VANCOUVER, BC, Feb. 26,
2024 /CNW/ - (TSX: AOI) (Nasdaq-Stockholm: AOI) –
Africa Oil Corp. ("Africa Oil", "AOC" or the "Company") is
pleased to announce its operating and consolidated financial
results for the three months and the year ended December 31, 2023, together with its 2024
Management Guidance. View PDF
Highlights
- Successfully met 2023 Management Guidance on production and
cash flow from operations2,5.
- The Company received three dividends totaling $175.0 million in 2023 from its shareholding in
Prime, including one dividend of $50.0
million in Q4 2023. AOC's cash and cash equivalents at
December 31, 2023, of $232.0 million.
- 2023 Full year net income of $87.1
million (2022: net loss of $60.3
million) or $0.19 per share
(2022: net loss of $0.13 per
share).
- The Company launched a new NCIB share buyback program on
December 6, 2023, and post year-end,
on January 10, 2024, started share
buybacks under the new NCIB. The Company will pay a dividend of
$0.025 per share on March 28, 2024.
- OML 130 renewed for 20 years securing AOC's long term
production base and enabling the refinancing of Prime's debt.
Prime's OML 130 and OML 127 were converted to operate under
Nigeria's new Petroleum Industry
Act ("PIA") and are now subject to a 30% Corporate Income Tax
regime compared to the previous 50% Petroleum Profit Tax ("PPT")
regime.
- Commenced the appraisal campaign for the Venus light oil and
associated gas discovery, with the positive results supporting the
commercial development of the field.
- Subsequent to the year-end, the Company announced a strategic
farmout agreement between its investee company Impact Oil and Gas
Limited ("Impact"), and TotalEnergies, that allows the Company to
continue its participation in the world class Venus oil development
project, and the follow-on exploration and appraisal campaign on
Blocks 2913B and 2912 with no upfront
costs.
- Selected Prime's results net to Africa Oil's 50% shareholding*:
- Recorded full-year average daily WI production of approximately
19,800 barrels of oil equivalent per day ("boepd") and average
daily net entitlement production of approximately 22,400 boepd.
These compare with mid-range 2023 Management Guidance figures of
20,000 boepd and 22,000 boepd for WI and net entitlement
production, respectively.
- Recorded cashflow from operations2,5 of $298.8 million, which compares with the guidance
mid-point of $290.0 million.
- Prime's cash position of $76.1
million and debt balance of $375.0
million resulting in a Prime net debt position of
$298.9 million at December 31, 2023.
* Important
information: Africa Oil's interest in Prime is accounted for as an
investment in joint venture. Refer to Note 1 on page 5 for further
details. Please also refer to other notes on page 4 for important
information on the material presented.
|
Africa Oil President and CEO, Roger
Tucker commented: "2023 was a very good year for
Africa Oil. Two highlights are the renewal of Prime's OML 130
license for a further 20-year period and the successful appraisal
of the Venus discovery, which supports the case for its commercial
development. The OML 130 renewal not only secured the long-term
future of our core producing assets, it also facilitated the
refinancing of Prime's debt on competitive terms and allowed a
dividend distribution of $175 million
to Africa Oil for the year. The renewal also supports further
investments including in the Preowei development project.
The appraisal of the Venus field during 2023 was very
encouraging and we note the operator's positive public statements
regarding the development of this world-class discovery. We are
also excited by the wider prospectivity in the area, as evidenced
by the recent Mangetti discovery. Post period end we announced the
farmout agreement between Impact and TotalEnergies. Under this
transformational agreement Africa Oil will retain exposure to the
Venus field and associated exploration upside at no upfront cost,
and with no further demand on our balance sheet."
Our focus for 2024 is to enhance the value of our core assets,
including our operated exploration assets through strategic farm
down transactions, and pursuing opportunities to consolidate and
streamline our asset ownerships."
