TIDMAET
RNS Number : 6159J
Afentra PLC
28 April 2022
28 April 2022
AFENTRA PLC
Afentra signs Sale and Purchase Agreement with Sonangol
for Blocks 3/05 & 23 offshore Angola
Afentra plc ('Afentra' or the 'Company') is pleased to announce
that its wholly-owned subsidiary, Afentra (Angola) Ltd, has signed
a Sale and Purchase Agreement ('SPA') with Sonangol Pesquisa e
Produção S.A. ('Sonangol') to purchase interests in Block 3/05 and
Block 23, offshore Angola (the "Acquisition") for a firm
consideration of $80 million and contingent payments of up to $50
million (in aggregate) in the case of Block 3/05 and consideration
of $0.5 million in the case of Block 23.
Acquisition Highlights
-- Strategic rationale - facilitates a first entry for Afentra
into Angola, one of the Company's key target markets in West
Africa, with opportunities to build a material production business
and contribute to a sustainable transition
-- Block 3/05 - acquiring a 20% non-operated interest in a high-potential long-life asset
o Initial consideration of $80 million
o Additional contingent consideration of up to $50 million to be
paid in respect of each of the ten calendar years commencing 1
January 2023
o Stable production of c.4,000 bopd net with strong cashflow
o Net 2P reserves of c.20 million barrels(1)
o Oil in Place of over 3 billion barrels(1) provides significant
resource upside
o Highly attractive asset economics with low breakeven oil price
of $35/bbl
o To date, decommissioning costs have been pre-funded by
previous and existing JV partners
-- Block 23 - acquiring 40% non-operated interest in a highly
prospective deepwater exploration and appraisal opportunity for a
consideration of $0.5 million
-- Funding - expected to be financed through new debt facilities
and existing cash on the balance sheet. Discussions with
prospective debt providers well advanced
Transaction Overview
Afentra is acquiring a 20% non-operated interest in Block 3/05
and a 40% non-operated interest in Block 23 for a total
consideration of up to $130 million. The consideration is comprised
of $80 million cash up front, subject to customary completion
adjustments, up to $50 million in contingent payments, payable in
respect of each of the ten calendar years commencing January 1,
2023 and subject to certain oil price and production hurdles, and
$0.5 million in respect of Block 23. The Acquisition has an
effective date of 20 April 2022.
This represents a strategic entry into a highly attractive West
African jurisdiction with an implied acquisition cost of $4/boe,
based on 2P reserves 1 .
The Acquisition is expected to be funded with new debt
facilities and existing cash on the balance sheet. Discussions with
prospective providers of debt finance are well advanced and will be
finalised in due course.
While completion is expected in the third quarter of 2022, next
steps in the process include the conclusion of Afentra's due
diligence exercise, the provision of a bank guarantee in respect of
the 10% transaction deposit and the completion of the right of
first offer process by Sonangol. Government approvals and a license
extension for Block 3/05 are anticipated to be granted, with the
publication of the AIM re-admission document and resumption of
trading anticipated to occur mid-year. In addition to the
conditions described above relating to regulatory consents, right
of first offer, license extension and due diligence, the
Acquisition is subject to the receipt of shareholder approval
pursuant to an ordinary resolution to be proposed at a General
Meeting and re-admission of the enlarged group to trading on AIM.
Further details of the Acquisition and SPA will be set out in the
re-admission document.
Asset Overview: Block 3/05
Block 3/05, in which Afentra is acquiring a 20% non-operated
interest, is located in the Lower Congo Basin and consists of eight
mature producing fields. The discoveries were made by Elf Petroleum
(now part of TotalEnergies) in the early 1980s. Development was by
shallow-water (40-100m) platforms that included successful
waterflood activities with first oil in 1985. Sonangol assumed
operatorship from 2005 and has focused on sustaining production
through workovers and maintaining asset integrity. No infill
drilling campaigns have taken place in the last 15 years. The asset
has a diverse portfolio of over 100 wells and currently produces
from around 40 production wells and has nine active water
injectors. The facilities include 17 well-head and support
platforms and four processing platforms, with oil exported via the
Palanca FSO.
In 2021, the average daily gross production was 17,000 bopd,
with an exit rate of 21,000 bopd, and gross 2P reserves of
approximately 100 million barrels 1 at year end 2021.
Block 3/05's existing Production Sharing Agreement (PSA) expires
in 2025 and this is expected to be extended to 2040. This extension
is a condition to completing the Acquisition. To date, the asset
decommissioning costs have been pre-funded.
Sonangol is an experienced operator with a sustained track
record across the leading and lagging indicators for safety and
environmental considerations, including CO 2 emissions and flaring
measurements. Afentra looks forward to working with Sonangol to
determine action plans to further reduce future emissions.
Post completion of the Acquisition, the JV will be comprised as
follows: Sonangol (Operator, 30%), Afentra (20%), M&P (20%),
ENI (12%), Somoil (10%), NIS-Naftagas (4%) and INA (4%).
Asset Overview: Block 23
Block 23 is a 5,000 km 2 exploration and appraisal block located
in the Kwanza basin in water depths from 600 to 1,600 metres and
has a working petroleum system. Whilst the large block is covered
by modern 3D and 2D seismic data sets, with no outstanding work
commitments remaining, the majority 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 around 150 mmbo and tested
at flow rates of around 3,000 - 4,000 bopd of light oil.
