reclassified to the
income statement in
|
|
|
|
|
|
subsequent periods
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation
adjustments
|
|
(96)
|
|
-
|
|
|
|
|
|
|
|
Total other comprehensive expense for
the year
|
|
(96)
|
|
-
|
|
|
|
|
|
|
|
Total comprehensive expense for the year attributable to the
owners of the parent
|
|
(2,801)
|
|
(9,086)
|
|
|
|
|
|
|
|
Basic & Diluted loss per share (US
cents)
|
|
(1.2)
|
|
(4.1)
|
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS
AT 31 DECEMBER
|
|
Note
|
2023
|
|
2022
|
|
|
|
$000
|
|
$000
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
Exploration and evaluation
assets
|
|
21,867
|
|
21,324
|
|
Property, plant and
equipment
|
3
|
75,131
|
|
540
|
|
Other non-current assets
|
4
|
76,973
|
|
-
|
|
|
|
173,971
|
|
21,864
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Inventories
|
|
13,441
|
|
-
|
|
Trade and other
receivables
|
|
3,640
|
|
419
|
|
Cash and cash equivalents
|
|
14,729
|
|
20,384
|
|
Restricted Funds
|
|
4,850
|
|
10,200
|
|
|
|
36,660
|
|
31,003
|
|
|
|
|
|
|
|
Total assets
|
|
210,631
|
|
52,867
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Share capital
|
|
28,143
|
|
28,143
|
|
Currency translation
reserve
|
|
(298)
|
|
(202)
|
|
Share option reserve
|
|
965
|
|
-
|
|
Retained earnings
|
|
19,162
|
|
21,867
|
|
Total equity
|
|
47,972
|
|
49,808
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Borrowings
|
5
|
6,752
|
|
-
|
|
Trade and other payables
|
|
27,307
|
|
2,689
|
|
Contingent consideration
|
6a
|
4,621
|
|
-
|
|
Lease liability
|
|
155
|
|
210
|
|
|
|
38,835
|
|
2,899
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
Borrowings
|
5
|
24,951
|
|
-
|
|
Contingent consideration
|
6a
|
21,863
|
|
-
|
|
Provisions
|
6b
|
77,010
|
|
33
|
|
Lease liability
|
|
-
|
|
127
|
|
|
|
123,824
|
|
160
|
|
|
|
|
|
|
|
Total liabilities
|
|
162,660
|
|
3,059
|
|
|
|
|
|
|
|
Total equity and liabilities
|
|
210,631
|
|
52,867
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
|
|
|
|
Currency
|
Share
|
|
|
|
|
|
|
Share
|
translation
|
option
|
Retained
|
|
|
|
|
|
capital
|
reserve
|
reserve
|
earnings
|
Total
|
|
|
|
|
$000
|
$000
|
$000
|
$000
|
$000
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2022
|
|
|
28,143
|
(202)
|
-
|
30,953
|
58,894
|
|
Loss for the year
|
|
|
-
|
-
|
-
|
(9,086)
|
(9,086)
|
|
Currency translation
adjustments
|
|
|
-
|
-
|
-
|
-
|
-
|
|
Total comprehensive expense for the
year attributable to the owners of the parent
|
|
-
|
-
|
-
|
(9,086)
|
(9,086)
|
|
At
31 December 2022
|
|
|
28,143
|
(202)
|
-
|
21,867
|
49,808
|
|
Loss for the year
|
|
|
-
|
-
|
-
|
(2,705)
|
(2,705)
|
|
Currency translation
adjustments
|
|
|
-
|
(96)
|
-
|
-
|
(96)
|
|
Total comprehensive expense for the
year attributable to the owners of the parent
|
|
-
|
(96)
|
-
|
(2,705)
|
(2,801)
|
|
Share based payment charge for the
year
|
|
|
-
|
-
|
965
|
-
|
965
|
|
At
31 December 2023
|
|
|
28,143
|
(298)
|
965
|
19,162
|
47,972
|
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR
THE YEAR ENDED 31 DECEMBER
|
|
Note
|
2023
|
|
2022
|
|
|
|
$000
|
|
$000
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
Loss before tax
|
