TIDMAET
RNS Number : 1897L
Afentra PLC
09 September 2021
09 September 2021
Afentra p l c
Results for the six months ending 30 June 2021
Overview
Afentra plc ('Afentra' or the 'Company'), together with its
subsidiary undertakings (the 'Group'), is an upstream oil and gas
company quoted on the AIM market of the London Stock Exchange.
The Company's strategy is to build an oil and gas business of
scale through the acquisition of both operated and non-operated
production assets and discovered resources in Africa, where its
management team have extensive operational experience. Afentra is
well positioned to take advantage of the energy transition and
associated market dynamics which is creating opportunities for
experienced operators with a strong track record to acquire quality
producing assets.
The Company currently has a position in the onshore Odewayne
exploration block that is operated by Genel Energy, where its 34%
interest is fully carried.
Operations summary
-- Odewayne Licence - new Afentra team continue its technical
assessment and outlook on block prospectivity in discussion with
the operator
-- Business Development - experienced team now in place and
actively pursuing potential deals in Africa, primarily focused on
operated and non-operated production assets
Corporate summary
-- 18 February 2021: Several institutional and high net worth
investors purchased shares sold by existing shareholders including
Waterford Finance and Investment Limited (equating to its entire
29.23% shareholding in the Company) and Mistyvale Limited (equating
to its entire 15.66% shareholding in the Company)
-- 16 March 2021: Paul McDade and Ian Cloke join the Board of
Directors as CEO and COO respectively
-- 30 March 2021: Jeffrey MacDonald and Gavin Wilson join the
Board of Directors as Independent non-executive Chairman and
Independent non-executive Director respectively
-- 13 April 2021: The Company announced its intention to change
its name from Sterling Energy plc to Afentra plc and adopt new
articles of association. The proposed changes were approved at the
General Meeting held on 30 April 2021
-- 5 May 2021: Afentra plc launched and Anastasia Deulina is
appointed as Chief Financial Officer
Financial s ummary
-- Cash resources as at 30 June 2021 of $ 40.8 million (30 June
2020 of $ 43.8 million).
-- A d j usted EBI T DAX loss of $ 1.5 million (1H 2020: loss $ 289 k).
-- Loss after tax of $ 2.4 million (1H 2020: loss $ 866k ).
-- The Group remains debt free and fully carried for Odewayne
operations (Third and the Fourth Period).
Paul McDade, Chief Executive Officer, Afentra plc commented:
"2021 has been an eventful period during which we have established
Afentra plc and set the company on an exciting strategic path. The
market drivers for the energy transition across Africa are
presenting a wide range of compelling opportunities and we believe
that our proven operating track record, focused ESG agenda, strong
balance sheet and supportive shareholder base put us in a unique
position to capitalise on these opportunities."
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
Jon Krinks
James Husband
Peel Hunt LLP (Nominated Advisor and Joint Broker) +44 (0)20
7418 8900
Richard Crichton
David McKeown
Tennyson Securities (Joint Broker) +44 (0)20 7186 9033
Peter Krens
CEO Statement
I am pleased to provide an update on Afentra's progress in the
first half of 2021, a period in which we have launched with a new
name, management team and a clearly defined strategic vision. It is
also a period, after the economic and industry challenges caused by
the pandemic through 2020, in which we have begun to see a steady
strengthening of commodity prices and cautious optimism within the
sector and wider economies.
Afentra was launched in May 2021 with a clear agenda; to
capitalise on opportunities presented by the accelerating energy
transition in Africa and in doing so support a responsible transfer
of asset ownership that provides beneficial outcomes for all
stakeholders involved.
To deliver this vision, Afentra has assembled a high-quality
team with a proven track record for operational excellence,
commercial focus, environmental stewardship, transparent governance
and delivering a positive socio-economic impact. We have ambitious
plans for growth and aim to become a leading pan-African operator
of scale, delivering long-term value for our shareholders through
accretive transactions.
As International Oil Companies (IOCs) seek to meet the
expectations of certain stakeholders to rationalise and diversify
their portfolios away from carbon intensive activities, they are
starting to divest parts of their African upstream assets. This is
creating an opportunity rich landscape for responsible companies
like Afentra. We are looking at a wide range of operated and
non-operated opportunities and, with our experienced team, are well
positioned as a credible counterparty for both IOCs seeking to
divest assets and an experienced partner for host governments to
work with.