2023 Full Year and Fourth Quarter Results Summary
(Millions United States Dollars, except Per Share and Share
Amounts)
|
Three months
ended
|
Year
ended
|
|
Unit
|
December
31,
2023
|
December
31,
2022
|
December
31,
2023
|
December
31,
2022
|
AOC highlights
|
|
|
|
|
|
Net income/ (loss)
|
$'m
|
(88.8)
|
(182.1)
|
87.1
|
(60.3)
|
Net income/ (loss)
per share - basic
|
$/
share
|
(0.19)
|
(0.39)
|
0.19
|
(0.13)
|
Cash
position
|
$'m
|
232.0
|
199.7
|
232.0
|
199.7
|
Prime highlights, net to AOC's
50% shareholding1
|
|
|
|
|
|
WI production3
|
boepd
|
18,500
|
21,300
|
19,800
|
23,500
|
Economic
entitlement production4
|
boepd
|
21,700
|
23,500
|
22,400
|
25,600
|
Cash
flow from operations2,5
|
$'m
|
62.5
|
65.6
|
298.8
|
279.4
|
EBITDAX2
|
$'m
|
110.7
|
140.7
|
458.7
|
617.4
|
Free Cash
Flow2
|
$'m
|
16.7
|
(16.9)
|
149.1
|
299.8
|
Net debt
|
$'m
|
298.9
|
225.3
|
298.9
|
225.3
|
The financial information in this table was selected from the Company's
audited
consolidated financial statements for the year
ended December 31, 2023. The Company's consolidated financial
statements, notes to the financial statements, management's
discussion and analysis for the year ended December 31, 2023 and
2022 have been filed on SEDAR (www.sedar.com) and are available on
the Company's website (www.africaoilcorp.com).
|
In 2023, the Company recorded a net income attributable to
common shareholders of $87.1 million.
This is primarily made up of income from the Company's investment
in Prime of $228.0 million offset
against losses from the Company's investment in associates of
$47.0 million and impairment
recognized to its Kenyan intangible exploration assets of
$62.2 million writing these assets
down to nil. The net income attributable to common shareholders in
2023 of $87.1 million has increased
from a loss of $60.3 million in 2022
as the income from Prime has increased by $81.4 million and the impairment recognized in
relation to the Company's intangible exploration assets in
Kenya has decreased by
$108.4 million. This is offset by an
increase in the share of loss from investments in associates of
$38.8 million.
The share of profit from the Company's 50% investment in Prime
in Q4 2023 was impacted by a non-cash impairment of $131.7 million recorded by Prime, mainly due to
Prime applying a higher discount rate in its valuation, and from
changes in the technical assumptions in OML 130..
The figures used in the explanations for movements period on
period below are based on Prime's gross balances per the financial
statements.
Prime revenues decreased by $284.1
million in 2023 compared to 2022, mainly driven by lower
liftings. Prime also recorded an increase in cost of sales of
$41.7 million, primarily driven by an
increase in DD&A of $99.0 million
as Prime has changed the method of depletion on its facilities
including FPSO from straight line to unit of production, to better
reflect the consumption of the reserves' economic benefits. This
resulted in gross profit in 2023 to be $325.8 million lower than 2022. In addition,
there was a decrease of $88.1 million
in other operating income, primarily consisting of investment tax
credits which can be offset against PPT, an increase of
$181.0 million in impairment charges,
and a tax income in 2023 of $248.6
million compared to a tax charge of $519.4 million in 2022. Prime renewed OML 130
resulting in OML 130 operating under the terms of the new PIA as
from June 1, 2023, and Prime
voluntary converted OML 127 to operate under the new Petroleum
Industry Act from March 1, 2023, with
all key conditions precedent fulfilled during 2023. Under these
terms, OML 127 and OML 130 are subject to a 30% Corporate Income
Tax regime compared to the previous 50% PPT regime which resulted
in the release of $62.0 million and
$346.0 million of deferred income tax
liabilities during the year for OML 127 and OML 130 respectively.
This has resulted in Prime's profit for 2023 increasing by
$156.6 million compared to 2022.
Outlook
2024 Priorities and Business Plan
The Company's focus for 2024 is to advance its main opportunity
set comprised of its core assets in deepwater Nigeria, Orange Basin offshore Namibia and South
Africa, and Equatorial
Guinea. Management will also evaluate the options for
consolidating the ownership of its core assets and streamlining of
the Company's business structure.
Africa Oil has made a strong start in the delivery of its 2024
business plan with the strategic farm-out agreement between its
investee company, Impact, and TotalEnergies for the interests in
Blocks 2912 (PEL 91) and 2913B (PEL
56), offshore Namibia, which was
announced on January 10, 2024. This
transaction gives the Company the opportunity to continue its
participation in the world-class Venus light oil development
project, and the follow-on exploration and appraisal program on the
Blocks at no upfront cost. This frees up the Company's balance
sheet for the pursuit of other growth opportunities and shareholder
capital returns.
