TIDMAET
RNS Number : 4885Z
Afentra PLC
16 May 2023
16 May 2023
AFENTRA P L C
ANNUAL RESULTS FOR THE YEARED 31 DECEMBER 2022
Afentra plc ('Afentra' or the 'Company'), is pleased to announce
its annual results for the year ended 31 December 2022.
2022 SUMMARY
Strategic
-- SPAs signed to acquire non-operated interests from Sonangol
and INA in the producing Block 3/05 (24%), adjacent development
Block 3/05A (4%) and exploration Block 23 (40%).
-- Reverse takeover ('RTO') announced under Rule 14 of the AIM Rules to acquire Block 3/05.
-- Publication of Admission Document followed by shareholder approval on 30 August 2022.
-- Stakeholder engagement across governmental, regulatory
authorities and industry counterparties in Angola continues to
demonstrate the country as an attractive operating and investment
jurisdiction.
-- Strengthened organisation with recruitment of high calibre
financial, technical and sustainability talent.
-- Continued to screen and evaluate compelling M&A
opportunities in line with the Company strategy.
-- Investor outreach and marketing, appealing to new
institutional and high net worth investors.
-- Continued to strengthen Afentra's profile within industry as
a credible counterparty of choice.
Operations
-- Progressed Angolan transactions to acquire interests in Blocks 3/05, 3/05A and Block 23.
-- Independent ESG due diligence conducted as an integral part
of the Block 3/05 and 3/05A assessment and to identify potential
options to reduce emissions.
-- Invited to observe all Block 3/05 and Block 3/05A partner
meetings and engage with operating team while awaiting transaction
completion.
-- Support the Operator of the Odewayne block in Somaliland to
progress the technical understanding of the block and outlook on
block prospectivity, as well as contributing to the drought relief
programme.
Financial Highlights
-- Entered into financing and offtake agreements with Trafigura
to finance Sonangol and INA Acquisitions:
o Reserve Based Lending ('RBL') facility: up to $75 million with
5-year tenure (8% margin over 3-month secured overnight financing
rate ('SOFR'));
o Revolving working capital facility: up to $30 million to
finance asset funding requirements between crude offtakes (4.75%
over 1-month SOFR);
o Offtake agreement for Afentra's crude oil entitlement lifted
from the Acquisitions.(1)
-- Cash resources net to the Group at 31 December 2022 of $30.6
million (2021: $37.7 million), including restricted funds of $10.2
million.
-- Adjusted EBITDAX:(2) loss for the Group of $5.2 million (2021: $2.0 million loss).
-- The Group remains fully carried for Odewayne operations for Third and the Fourth Period.
Post year-end Summary(3)
-- Completion of the INA acquisition announced 10 May 2023,
marking Afentra's formal entry into Angola.
o Net completion payment of $17.0m with Afentra inheriting crude
oil stock of 207,868 bbls(4) that can be valued at $16.6 million
(based on $80/bbl) on a pre-tax basis.
o Mauritius Commercial Bank ('MCB') has entered both the RBL and
working capital facilities as the lender to the Company. Trafigura
retains an interest in the RBL facility and will continue as
offtake provider.
-- The Sonangol acquisition long-stop date was extended to 30
June 2023 in order to facilitate completion of the transaction.
-- ANPG and the Block 3/05 JV partners agreed the improved terms
for the licence extension (1 July 2025 to 31 December 2040). ANPG
will now progress the formal approval process.
-- Afentra completed an updated Competent Persons Report ('CPR')
on Block 3/05 effective 1 January 2023, estimating 1P/2P/3P
reserves of 72/108/145 mmbbls (gross) and 2C resources of 43
mmbbls.
Commenting on the update, CEO Paul McDade said:
"2022 has been a year in which Afentra has truly established
itself as a respected oil and gas independent. Our focus on value
accretive M&A, accessing proven resources and delivering robust
cash flows has been evidenced by our two inaugural acquisitions.
These highly cash generative transactions provide an entry into
Angola, a target country for the Company and provide a platform
from which we plan to access further opportunities.
Despite a reduced financing market in the oil and gas space,
Afentra has been successful in securing financing packages for both
INA and Sonangol acquisitions and maintains a strong cash position
which will support potential future transactions.
With the completion of the INA transaction in May, we now look
ahead to completing the Sonangol transaction, and working with the
partnership to deliver the significant potential of these assets.
Beyond this, we continue our ongoing business development efforts
to seek further acquisitions in line with Afentra strategy and
purpose."
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
Peel Hunt LLP (Nominated Advisor and Joint Broker) +44 (0)20
7418 8900
Richard Crichton
Paul Gillam
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 4% non-operated interests in the producing Block 3/05 and
adjacent development Block 3/05A offshore Angola in the Lower Congo
Basin. In addition, Afentra maintains a 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.