Afentra's strong balance sheet and cost discipline also puts the
company in an excellent position to review and compete for
acquisition opportunities as they arise. The cash at hand also
provides optionality with regards to the funding structure for any
acquisitions, enabling us to consider smaller compelling
opportunities without the need to raise capital.
The strengthening of the oil price is obviously welcomed by the
industry, but does not alter the divestment agenda, nor does it
have a material impact on the valuations or competitive landscape
for our target acquisitions. It does however improve the economics
of target assets which will in turn enhance the appetite within the
capital markets to fund acquisitions.
Afentra is built upon an effective ESG framework. We have
aligned ourselves with the UN Sustainable Development Goals
(UNSDGs) and will increasingly meet the specific targets of the
UNSDGs as we progress from acquisition through to operatorship and
production.
At the heart of our approach is the conviction that African
countries must be able to benefit from the positive socio-economic
impact of their natural resources during the energy transition,
while also upholding the highest possible environmental standards.
We believe that it is important for all stakeholders that divested
assets end up in the hands of quality operators that are committed
to transparent disclosure of environmental data. Afentra believes
that through strong environmental stewardship and a focused
operating approach, we will be able to reduce the carbon emissions
of any acquired assets over time.
With regard to our existing asset in Somaliland, we are
currently progressing the technical assessment of Odewayne
alongside our partner Genel. Afentra remains fully carried on this
asset by Genel and we look forward to gaining a deeper
understanding of the appropriate forward work program as that
technical evaluation progresses through the second half of the
year.
Overall, it has been a very active first half of the year for
Afentra and we are making headway with our stated growth ambitions.
The market drivers are gathering momentum and your company feels
particularly well placed to capitalise on the array of upstream
opportunities that will be presented as a result of the energy
transition across Africa. We remain patient in our approach and
believe we have put in place all the required building blocks to
deliver long-term value. We thank our shareholders for their
support and look forward to delivering positive outcomes for all
our stakeholders through the second half of the year and
beyond.
Operations Review
Somaliland
Somaliland offers one of the last great opportunities to target
an undrilled onshore rift basin in Africa. The Odewayne block, with
access to Berbera deepwater port less than a 100km to the north, is
ideally located to commercialise any discovered hydrocarbons. The
company has continued to work the reprocessed 2D seismic survey
along with field data and legacy geological field studies to
determine if a Mesozoic age sedimentary basin is present in the
block and its prospectivity.
Odewayne (W.I. 34%) Exploration block
Overview
This large, unexplored, frontier acreage position covers
22,840km2, the equivalent of c. 100 UK North Sea blocks.
Exploration activity prior to the 2017 regional 2D seismic
acquisition program has been limited to the acquisition of airborne
gravity and magnetic data and surface fieldwork studies, with no
wells drilled on block.
The Company's wholly owned subsidiary, Afentra (East Africa)
Limited ('A(EA)L'), holds a 34% working interest in the PSA (fully
carried by Genel Energy Somaliland Limited for its share of the
costs of all exploration activities during the Third and Fourth
Periods of the PSA). The Odewayne production sharing agreement is
in the Third Period, with a 1,000km, 10km by 10km 2D seismic grid
acquired in 2017 by BGP. The Third Period has been further
extended, through the 8th deed of amendment. This data was
reprocessed in 2019 and is currently being reviewed after the
disruption caused by Covid in 2020-21.
In 2H 2021 the Company will review the reprocessed 2D seismic
data set and will update its technical assessment and outlook on
block prospectivity accordingly. Alongside the seismic reprocessing
review, the Operator is undertaking a number of work streams and it
is anticipated that these will aid the JV partnership in developing
an appropriate forward work program to further evaluate the
prospectivity of the licence.
Outlook on buy and build strategy
In March 2021 the Company shifted focus to support a responsible
energy transition in Africa by establishing itself as a credible
partner for divesting IOCs and Host Governments. The Company is
specifically targeting producing assets and discovered resources in
Africa. The focus will be on operated positions but will also
consider non-operated positions alongside credible operators with
shared standards and within a joint venture where we can leverage
our operating experience to influence outcomes and add value to
operator plans. The Company has developed a rigorous ESG agenda
which is being utilised in the screening process to ensure any
acquisition opportunities meet our risk criteria and provide scope
to reduce emissions through focused operational excellence.