|
(906)
|
|
(9,086)
|
|
Depreciation, depletion &
amortisation
|
3
|
2,880
|
|
244
|
|
Share-based payment charge
|
|
965
|
|
-
|
|
Finance income and gains
|
|
(240)
|
|
(86)
|
|
Finance expense and losses
|
|
3,508
|
|
197
|
|
Operating cash flow prior to working
capital movements
|
|
6,207
|
|
(8,731)
|
|
Decrease in inventories (from
acquisition date)
|
|
4,789
|
|
-
|
|
Decrease/(increase) in trade and
other receivables (from acquisition date)
|
|
5,809
|
|
(131)
|
|
(Decrease)/increase in trade and
other payables (from acquisition date)
|
|
(2,688)
|
|
2,170
|
|
Increase/(decrease) in
provisions
|
|
3
|
|
(3)
|
|
Cash flow generated from/(used in)
operating activities
|
|
14,120
|
|
(6,695)
|
|
Petroleum income tax paid
|
|
(1,799)
|
|
-
|
|
|
|
|
|
|
|
Net
cash flow generated from/(used in) operating
activities
|
|
12,321
|
|
(6,695)
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
Corporate acquisitions
|
7
|
(48,126)
|
|
-
|
|
Interest received
|
|
240
|
|
86
|
|
Purchase of property, plant and
equipment
|
|
(3,316)
|
|
(127)
|
|
Exploration and evaluation
costs
|
|
(43)
|
|
(35)
|
|
Cash inflow from/(outflow from)
restricted funds
|
|
5,350
|
|
(10,200)
|
|
|
|
|
|
|
|
Net
cash used in investing activities
|
|
(45,895)
|
|
(10,276)
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
Draw-downs on loan facilities net of
transaction costs
|
|
45,066
|
|
-
|
|
Principal repayments on loan
facilities
|
|
(14,367)
|
|
-
|
|
Interest paid and financing
fess
|
|
(2,504)
|
|
-
|
|
Principal and interest paid on lease
liability
|
|
(245)
|
|
(225)
|
|
|
|
|
|
|
|
Net
cash generated from/(used in) financing
activities
|
|
27,950
|
|
(225)
|
|
|
|
|
|
|
|
Net
decrease in cash and cash equivalents
|
|
(5,624)
|
|
(17,196)
|
|
|
|
|
|
|
|
Cash
and cash equivalents at beginning of year
|
|
20,384
|
|
37,727
|
|
|
|
|
|
|
|
Effect of foreign exchange rate
changes
|
|
(31)
|
|
(147)
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of year
|
|
14,729
|
|
20,384
|
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
1. General
information
The results announcement is for the
year ended 31 December 2023.
The financial information set out
above does not constitute the Company's statutory accounts for the
years ended 31 December 2023 or 2022, but is derived from those
accounts. Statutory accounts for 2022 have been delivered to the
Registrar of Companies and those for 2023 will be delivered
following the Company's Annual General Meeting.
The auditors have reported on those
accounts; their reports were unqualified, did not draw attention to
any matters by way of emphasis without qualifying their report and
did not contain statements under s498(2) or (3) Companies Act
2006.
While the financial information
included in this announcement has been prepared in accordance with
the recognition and measurement criteria of International Financial
Reporting Standards (IFRSs), this announcement does not itself
contain sufficient information to comply with IFRSs.
The Annual Report and Accounts and
the notice for the Company's Annual General meeting, which is to be
held at 10.00 a.m. on 27 June 2024, will be posted to Shareholders
on 4 June 2024.