(1) Subject to the terms of the Trafigura offtake agreement
(2) Defined within the definitions and glossary of terms
(3) Full disclosure of post-year events included in the notes to
the accounts
(4) Afentra share of stock-in-tank at completion
ASSET SUMMARY
Angola
Our entry to Angola lays the foundations for a significant core
asset base in West Africa which we will work to leverage and grow
from. These are high quality, shallow water, production assets with
stable and robust cash flow with material growth potential. The
acquisitions span the E&P lifecycle from exploration,
development through to a mature production base and deliver a
significant legacy asset set within this highly attractive West
African jurisdiction. Whilst we acknowledge current emissions are
high on this asset, we see significant scope for improvement across
multiple projects and will work to increase momentum and prioritise
emissions reduction opportunities.
Status of deals
Afentra is progressing its transaction to acquire a 20%
non-operated interest in Block 3/05 and 40% non-operated interest
in Block 23 from Sonangol P&P. A complementary transaction with
INA supplies additional 4% equity in Block 3/05 and 4% in Block
3/05A, which completed in May 2023.
Block 3/05's existing PSA expires in 2025. In May, the Block
3/05 JV partners agreed terms and the process for formal
administration of the licence extension has commenced. Key
enhancements include: licence extension from 1 July 2025 to 31
December 2040 and improved fiscal terms that strengthen the
economics of the permit. This extension is a condition to
completing the Acquisition of the Sonangol deal and the Company
awaits the conclusion of this process. To date, the asset
decommissioning costs have been pre-funded.
Block 3/05A Production Sharing Agreement expires in 2035 having
commenced in 2015.
Block 23 exploration license has been extended until 2026
allowing the new contractor group time to agree with ANPG a work
programme once the Sonangol divestment programme is completed.
Post deal interests are illustrated below:
Block 3/05
Company Interest
---------
Sonangol (Op.) 30%
---------
Afentra 24%
---------
M&P 20%
---------
Azule 12%
---------
ETU Energias 10%
---------
NIS 4%
---------
Block 3/05A
Company Interest
---------
Sonangol (Op.) 25%
---------
China Sonangol International 25%
---------
M&P 20%
---------
Azule 12%
---------
ETU Energies 10%
---------
Afentra 4%
---------
NIS 4%
---------
Block 23
Company Interest
---------
Namcor - Sequa - Petrolog
(Op.) 40%
---------
Afentra 40%
---------
Sonangol 20%
---------
BLOCK 3/05 (Production)
In 2022 the Block 3/05 fields averaged 18,660 bbl/d from 38
wells with a water cut of 75%. This is 9% higher than the 2021
production of 17,080 bbl/d. Looking to 2023 and beyond, we see
significant production and value creation potential in Blocks 3/05
& 3/05A, through integrating near term asset integrity
revitalisation, infrastructure upgrades and production
optimisation, together with longer cycle brownfield development
opportunities such as in-fill drilling and the tie-in of
undeveloped discoveries. A holistic approach focused on leveraging
existing and upgraded infrastructure including the potential to tie
into the nearby ALNG gas pipeline is key to unlocking the full
potential of this acreage whilst aligning with Angola's endorsement
of the World Bank's Zero Routine Flaring by 2030 initiative. We
believe there are a large number of potential opportunities for
reducing the relative emissions intensity and will work with the
operator and contractor group to ensure these are prioritised.
Importantly, in the next few years, sustaining current
production levels relies on re-instating and sustaining the
waterfloods in tandem with integrity, maintenance and existing well
stock optimisation projects. These activities are all low cost,
rapid capital return, activities. Incremental production growth
relies on longer term infill drilling and nearby discovered oil and
gas resources in 3/05A being matured and brought on stream.
History
Block 3/05 offshore Angola lies in the southern Congo Basin. The
block consists of 8 mature fields (Palanca, Impala, Impala SE,
Bufalo, Pacassa, Pambi, Cobo and Oombo) from which first oil was
achieved in 1985, with a combined STOIIP of 3.2 bnbbls of which
1.34 bnbbls of oil has been produced to date. Peak oil production
was approximately 200,000 bbl/d in mid-1998.
Block 3/05 lies in 60-100m water depth 37km offshore and is
developed via 4 processing platforms and 17 support structures
interlinked by 220km of subsea flowlines. This infrastructure
enables gathering and separation of all produced fluids together
with water injection and gas lift across the fields. The Palanca
Terminal (Floating storage and offloading facility 'FSO') is the
offtake route with a maximum storage capacity of 2 mmbbls.
