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Independent oil & gas company, Afren plc (LSE:AFR), released its results for the first six months of 2012 much to the delight of its shareholders. Although shares had risen only slightly by the end of the noon hour, the next few days ought to continue to bring a positive response to such a strong report.
Record Financial Results
Afren generated record sales of $771.7 million, an increase of 379% over the first half of 2011. Gross profit was up 377% from $117 million in 2011 to $396 million in the first half of this year. Pre-tax profit increased by 622% from $43.8 million to $318 million. Cash flow from operations also reached an all-time high at $558 million, 377% higher than $117 million last year.
Cash on hand at the end of the first half was $444 million as opposed to $321 million in 2011. Total net debt is currently $582.5 million, most of which is long-term. This is a $239 million increase over this time last year.
Operational Results
Excellent financial results don’t happen by themselves. They are generated by outstanding operational achievements. In this case, Afren had a 218% increase in net production for the first six months year-on-year to 41,251 boepd. Production is tracking very well against projections, so the company foresees no reason to miss its target of 42 to 46,000 boepd.
Corporate Comments
CEO Osma Shahenshah cited the company’s expanded pipeline and exploration activities, saying, “The first half of 2012 has been a period of notable success for Afren across all fronts. The strong financial results, with over seven hundred million dollars of revenue and half a billion dollars of net operating cash flow, all from Afren’s greenfield developments, is testimony to our strong and established operating track record. The Okoro East and Ebok North Fault Block discoveries in Nigeria and Simrit-2 discovery in the Kurdistan region of Iraq will add significantly to the already material 2P reserves base of 185 million barrels and 2P/2C base of 995 million barrels of oil equivalent. In East Africa, the on-going maturing of the portfolio has resulted in a mean prospective resources upgrade to 5,838 million barrels of oil equivalent (from 2,113 million barrels of oil equivalent). With a number of high impact exploration wells to be drilled in both West and East Africa and the Kurdistan region of Iraq, and the growing production base, Afren is well placed for continued success.”
Company Spotlight
Originally listed on LSE, Afren is a member of the FTSE 250. It operates 29 on- and off-shore facilities in 12 countries, primarily in Africa, but also in Madagascar, the Seychelles, and the Kurdistan region of Iraq. Those assets represent a full range of stages of development and production, helping the company to fully realize its plans for regular, steady, continual growth, not having to wait through long periods of unproductive time to for additional return on investment. Just as a wise investor desires a balance portfolio, so Afren approaches its exploration, development, and production cycles.