2. Going concern
The Group business activities,
together with the factors likely to affect its future development,
performance and position are set out in the Asset summary. The
financial position of the Group and Company, its cash flows and
liquidity position are described in the Financial
Review.
The Group has sufficient cash
resources for its working capital needs and its committed capital
expenditure programme at least for the next 12 months from the
signing of the annual report. Consequently, the Directors believe
that both the Group and Company are well placed to manage their
business risks successfully.
The Group has sufficient cash
resources based on existing cash on balance sheet, proceeds from
future oil sales and utilisation of the revolving working capital
facility to meet its liabilities as they fall due for a
period of at least 12 months from the date of signing these
financial statements, based on forecasts covering the period
through to 31 December 2025, notwithstanding the impact of the
situation in Ukraine and the Middle East and the resultant impact
to commodity prices and foreign exchange
rates.
The Board has looked at a
combination of downside scenarios, including a production shortfall
alongside lower than anticipated oil prices. The impact of the
downside scenarios can be mitigated by the implementation of
hedges of 70% of the remaining 2024 cargos. Further scenarios
associated with additional acquisitions of Kon 15 and Kon 19 have
also been reviewed and the Board believe that liquidity is
sufficient to pursue these opportunities and cover all financial
covenants, the tests of which, for current borrowings, have been
passed for the Historic Ratio (Net debt/Ebitda) and the Gross
liquidity test, and are not forecast to be breached within the
going concern period. The Board also notes the implementation of
the hedging policy and is confident in the utilisation of
commodity-based derivatives to manage oil price downside risk.
Thus, the Board believes its appropriate to continue to adopt the
going concern basis of accounting in preparation of the financial
statements.
The Directors have at the time of
approving the financial statements, a reasonable expectation that
the Group has adequate resources to continue in operational
existence for the foreseeable future.
3. Property, plant and
equipment
Block 3/05 PSA, Angola: Afentra
Angola Ltd 18%, Sonangol (Operator) 36%, M&P 20%, Azule 12%,
Etu Energias 10% and NIS-Naftagas 4%.
Block 3/05A PSA, Angola: Afentra
Angola Ltd 5.33%, Sonangol (Operator) 33.33%, M&P 26.68%, Azule
16%, Etu Energias 13.33% and NIS-Naftagas 5.33%.
The right of use asset (office
lease) is depreciated on a straight-line basis over the lifetime of
the lease contract. The current lease term is for 8 years, ending
in 2024. See Note 7 for further information on the additions in the
year.
|
|
|
|
|
|
|
|
Computer
|
|
|
|
|
|
|
|
Oil and gas
assets
|
Office
Lease
|
and office
equipment
|
Total
|
|
Group
|
|
|
|
|
$000
|
$000
|
$000
|
$000
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
At 1 January 2022
|
|
|
|
|
-
|
1,203
|
279
|
1,482
|
|
Modification during the
year
|
|
|
|
|
-
|
(60)
|
(8)
|
(68)
|
|
Additions during the year
|
|
|
|
|
-
|
-
|
127
|
127
|
|
Disposals during the year
|
|
|
|
|
-
|
-
|
(49)
|
(49)
|
|
At 31 December 2022
|
|
|
|
|
-
|
1,143
|
349
|
1,492
|
|
Modification during the
year
|
|
|
|
|
-
|
22
|
9
|
31
|
|
Acquisitions during the
year
|
|
|
|
|
71,356
|
-
|
-
|
71,356
|
|
Additions during the year