An experienced technical and commercial team, of staff and
consultants, with deep knowledge of the West African region has
been assembled and is screening a number of opportunities.
Financial Rev iew
Selected financial data
1H 2021 1H 2020 FY 2020
Cash and cash equivalents net to Group ($m) 40.8 43.8 42.7
--------------------------------------------- -------- -------- --------
Adjusted EBITDAX (1) ($m) (1.5) (0.3) (0.8)
--------------------------------------------- -------- -------- --------
Loss after tax ($m) (2.4) (0.9) (1.9)
--------------------------------------------- -------- -------- --------
Debt ($m) - - -
--------------------------------------------- -------- -------- --------
NAVPS (2) (at period end) (GBP pence) 20.2 23.9 21.3
--------------------------------------------- -------- -------- --------
Share price (at period end) (GBP pence) 15.0 11.5 9.4
--------------------------------------------- -------- -------- --------
(1) Adju s t ed EBITDAX is cal c u lat ed as earnings be f ore
int ere s t, taxat i on, depreciation, amor t i sat i on, impa i r
m ent, pr e - l i cence expend i tur e, pr ov isio ns and shar e
-ba s ed pa y m ents.
(2) Net asset value per share
Loss from operations
T he loss from operations for 1H 2021 was $2.5 million (1H 2020:
loss $1.1 million) for the reasons described below.
During the period, net administrative expenditure increased to
$2.5 million (1H 2020: $1.1 million) as a result of exceptional
(one off) items relating to costs associated with the migration to
Afentra, a change in management and an increase in contractors and
advisors. Pre-licence costs for 1H 2021 was $862k (1H 2020:
$716k).
Adjusted EBITDAX and loss after tax
A d j usted EBI T DAX totalled a loss of $1.5 million (1H 2020:
loss $289k).
Finance inco me of $46k r epre sents inter est r e c eived
($11k) and foreign exchange gains ($35k) on cash h eld by the Group
(1H 2020: $288k).
Finance costs totalled $ 23k (1H 2020: $ 56k).
T he loss after tax totalled $ 2.4 million (1H 2020: loss $ 866k
). Basic loss per share was 1.11 USc per share ( 1H 2020: 0.39 USc
loss per share ). No dividend is propos ed to be paid for the six
months to 30
June 2021 (30 June 2020: nil).
Cash flow
Net cash outflow from operating activities (pre -working capital
move ments) totalled $2.3 million (1H 2020: outflow $988k ). A fter
working capital, net cash outflow from operating activities
totalled $ 1.8
million (1H 2020: outflow $ 1.2 million).
Statement of financial position
At 30 June 2021, Afentra held $40.8 million cash and cash
equivalents available for its own use (30 June 2020: $43.8
million).
Group net assets at 30 June 2021 were $61.4 million (30 June
2020 were $64.9 million). Non-current assets totalled $22.0 million
(30 June 2020: $22.0 million) with net current assets reducing to
$40.1 million (30 June 2020: $43.7 million).
Going Concern
T he Group's business activitie s, togeth er with the factors
likely to af f ect its future de v elop ment, performance and
position are s et out in the CEO State ment and in the Op erations
Re vie w. The financial position of the Group is de scribed in the
Financial R e vie w.
T he Co mpany has s u fficient cash re sources for its working
capital needs for at l east the n e xt 12 months. As a cons
equence, the Dir ectors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future. This assessment has been made by the
Directors who remain confident the group has sufficient cash
resources to meet its liabilities as they fall due for a period of
at least 12 months from the date of signing these financial
statements, and notwithstanding the impact that Covid-19 has had
internationally. The Directors believe that the Group is in a
strong position to absorb any potential impact on the Group arising
from Covid-19. Accordingly, th ey continue to adopt the going
concern basis in preparing the re sults for the s ix months ended
30 June 2021.
Disclaimer
T his document contains ce r tain forward-looking statements
that are subj ect to the usual risk factors and uncertainties
associated with the oil and gas e xploration and production busines
s. Whilst the Group beli e v es the e xpectation re flected he r
ein to be reasonable in light of the information available to it at
this time, the actual outcome may be materially diff erent owing to
factors eith er beyond the Group's control or oth erwise within the
Group's control but where, for e xample, the Group decides on a
change of plan or strategy. Acco rdingly, no reliance may be plac
ed on the figures contained in such for ward -looking
statements.