Namibia Orange Basin Appraisal and Exploration
Campaign
The successful Venus-1X drill stem test and Venus-1A appraisal
well, both completed in 2023, support the commercial development
case for the Venus oilfield. The appraisal program and the
development studies to be carried out during 2024 are expected to
define the Venus development concept. The Mangetti-1X exploration
well, located approximately 35km to the North West of the Venus-1X
well, intersected hydrocarbon bearing intervals in the Mangetti fan
prospect, a separate fan system to the Venus oil discovery.
Mangetti-1X also achieved its secondary objective of successfully
intersecting and appraising the northern area of the Venus
discovery. Drilling continues at the Venus-2A appraisal well,
approximately 17 km to the northwest of the Venus-1X location. The
results from these wells will be incorporated in the development
studies.
In addition to the Venus opportunity, the Company has retained
upside exposure to the exploration opportunities that in case of
success, could significantly increase the existing discovered
resource base. Furthermore, the processing of the 3D seismic data
that is currently being acquired could better define the
prospectivity on Block 2193B to the
south of the Venus discovery. It is possible that the JV could
drill further high-impact exploration wells on separate fan
structures on this Block during 2024 or 2025.
At the date of this report, AOC has an interest in this program
through its 31.1% shareholding in Impact, which in turn has a 20.0%
WI in Block 2913B (PEL 56) and 18.9%
in Block 2912 (PEL 91). On closing of the farm-out transaction with
TotalEnergies, Impact will retain a carried 9.5% WI in each of the
two Blocks.
Nigeria
The OML 130 drilling campaign that commenced on February 22, 2023, has completed a total of five
wells. One production well and two water injection wells have
been brought online at Egina. Two production wells have been
completed at Akpo West and brought onstream over the Akpo FPSO
during Q1 2024. The multi-well program is planned for up to nine
wells on the OML 130 asset during 2023 and finishing in 2024, with
a further option to extend the rig contract to drill additional
wells in the Block.
Acquisition of 4D monitor seismic surveys are planned for Akpo,
Egina and Agbami during late 2023, through 2024. The acquisition
plan also includes a baseline 4D seismic survey of the Preowei
field. The surveys will support future drilling decisions across
both OML 127 and OML 130.
Full year 2023 production was in line with the midpoint of the
management guidance for both working interest and economic
entitlement. Beyond the aforementioned drilling campaign on Egina
and Akpo, which will offset production decline, there is a planned
maintenance shutdown for the Akpo field which will occur in Q1
2024, this was previously planned for Q4 2023. A planned
maintenance shutdown will also be executed on Agbami during H1
2024.
Following the 20-year renewal of OML 130 on May 28, 2023, FEED studies have recommenced which
could facilitate the final investment decision for the Preowei oil
discovery development project. The Preowei oil field is to the
north of the Egina FPSO and is a development opportunity via a
satellite subsea tie-back project to the Egina FPSO.
South Africa Orange Basin, Block 3B/4B
Following the approval from the Government of the Republic of
South Africa of the transfer of a
6.25% interest in Block 3B/4B from Azinam
to the Company on January 19, 2024,
at the date of this MD&A, the Company holds an operated WI of
26.25% in the Block.
The Company and its JV parties are progressing plans to conduct
a two-well campaign on Block 3B/4B and are in
discussions with various potential parties to farm out a share of
their working interest in the Block. The JV parties are also
working with a leading South African environmental consulting firm
to conduct a comprehensive Environmental and Social Impact
Assessment ("ESIA") process in preparation for permitting and
drilling activity on the Block.
Equatorial Guinea
The Company continued its geological and geophysical works for
Blocks EG-18 and EG-31 with subsurface studies conducted during
2023 defining multiple prospects on both Blocks. Seismic
reprocessing and subsurface studies will continue over the coming
months to further refine and rank the identified prospects,
identify any further prospects and prioritize a potential drilling
target on the shallow water EG-31 Block, for drilling in 2025. The
Company's objective is to farm-down part of Blocks EG-18 and EG-31
in 2024.
The Company holds an operated WI of 80.0% in each of Blocks
EG-18 and EG-31.
2024 Management Guidance
The Company's 2024 production will be contributed solely by its
50% shareholding in Prime. The 2024 Management Guidance includes WI
production guidance range of 16,500 – 19,500 boepd and net
entitlement production range of 18,000 – 21,000 boepd with
approximately 78% expected to be light and medium crude oil and 22%
conventional natural gas.