|
|
|
|
|
6,066
|
-
|
18
|
6,084
|
|
Disposals during the year
|
|
|
|
|
-
|
-
|
(5)
|
(5)
|
|
At
31 December 2023
|
|
|
|
|
77,422
|
1,165
|
371
|
78,958
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment
|
|
|
|
|
|
|
|
|
|
At 1 January 2022
|
|
|
|
|
-
|
(598)
|
(159)
|
(757)
|
|
Charge for the year
|
|
|
|
|
-
|
(187)
|
(57)
|
(244)
|
|
Disposals during the year
|
|
|
|
|
-
|
-
|
49
|
49
|
|
At 31 December 2022
|
|
|
|
|
-
|
(785)
|
(167)
|
(952)
|
|
Charge for the year
|
|
|
|
|
(2,600)
|
(190)
|
(90)
|
(2,880)
|
|
Disposals during the year
|
|
|
|
|
-
|
-
|
5
|
5
|
|
At
31 December 2023
|
|
|
|
|
(2,600)
|
(975)
|
(252)
|
(3,827)
|
|
|
|
|
|
|
|
|
|
|
|
Net
book value at 31 December 2023
|
|
|
|
|
74,822
|
190
|
119
|
75,131
|
|
Net book value at 31 December
2022
|
|
|
|
|
-
|
358
|
182
|
540
|
|
Net book value at 31 December
2021
|
|
|
|
|
-
|
605
|
120
|
725
|
4. Other non-current
assets
The Group have reviewed the
accounting treatment for the decommissioning fund held by the Block
3/05 Operator and have recognised a non-current asset and an
offsetting non-current liability for $77.0 million, which equates
to the present value of the future decommissioning liability. It is
management's view that the future liability for decommissioning is
represented by the totality of the funds held by the Operator,
specifically for such purposes. The non-current asset held for
decommissioning liability is limited to the lower of the present
value of the future decommissioning liability and the amount of the
funds held by the Operator.
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
$000
|
$000
|
|
|
|
|
|
|
|
|
|
|
|
Decommissioning fund
|
|
|
|
|
|
|
76,973
|
-
|
|
|
|
|
|
|
|
|
76,973
|
-
|
5. Borrowings
The Group has activated elements of
both the RBL Facility and Working Capital facility in order to
facilitate the completion of the INA and Sonangol acquisitions. As
at 31 December 2023, the Group has drawn down $34.8 million (RBL)
and $ Nil million (Working Capital) with the following key
terms:
RBL Facility
· 5-year
tenor
· 8%
margin over 3-month SOFR (Secured Overnight Financing
Rate)
· Semi-
annual linear amortisations
· Key
financial covenant of Net Debt to EBITDA <
3:1
Working Capital up to $30 million
revolving facility
· 5-year
tenor
· 4.75%
margin over 1-month SOFR
· Repayable with proceeds from liftings
|
|
|
|
|
|
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
$000
|
$000
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Reserve Based Lending
Facility
|
|
|
|
|
|
|
6,752
|
-
|
|
Working Capital Facility
|
|
|
|
|
|
|
-
|
-
|
|
|
|
|
|
|
|
|
6,752
|
-
|
|
|
|
|
|
|
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
$000
|
$000
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
Reserve Based Lending
Facility
|
|
|
|
|
|
|
24,951
|
-
|
|
|
|
|
|
|
|
|
24,951
|
-
|
|
|
|
|
|
|
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
$000
|
$000
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
|
|
|
|
|
|
|
|
|
At 1 January
|
|
|
|
|
|
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Loan drawdowns
|
|
|
|
|
|
|
48,003
|
-
|
|
Interest charge
|
|
|
|
|
|
|
1,152
|
-
|
|
Repayments
|
|
|
|
|
|
|
(15,519)
|
-
|
|
Unamortised debt arrangement
cost
|
|
|
|
|
|
|
(2,545)
|
-
|
|
Interest accrued
|
|
|
|
|
|
|
612
|
-
|
|
|
|
|
|
|
|
|
|
|
|
At
31 December
|
|
|
|
|
|
|
31,703
|
-
|
A charge is placed on Afentra
(Angola) Ltd shares to Mauritius Commercial Bank Limited as
required by the terms of the debt facilities.