Glossary
$ US Dollars
2D two dimensional
------------------------------------------------------
Adjusted EBITDAX earnings before interest, taxation, depreciation,
amortisation, impairment, pre-
licence expenditure, provisions and share based
payments
------------------------------------------------------
AIM Alternative Investment Market of the London Stock
Exchange
------------------------------------------------------
Group Afentra plc, together with its subsidiary undertakings
(the 'Group')
------------------------------------------------------
km kilometre
------------------------------------------------------
NAVPS Net asset value per share
------------------------------------------------------
Petrosoma Petrosoma Limited (JV partner in Somaliland)
------------------------------------------------------
PSA production sharing agreement
------------------------------------------------------
Seismic Geophysical investigation method that uses seismic
energy to interpret the geometry of rocks in the
subsurface
------------------------------------------------------
km(2) square kilometre
------------------------------------------------------
WI working interest
------------------------------------------------------
Condensed consolidated income statement for the six m onths to
30 June 2021
Restated
Six months Six months
to to Year ended
30th June 30th June 31st December
2021 2020 2020
$000 $000 $000
(unaudited) (unaudited) (audited)
------------------------------------------- ------------------------------------------- -------------------------------------------
Other
administrative
expenses (1,605) (382) (953)
Pre-licence costs (862) (716) (1,221)
------------------- ------------------------------------------- ------------------------------------------- -------------------------------------------
Total
administrative
expenses (2,467) (1,098) (2,174)
Loss from
operations (2,467) (1,098) (2,174)
Finance income 46 288 326
Finance expense (23) (56) (58)
Loss before tax (2,444) (866) (1,906)
Tax - - -
Loss for the
period
attributable
to the owners of
the parent (2,444) (866) (1,906)
------------------------------------------- ------------------------------------------- -------------------------------------------
Other
comprehensive
expense
- items to be
reclassified to
the income
statement in
subsequent
periods
Currency
translation
adjustments (5) 6 7
Total
comprehensive
(expense)/income
for the period (5) 6 7
------------------------------------------- ------------------------------------------- -------------------------------------------
Total
comprehensive
expense
for the period
attributable
to the owners of
the parent (2,449) (860) (1,899)
=========================================== =========================================== ===========================================
Basic and diluted
loss per
share (US cents) (1.11) (.39) (.87)
Condensed consolidated statement of financial position as at 30
June 2021
Restated
As at As at As at
30th June 30th June 31st December
Note 2021 2020 2020
$000 $000 $000
(unaudited) (unaudited) (audited)
------------ ---------------------------------------- --------------
Non-current assets
Intangible exploration and
evaluation assets 3 21,252 21,142 21,209
Property, plant and equipment 746 848 844
21,998 21,990 22,053
------------ ---------------------------------------- --------------
Current assets
Trade and other receivables 228 148 193
Cash and cash equivalents 40,772 43,798 42,674
41,000 43,946 42,867
------------ ---------------------------------------- --------------
Total assets 62,998 65,936 64,920
============ ======================================== ==============
Equity
Share capital 28,143 28,143 28,143
Currency translation reserve (202) (198) (197)
Retained earnings 33,501 36,985 35,945
Total equity 61,442 64,930 63,891
------------ ---------------------------------------- --------------
Current liabilities
Trade and other payables 825 178 209
Lease liability 120 98 205
945 276 414
------------ ---------------------------------------- --------------
Non-current liabilities
Lease liability 576 700 581
Long-term provision 35 30 34
611 730 615
------------ ---------------------------------------- --------------
Total liabilities 1,556 1,006 1,029
------------ ---------------------------------------- --------------
Total equity and liabilities 62,998 65,936 64,920
============ ======================================== ==============
Condensed consolidated statement of changes in equity for the
six months ended 30 June 2021
Currency
Share translation Retained
capital reserve earnings Total
$000 $000 $000 $000
--------------------- ------------ --------- --------