Prime is expected to sell 10-13 cargoes of approximately one
million barrels each during 2024. Based on the above production and
Prime's current 2024 cargo lifting schedule, the Company's
management estimate Prime to generate cash flow from operations of
approximately $230.0 - $320.0 million net to the Company's 50%
shareholding. These estimates are based on a 2024 average Brent
price of $82.0/bbl.
Any dividends6 received by the Company from Prime's
operating cash flows and cash on hand will be subject to Prime's
capital investment and financing cashflows, including Prime's RBL
interest payments and principal amortization. Net to the Company's
50% shareholding, Prime's 2024 capital investment is expected to be
in the range of $100.0 - $130.0 million. Prime had a cash and cash
equivalents balance of $76.1 million
net to the Company's 50% shareholding at December 31, 2023.
Prime, net to AOC's 50%
shareholding:
|
2024
Guidance
|
2023 Actuals
|
WI production
(boepd) 7,8
|
16,500 –
19,500
|
19,800
|
Economic entitlement
production (boepd) 9
|
18,000 –
21,000
|
22,400
|
Cash flow from
operations 5 (million)
|
$230.0 –
$320.0
|
$299.5
|
Capital investment
(million)
|
$100.0 -
$130.0
|
$62.2
|
Dividends and AGM
The Company is pleased to announce that its Board of Directors
has declared the distribution of the Company's semi-annual cash
dividend of $0.025 per common share.
This dividend will be payable on March 28,
2024, to shareholders of record at the close of business on
March 8, 2024. This dividend
qualifies as an 'eligible dividend' for Canadian income tax
purposes.
Dividends for shares traded on the Toronto Stock Exchange
("TSX") will be paid in Canadian dollars on March 28, 2024; however, all US and foreign
shareholders will receive USD funds. Dividends for shares traded on
Nasdaq Stockholm will be paid in Swedish kronor in accordance with
Euroclear principles on April 2,
2024.
To execute the payment of the dividend, a temporary
administrative cross border transfer closure will be applied by
Euroclear from March 6, 2024, up to
and including March 8, 2024, during
which period shares of the Company cannot be transferred between
the TSX and Nasdaq Stockholm.
Payment to shareholders who are not residents of Canada will be net of any Canadian withholding
taxes that may be applicable. For further details, please
visit:
https://africaoilcorp.com/investors/dividend-information/
The Company's Annual General Meeting is planned to be held on
May 23, 2024.
2023 Annual Filings
The Company's 2023 Annual Filings Document, MD&A, Annual
Information Form and Financial Statements are available for
download from the Company's website:
https://www.africaoilcorp.com/investors/meeting-materials-corporate-filings/
NOTES
1.
|
The 50% shareholding in
Prime is accounted for using the equity method and presented as an
investment in joint venture in the Interim Condensed Consolidated
Balance Sheet. Africa Oil's 50% share of Prime's net profit or loss
will be shown in the Consolidated Statements of Net Income and
Comprehensive Income. Any dividends received by Africa Oil from
Prime are recorded as Cash flow from Investing
Activities.
|
2.
|
Includes non-GAAP
measures. Definitions and reconciliations to these non-GAAP
measures are provided in Fourth Quarter 2023 MD&A.
|
3.
|
Aggregate oil
equivalent production data comprised of light and medium crude oil
and conventional natural gas production net to Prime's W.I. in
Agbami, Akpo and Egina fields. These production rates only include
sold gas volumes and not those volumes used for fuel, reinjected or
flared.
|
4.
|
Net entitlement
production is calculated using the economic interest methodology
and includes cost recovery oil, tax oil and profit oil and is
different from working interest production that is calculated based
on project volumes multiplied by Prime's effective working interest
in each license.
|
5.
|
Cash flow from
operations before working capital adjustments and interest
payments.
|
6.
|
Prime does not pay
dividends to its shareholders, including the Company, on a fixed
pre-determined schedule. Previous number of dividends and their
amounts should not be taken as a guide for future dividends to be
received by the Company. Any dividends received by the Company from
Prime's operating cash flows will be subject to Prime's capital
investment and financing cashflows, including payments of Prime's
RBL principal amortization, which are subject to semi-annual RBL
redeterminations, and Prime's minimum cash on hand
requirements.
|
7.
|
The Company's 2024
production will be contributed solely by its 50% shareholding in
Prime.
|
8.
|
Approximately, 78%
expected to be light and medium crude oil and 22% conventional
natural gas.
|
9.