6. Contingent consideration and
provisions
a. Contingent
consideration
Provisions include contingent
consideration payable to SNL and INA on Blocks 3/05 and
3/05A:
INA acquisition:
· Tranche 1: The contingent consideration for 3/05 relates to
the 2023 and 2024 production levels and a realised brent price
hurdle up to an annual cap of $2.0 million;
· Tranche 2: The contingent consideration for 3/05A relates to
the successful future development of the Caco Gazela and Punja
development areas, with production and oil price hurdles. The
maximum payable for these development areas is $5.0
million.
SNL acquisition:
· The
contingent consideration for the SNL acquisition is payable
annually over the next 10 years in each year where production
exceeds 15,000bopd, and the realised oil price exceeds $65. The
maximum annual amount payable is $3.5 million, resulting in a total
maximum payment of $35 million over 10 years.
Management have reviewed the
contingent payments related to the SNL and INA acquisitions, which
are dependent upon production levels, future oil price hurdles and
future 3/05A developments. Judgement has been applied to the
probability of the circumstances occurring that would give rise to
some or all of the future payments. For each tranche of contingent
consideration Management have applied a multiple scenario approach
with 4 scenarios applied to each tranche along with the related
weightings of probability resulting in an expected amount
payable.
In addition, Management has applied
a discount rate that approximates to the incremental borrowing rate
in arriving at a present value at the balance sheet date of the
probable future liabilities. The discount rate is based at a market
rate of 9.1%. Management is therefore comfortable with the
liabilities recorded at the balance sheet date in respect of these
contingent future events.
In applying Management's judgement
to the different scenarios and applying the discount rate noted
above results in contingent consideration of $26.5 million. A 2%
increase in the discount rate would result in a reduction in
contingent consideration of $1.6 million and a 2% decrease in the
discount rate would result in an increase in contingent
consideration of $1.8 million. The
impact of removing the scenarios that have an expectation the
realised brent price hurdles will not be met (5% original
weighting) and including a relative increase in the base case
scenarios would increase the contingent consideration by $0.6
million.
|
|
|
|
|
|
|
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
|
$000
|
$000
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration
|
|
|
|
|
|
|
|
4,621
|
-
|
|
|
|
|
|
|
|
|
|
4,621
|
-
|
|
|
|
|
|
|
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
$000
|
$000
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
Contingent consideration
|
|
|
|
|
|
|
21,863
|
-
|
|
|
|
|
|
|
|
|
21,863
|
-
|
b. Decommissioning and other
provisions
As part of the acquisition of Block
3/05 from SNL and INA the Group is responsible for the future cost
of decommissioning the wells. As set out in Note 4 the
decommissioning is prefunded and held by the Block 3/05 Operator
and the Group has recognised a non-current asset to offset the
decommissioning non-current liability of $77.0 million, which
equates to the present value of the future decommissioning
liability.
The cost of the decommissioning is
equal to the agreed decommissioning plan. The Group's share of this
cost is $99.7 million. In calculating the decommissioning liability
at 31 December 2023 the cost has been inflated to provide the
future cost of decommissioning at a rate of 2.5% and then
discounted to the present value at a discount rate of 4.07%. This
results in a decommissioning liability of $77.0 million.
The impact of changes to the
inflation and discount rates, independently, would result in the
following. An increase in the inflation rate to 3% would increase
the decommissioning liability by $6.6 million. An increase in the
discount rate to 4.25% would decrease the decommissioning liability
by $2.2 million. A decrease in the inflation rate to 2% would
decrease the decommissioning liability by $6.1 million. A decrease
to the discount rate to 4.00% would increase the decommissioning
liability by $0.9 million.
|
|
|
|
|
|
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
$000
|
$000
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
Decommissioning
|
|
|
|
|
|
|
76,973
|
-
|
|
Other
|
|
|
|
|
|
|
37
|
33
|
|
|
|
|
|
|
|
|
77,010
|
33
|
Movements in current and non-current
provisions (contingent consideration) during 2023 are primarily due
to the acquisitions of the INA and Sonangol interests in Angola
(Block 3/05 (18%) and Block 3/05A (5.33%).