Post completion of the Acquisition, the JV is expected to be
comprised of: Namcor, Sequa and Petrolog(40% and operator); Afentra
(40%) and Sonangol (20%).
Strategic Rationale
The Acquisition is consistent with the strategic objective set
by Afentra at the time of its launch in May 2021 to build a
balanced cash flow generative portfolio of assets where the Company
can contribute to emissions reduction to drive a sustainable
transition. These assets give Afentra exposure to a high-quality
asset base with long-life, low-cost production, access to
additional production optimisation opportunities, upside potential
and opportunities to reduce future emissions.
Angola is a jurisdiction where the Afentra team have significant
knowledge and previous experience. It offers an attractive
operating environment, with good fiscal terms which have been
improved in recent years to attract new investment. It is a
material hydrocarbon province with a wealth of future opportunities
and was a key target country for the Company.
Afentra are acquiring a meaningful interest in Block 3/05
alongside an experienced and credible operator and an aligned JV.
Consistent with Afentra's Purpose and Strategy, Afentra will be
working alongside Sonangol to support its transition strategy which
is closely aligned with Afentra's ESG agenda. A key outcome of the
due diligence work to date has been to identify the opportunity to
work with the JV to enhance the environmental performance of Block
3/05 through emissions reductions.
Commenting on the update, CEO Paul McDade said:
"We are delighted to have agreed terms with Sonangol and signed
the SPA for our entry into Block 3/05, Lower Congo basin and Block
23, Kwanza basin in Angola. This transformative deal marks our
first acquisition since launch last year, and sees the Company
enter Angola, a major oil and gas jurisdiction with significant
opportunities ahead to build a material business and positively
impact the energy transition in Africa.
This highly accretive transaction gives Afentra exposure to a
high-quality asset base, underpinned by strong cash flow from
stable and long-life production and 20 million barrels 1 of net 2P
Reserves. The assets, containing over 3 billion barrels 1 of oil in
place, provide significant scope for further value creation from
production optimisation, infill drilling and incremental
developments. The attractive deal metrics and strong cashflow
generation demonstrate Afentra's commercial discipline and focus on
robust cash flow. The entry into Block 23 provides us the
opportunity to work with Sonangol to better understand and unlock
the potential of this exciting and highly prospective exploration
area.
We are looking forward to partnering with Sonangol, which has
run a very pragmatic and transparent process, and supporting them
in delivering an effective energy transition strategy. We are also
looking forward to demonstrating our commitment to the ESG
principles upon which Afentra was launched and working to create
value for all of our stakeholders.
The next steps will be to complete our due diligence process and
to conclude our discussions on the debt facility to fund the
acquisition, with a view to completing the transaction in the third
quarter of 2022.
I would like to thank our shareholders for their patience
through this process and hope they share the management's
excitement about the value creation implications of this deal. We
look forward to communicating on our progress as we move towards
the publication of the re-admission document and the recommencement
of trading thereafter."
1. OIIP and 2P Reserves are currently determined by Afentra and
subject to ongoing independent Competent Persons Report.
Management Presentation - 10am Thursday 28 April
Afentra's management team will host a live audiocast
presentation today at 10am to provide further details on the
Acquisition and the assets.
The live audiocast can be accessed via the following link:
https://webcasting.buchanan.uk.com/broadcast/625eab44841dd838fd0be737
A playback of the audiocast will be made available on the
website: www.afentraplc.com
Analysts and investors wishing to participate in the Q&A
session can do so by submitting questions to
afentra@buchanan.uk.com , or via the chat function of the live
audiocast, and these will be addressed by management during the
audiocast.
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
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 a current 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) ('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.
Technical Information
The technical information contained in this announcement has
been reviewed and approved by Robin Rindfuss, Head of Sub-Surface
at Afentra plc. Robin Rindfuss has over 25 years of experience in
oil and gas exploration, production and development and is a member
of the Society of Petroleum Engineers (SPE). The OIIP and 2P
Reserves information set out herein are currently determined by
Afentra and are subject to the ongoing preparation of an
independent Competent Persons Report.
Continued suspension of trading
The Acquisition constitutes a reverse takeover in accordance
with Rule 14 of the AIM Rules for Companies. An AIM re-admission
document setting out, inter alia, details of the Acquisition
(including a competent person's report on the assets being
acquired) will be published and sent to Afentra's shareholders with
a notice of general meeting. Accordingly, the Company's ordinary
shares will remain suspended from trading on AIM until either the
publication of an AIM admission document or until confirmation is
given that the Acquisition is not proceeding. The Company will
release further announcements as and when appropriate.
Standard
Estimates of reserves and resources have been prepared in
accordance with the June 2018 Petroleum Resources Management System
("PRMS") as the standard for classification and reporting.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
AGRDZGZDGNNGZZZ
(END) Dow Jones Newswires
April 28, 2022 02:02 ET (06:02 GMT)
Afentra (LSE:AET)
Historical Stock Chart
From Mar 2024 to Apr 2024
Afentra (LSE:AET)
Historical Stock Chart
From Apr 2023 to Apr 2024