|
Net entitlement
production estimate is based on a 2024 average Brent price of
$82.0/bbl being the average of the Brent forward curves between
September 27, 2023, and November 23, 2023. Net entitlement
production is calculated using the economic interest methodology
and includes cost recovery oil, tax oil and profit oil and is
different from WI production that is calculated based on project
volumes multiplied by Prime's effective WI.
|
All dollar amounts are
in United States dollars unless otherwise indicated.
|
Management Conference Call
Senior management will hold a conference call to discuss the
results on Tuesday, February 27, 2024
at 09:00 (ET) / 14:00 (GMT) / 15:00 (CET). Participants should use
the following link to register for the live webcast:
https://onlinexperiences.com/Launch/QReg/ShowUUID=D8CA19B8-00F2-4CF1-B444-DEC5E88D4620
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Participants can also join via telephone with the instructions
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About Africa Oil
Africa Oil Corp. is a Canadian oil and gas company with
producing and development assets in deepwater Nigeria and an exploration/appraisal portfolio
in west and south of Africa, as
well as Guyana. The Company is
listed on the Toronto Stock Exchange and on Nasdaq Stockholm under
the symbol "AOI".
Additional Information
This information is information that Africa Oil is obliged to
make public pursuant to the EU Market Abuse Regulation and the
Swedish Financial Instruments Trading Act. The information was
submitted for publication, through the agency of the contact
persons set out above, at 6:30 p.m.
ET on February 26, 2024.
Advisory Regarding Oil and Gas Information
The terms boe (barrel of oil equivalent) is used throughout this
press release. Such terms may be misleading, particularly if used
in isolation. Production data are based on a conversion ratio of
six thousand cubic feet per barrel (6 Mcf: 1bbl). This conversion
ratio is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value
equivalency at the wellhead. Given that the value ratio based on
the current price of crude oil as compared to natural gas is
significantly different from the energy equivalency of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an
indication of value. Petroleum references in this press release are
to light and medium gravity crude oil and conventional natural gas
in accordance with NI 51-101 and the COGE Handbook.
Forward-Looking Information
Certain statements and information contained herein constitute
"forward-looking information" (within the meaning of applicable
Canadian securities legislation). Such statements and information
(together, "forward-looking statements") relate to future events or
the Company's future performance, business prospects or
opportunities.
All statements other than statements of historical fact may be
forward-looking statements. Statements concerning proven and
probable reserves and resource estimates may also be deemed to
constitute forward-looking statements and reflect conclusions that
are based on certain assumptions that the reserves and resources
can be economically exploited. Any statements that express or
involve discussions with respect to predictions, expectations,
beliefs, plans, projections, objectives, assumptions or future
events or performance (often, but not always, using words or
phrases such as "seek", "anticipate", "plan", "continue",
"estimate", "expect, "may", "will", "project", "predict",
"potential", "targeting", "intend", "could", "might", "should",
"believe" and similar expressions) are not statements of historical
fact and may be "forward-looking statements". Forward-looking
statements involve known and unknown risks, ongoing uncertainties
and other factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
statements, including statements pertaining to the 2023 Management
Guidance including production, cashflow from operation and capital
investment estimates, performance of commodity hedges, the results,
schedules and costs of drilling activity including those offshore
Namibia and Nigeria, the outcome of exploration and
appraisal activities including those offshore Namibia, uninsured risks, regulatory and
fiscal changes, availability of materials and equipment,
unanticipated environmental impacts on operations, duration of the
drilling program, availability of third party service providers and
defects in title. No assurance can be given that these expectations
will prove to be correct and such forward-looking statements should
not be unduly relied upon. The Company does not intend, and does
not assume any obligation, to update these forward-looking
statements, except as required by applicable laws. These
forward-looking statements involve risks and uncertainties relating
to, among other things, changes in macro-economic conditions and
their impact on operations, changes in oil prices, reservoir and
production facility performance, hedging counterparty contractual
performance, results of exploration and development activities,
cost overruns, uninsured risks, regulatory and fiscal changes
including defects in title, claims and legal proceedings,
availability of materials and equipment, availability of skilled
personnel, timeliness of government or other regulatory approvals,
actual performance of facilities, joint venture partner
underperformance, availability of financing on reasonable terms,
availability of third party service providers, equipment and
processes relative to specifications and expectations and
unanticipated environmental, health and safety impacts on
operations. Actual results may differ materially from those
expressed or implied by such forward-looking statements.
SOURCE Africa Oil Corp.