7. Asset
acquisitions
During the period the Group
completed the acquisition of interests in Block 3/05 (18%) and
Block 3/05A (5.33%) offshore Angola for a net $48.1 million payment
with subsequent contingent payments of $26.5 million. See Note 6a
for details of the contingent consideration.
|
|
|
|
|
|
Block 3/05
|
Block 3/05A
|
Block 23
|
Total
|
|
|
|
|
|
|
$000
|
$000
|
$000
|
$000
|
|
|
|
|
|
|
|
|
|
|
|
Consideration
|
|
|
|
|
|
|
|
|
|
Initial consideration
|
|
|
|
|
65,000
|
3,000
|
500
|
68,500
|
|
Actual adjustments from effective
date
|
|
|
|
|
(34,604)
|
2,203
|
-
|
(32,401)
|
|
Contingent consideration - Extension
of Block 3/05 licence
|
|
|
|
10,000
|
-
|
-
|
10,000
|
|
Contingent consideration - Oil price
linked
|
|
|
|
|
2,028
|
-
|
-
|
2,028
|
|
Consideration paid
|
|
|
|
|
42,423
|
5,203
|
500
|
48,126
|
|
Contingent consideration - Oil price
and production linked / future developments
|
|
25,122
|
1,362
|
-
|
26,484
|
|
Total consideration
|
|
|
|
|
67,545
|
6,565
|
500
|
74,610
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets
|
|
|
|
|
|
|
|
|
|
Oil and gas properties
|
|
|
|
|
63,745
|
7,611
|
-
|
71,356
|
|
Other non-current assets
(decommissioning fund)
|
|
|
|
76,973
|
-
|
-
|
76,973
|
|
Exploration and evaluation
assets
|
|
|
|
|
-
|
-
|
500
|
500
|
|
Non-current provision
(decommissioning)
|
|
|
|
|
(76,973)
|
-
|
-
|
(76,973)
|
|
Inventory (Oil Stock)
|
|
|
|
|
14,272
|
88
|
-
|
14,360
|
|
Joint Venture partner
balance
|
|
|
|
|
(2,165)
|
627
|
-
|
(1,538)
|
|
Joint Venture working
capital
|
|
|
|
|
(8,307)
|
(1,761)
|
-
|
(10,068)
|
|
Net
assets acquired
|
|
|
|
|
67,545
|
6,565
|
500
|
74,610
|
The Group performed an assessment of
the SNL and INA acquisitions to determine whether the acquisition
should be accounted for as an asset acquisition or a business
combination. For both transactions, the Group established that
under IFRS11, joint control does not exist, and therefore the Group
have deemed the acquisition to qualify as an acquisition of group
of assets and liabilities, not of a business. Furthermore,
the Group gave regard to guidance included under IFRS 11- Joint
Arrangements, and will account for its share of the income,
expenses, assets, and liabilities from the acquisition
date.
The consideration (contingent and
actual consideration paid) was allocated to assets and liabilities
based on their relative fair values.
8. Subsequent events
Subsequent to the Balance Sheet date
of December 31st, the following business deliverables
occurred:
· Afentra submitted bids, as a non-operating partner, for Blocks
KON15 (1,000 km2) and KON19 (900 km2) located in the Kwanza onshore
Basin and in January has been informed that it has been selected as
the preferred bidder for 45% equity in both Blocks.
· In
February 2024, the Company sold its first 2024 cargo of 450,000
bbls of crude oil. The sales price inclusive of the Brent premium
was $85/bbl, generating pre-tax sales of $38.2 million to
Afentra.
· In
March 2024 conditional share option awards were granted to the
Executive Directors of the Company under the terms of the Afentra
plc Founders' Share Plan.