At 1 January 2020 28,143 (204) 37,851 65,790
------------------------------- --------------------- ------------ --------- --------
Total comprehensive expense
for the period attributable
to the owners of the parent - 6 (866) (860)
---------
At 30 June 2020 - restated 28,143 (198) 36,985 64,930
------------------------------- --------------------- ------------ --------- --------
Total comprehensive expense
for the period attributable
to the owners of the parent - (1) (1,040) (1,039)
At 31 December 2020 28,143 (197) 35,945 63,891
------------------------------- --------------------- ------------ --------- --------
Total comprehensive expense
for the period attributable
to the owners of the parent - (5) (2,444) (2,449)
At 30 June 2021 28,143 (202) 33,501 61,442
------------------------------- --------------------- ------------ --------- --------
Condensed consolidated statement of cash flows for the six
months ended 30 June 2021
Restated
Six months Six months
to to Year ended
30th June 30th June 31st December
Note 2021 2020 2020
$000 $000 $000
(unaudited) (unaudited) (audited)
------------ ------------------------------------------- --------------
Operating activities:
Loss before tax (2,444) (866) (1,906)
Depreciation, depletion
& amortisation 119 166 193
Finance income and
gains (46) (288) (326)
Finance expense and
losses 23 - 59
------------ ------------------------------------------- --------------
Operating cash outflow
prior to working capital
movements (2,348) (988) (1,980)
(Increase)/decrease
in trade and other
receivables (35) 84 57
Increase/(decrease)
in trade and other
payables 616 (262) (230)
Increase in provision 1 - 4
Net cash outflow from
operating activities (1,766) (1,166) (2,149)
Investing activities
Interest received 11 284 326
Purchase of property,
plant and equipment (9) - (12)
Exploration and evaluation
costs 3 (43) (23) (90)
Net cash (used)/generated
from investing activities (41) 261 224
Financing activities
Principal paid on
lease liability (121) (108) (237)
Interest paid on lease
liability (20) (29) (46)
Net cash used in financing
activities (141) (137) (283)
Net decrease in cash
and cash equivalents (1,948) (1,042) (2,208)
Cash and cash equivalents
at beginning of period 42,674 44,851 44,851
Effect of foreign
exchange rate changes 46 (11) 31
Cash and cash equivalents
at end of period 40,772 43,798 42,674
============ =========================================== ==============
Notes to the consolidated results for the six months ended 30
June 2021
1. Basis of preparation
T he financial information contained in this announcement does
not constitute statutory financial statements within the meaning of
S ection 435 of the Co mpanies Act 2006.
T he financial information for the six months ended 30 June 2021
is unaudited. In the opinion of the Directors, the financial
information for this period fairly repre s ents the f inancial
position of the Group. R e sults of operations and cash flo ws for
the period are in compliance with International Financial Reporting
Standards (IFRSs). T he accounting policie s, e stimat es and judg
e ments applied are consistent with those disclos ed in the annual
financial statements for the year ended 31 De c e mber 2020. The se
financial statem ents should be read in con junction with the
annual financial statem ents for the year ended 31 De c em b er
2020.
The financial information for the six months ended 30 June 2020
has been restated as a consequence of an IFRS 9 adjustment by the
Group.
A ll financial information is pres ented in USD, unle ss oth
erwise disclos ed.
An unqualified audit opinion was expressed for the year ended 31
December 2020, as delivered to the Registrar.
The Directors of the Company approved the financial information
included in the results on 09 September 2021.
2. Results & dividends
T he Group has r etained earnings at the end of the p eriod of
$33.5 million (30 June 2020: $37.0 million r etained earnings) to
be carried forward. The Directors do not recom mend the paym ent of
a dividend (1H 2020: nil ).
3. Intangible exploration and evaluation (E&E) assets
Total
$000
(unaudited)
------------
Net book value at 31 December 2019 21,119
------------
Additions during the period 23
Net book value at 30 June 2020 21,142
------------
Additions during the period 67
Net book value at 31 December 2020 21,209
------------
Additions during the period 43
Net book value at 30 June 2021 21,252
------------
Group intangible assets:
Odewayne PSA, Somaliland: SE(EA)L 34%, Genel Energy Somaliland
Limited 50%, Petrosoma 16%
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END
IR DZGGLLRMGMZM
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