· In
March 2024, Afentra with its partners agreed and initialed the PSA
for the onshore Block KON19 with Agência Nacional de Petróleo, Gás
e Biocombustíveis ('ANPG') and now await the formal approval of the
Angolan Government.
· In
March 2024, Afentra announced that it had received approval from
the Angolan Competition Authority for the acquisition from Azule of
a 12% non-operating interest in Block 3/05 and a 16% non-operating
interest in Block 3/05A, offshore Angola.
· In
April 2024, Afentra announced that it had received approval from
the Government of Angola for the Azule Acquisition.
· In
April 2024, Afentra announced that the Government of Angola had
declared the Punja Development Area in Block 3/05A a marginal
discovery with improved fiscal terms now applicable for the
remainder of its term.
· In May
2024, Afentra announced the completion of the Azule acquisition
resulting in Afentra holding non-operated interests of 30% in Block
3/05 and 21.33% in Block 3/05A, including the following completion
settlement figures:
· Net
completion payment of $28.4 million, with Afentra inheriting crude
oil stock of c.480,000 barrels.
· Net
completion payment to be funded by $4.9 million held in escrow,
$17.0 million from the agreed RBL and $6.5 million from cash
resources.
· Further contingent payments payable to Azule include up to
$14.0 million over two years for Block 3/05 (subject to oil price
thresholds) and up to $15.0 million (for future developments,
subject to oil price thresholds and production hurdles in Block
3/05A).
· Following the Azule acquisition, the total RBL drawn is $47.3
million, the total working capital facility drawn is $13.7 million,
and the cash balance is $14.8 million, resulting in a net debt of
approximately $46.2 million.
· After
completing the Azule acquisition, the company holds a stock of c.
840,000 barrels, that can be valued at $63.0 million (based on $75
per barrel) on a pre-tax basis.
· The
company expects to sell its next cargo of crude oil (around 450,000
barrels) in June 2024.
· Mauritius Commercial Bank continues as the lender to the
company. Trafigura retains an interest in the RBL facility and will
continue as offtake provider.
DEFINITIONS AND GLOSSARY OF TERMS
$
US dollars
2D
Two dimensional
2C
Denotes best estimate of Contingent Resources
2P
Denotes the best estimate of Reserves. The sum of Proved
plus
Probable Reserves
AIM
AIM, a SME Growth market of the London Stock Exchange
AGM
Annual General Meeting
ALNG
The Angola LNG project
ANPG
Agência Nacional de Petróleo, Gás e Biocombustíveis (holder of the
mining rights of Exploration, Development and Production of liquid
and gaseous hydrocarbons in Angola)
Articles
The Articles of Association of the
Company
Block 3/05
The contract area described in and covered by the
Block 3/05 PSA
Block 3/05A
The contract area described in the Block 3/05A
PSA
Block 23
The contract area described in and covered by the
Block 23 PSA
Board
The Board of Directors of the Company
bbls
Barrels of oil ('k-' / 'mm-' / 'bn-' for thousand
/ million / billion)
Bopd
Barrels of oil per day ('k-' / 'mm-' for thousand /
million)
Bwipd
Barrels water injection per day
CCRA
Climate Change Risk Assessment
Companies Act or Companies
Act
The Companies Act 2006, as amended 2006
Company
Afentra plc
CPR
Competent Persons Report
Directors
The Directors of the Company
E&E
Exploration and evaluation assets
E&P
Exploration and production
EBITDAX
(Adjusted)
Earnings before interest, taxation, depreciation,
depletion and amortisation, impairment, share-based payments,
provisions, and pre-licence expenditure
EITI
Extractive Industries Transparency
Initiative
Entitlement
Reserves
Entitlement production/reserves refers to the
share of oil/gas that a company is entitled to receive based on
fiscal and contractual agreements governing the specific
asset.
EOR
Enhannced Oil Recovery
ERCe
ERC Equipoise Limited (author of the Competent
Person's Report)
ESP
Eletrical Submersible Pumps
Farm-in &
farm-out
A transaction under which one party
(farm-out party) transfers part of its interest to a contract to
another party (farm-in party) in exchange for a consideration which
may comprise the obligation to pay for some of the farm-out party
costs relating to the contract and a cash sum for past costs
incurred by the farm-out party
FID
Final investment decision
FSO
Floating storage and offloading
G&A
General and administrative
GBP
Pounds sterling
G&G
Geological and geophysical
Genel Energy
Genel Energy Somaliland Limited
GHG
Greenhouse gases
GOR
Gas Oil Ratio
Group
The Company and its subsidiary
undertakings
H&S
Health and Safety
HSSE
Health, Safety, Security and Environment
hydrocarbons
Organic compounds of carbon and
hydrogen
IAS
International Accounting Standards
IFRS
International Financial Reporting Standards
INA
INA-Indstrija Nafte d.d
IOC
International oil company
IPCC
Intergovernmental Panel on Climate
Change
JV
Joint venture
JOA
Joint operating agreement
k
Thousands
km
Kilometre(s)
km2
Square kilometre(s)
KPIs
Key performance indicators
lead
Indication of a potential exploration
prospect
Lifex
Life extension capex
LNG
Liquefied Natural Gas
London Stock Exchange or
LSE London Stock
Exchange Plc
LTI
Lost time Injury
LTIP
Long-term incentive plan
LWI
Light Well Intervention
M&A
Mergers and acquisitions
m
Metre(s)
NFA
No Further Activity - forecast without new Capex
invested
NOCs
MNational oil company
O&G
Oil and gas
OECD
Organisation for Economic Cooperation and
Development
Op.
Operator
Opex
Operating expenditure
Ordinary Shares
ordinary shares of 10 pence each
Petroleum
Oil, gas, condensate and natural gas
liquids
Petrosoma
Petrosoma Limited (JV partner in
Somaliland)
Prospect
An area of exploration in which hydrocarbons have
been predicted to exist in economic quantity. A group of prospects
of a similar nature constitutes a play.
PSA
Production sharing agreementQCA
Code Corporate Governance Code for Small and Mid-Size Quoted
Companies 2018
RBL
Reserve-Based Lending
Reserves
Reserves are those quantities of petroleum
anticipated to be commercially recoverable by application of
development projects to known accumulations from a given date
forward under defined conditions. Reserves must satisfy four
criteria; they must be discovered, recoverable, commercial and
remaining based on the development projects applied. Reserves are
further categorised in accordance with the level of certainty
associated with the estimates and may be sub-classified based on
project maturity and/or characterised by development and production
status
RTO
Reverse takeover (pursuant to Rule 14 of the AIM
Rules)
SPA
Sale and Purchase Agreements
Seismic
Data, obtained using a sound source and receiver,
that is processed to provide a representation of a vertical
cross-section through the subsurface layers
SOFR
Secured Overnight Financing Rate
Shares
10p ordinary shares
Shareholders
Ordinary shareholders of 10p each in the
Company
Subsidiary
A subsidiary undertaking as defined in the 2006
Act
Sonangol
Sonangol Pesquisa e Producao
S.A.
Sonangol
EP
Sociedade Nacional de Combustíveis de Angola, Empresa
Pública
TCFD
Task force on Climate-related Financial Disclosure
Third and Fourth
Period
Exploration terms: Third Period is to May 2025 with a work
commitment of 500km 2D seismic acquisition; Fourth Period is to
October 2026 with a work commitment of 1,000km 2D seismic
acquisition and one exploration well
Trafigura
Trafigura PTE
TRIF
Total Recordable Incident Frequency
United Kingdom or
UK
The United Kingdom of Great Britain and Northern
Ireland
Working Interest or
WI
A Company's equity interest in a project before
reduction for royalties or production share owed to others under
the applicable fiscal terms
ZRF
Zero Routine
Flaring