All production to date has been sourced from the prolific
fractured Albian Pinda carbonate reservoir in southern Congo Basin.
The labe and Malembo reservoirs have yet to be developed. The depth
of the Pinda varies from 2,000-3,500m and ranges in thickness from
330-480m.
Value creation potential
During the field history water injection was successfully
implemented as an enhanced recovery mechanism across 7 of the 8
fields, reaching a peak rate of 366,000 barrels water injection per
day ('bwi/d') in November 1999. Water injection slowed and ceased
due to lack of maintenance investment in the oil price downturn of
2015/16. Sonangol has made progress towards re-instating injection
capacity post Covid and are successfully overcoming a series of
aging infrastructure hurdles to deliver availability improvements
across the operational system.
Afentra and the Contractor Group anticipate increases in the
recovery potential associated with delivery of sustained
waterfloods. This, together with existing well stock optimisation
opportunities including artificial lift, is focused on accelerating
reservoir throughput and oil recovery. In addition, longer cycle
potential associated with infill drilling campaigns and access to
shallower oil pools in the Iabe and Malembo reservoirs are under
consideration to grow production.
ERCE conducted an updated CPR at year end 2022. Encouragingly an
enhancement of +4 mmbbls reserves is attributable to better field
performance during April - December 2022. Scheduling deferrals and
re-phasing of projects resulted in -6 mmbls reserves, for barrels
which fall into future tail-end production.
Contingent resources remain largely unchanged, with additional
potential projects to be added via ESP deployment and
re-development of Oombo Field. Additionally, no reserves or
resources are currently booked for Block 3/05A.
BLOCK 3/05A (Appraisal)
Block 3/05A contains 3 appraised light oil discoveries (Punja,
Caco & Gazela) with a combined STOIIP of in excess of 300
mmbbls from which only 2.4 mmbbls has been recovered to date.
Long-term testing commenced at the Gazela field, of 1,100 bbl/d,
enabling framing of potential development options. The existing
Block 3/05 infrastructure and synergies with the application of fit
for purpose technology provides the opportunity for production
growth potential via tie backs. Our multi-disciplined team is
taking a holistic view of Block 3/05A and Block 3/05 together,
working with the operator and contractor group to progress these
opportunities towards value generating appraisal and development.
Full field production of these discoveries could result in an
incremental 10,000 bbl/d or greater of production leveraging the
existing facilities.
Given the high gas oil ratio of the Punja field reservoirs, an
integrated gas management plan across both Blocks 3/05A and 3/05 is
essential to optimising the responsible development of these oil
and gas resources. In line with our ESG values, all alternatives to
flaring excess gas from additional developments will be evaluated
with the Joint Venture before proceeding to sanction future
projects. There are a number of zero routine flaring options that
will be evaluated, including commercial export of excess gas via
the ALNG network which is located in close proximity to existing
infrastructure or gas injection into existing fields. Both options
will require review and a potential upgrade of the existing
compression infrastructure located at the Cobo field.
The Joint Venture partnership will be progressing the next steps
to both Punja and Caco-Gazela in a phased approach in order to gain
appraisal data, reduce uncertainty and generate cash flow through
monetising early production. A number of development concepts will
be screened and ranked in order to reach an optimised FID in the
near term.
BLOCK 23 (Exploration)
Block 23 Offshore Kwanza has a large areal footprint of almost
5,000km(2) in water depths of 600-1,600m. Block 23 contains the sub
commercial Azule pre-salt carbonate discovery which tested at
3,000-4,000 bbl/d light sweet crude oil and is estimated to contain
approximately 150 mmbbls STOIIP.
The block is covered by modern 2D & 3D seismic data, with
further follow up prospectivity mapped in both pre and post-salt
plays.
There are no outstanding work commitments on the block, however
we are reviewing a possible work programme to re-process 3D seismic
which has the potential to de-risk a large part of the basin, using
advanced geophysical techniques.
Somaliland
Somaliland offers one of the last opportunities to target an
undrilled onshore rift basin in Africa. The Odewayne block, with
access to Berbera deep-water port less than a 100km to the north,
is ideally located to commercialise any discovered
hydrocarbons.
Odewayne (Exploration)
This large, unexplored, frontier acreage position covers
22,840km(2) , the equivalent of c.100 UK North Sea blocks.
Exploration activity prior to the 2017 regional 2D seismic
acquisition programme 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 was awarded in 2005.
It 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 to May 2025.
During 2022 the main work programme consisted of the dating of
field samples, integrating these with identifying and mapping a
number of leads using the PSTM 2D geophysical data leading to a
risked volumetric assessment. This has resulted in an integrated
semi-regional basin model. From this integrated framework, further
understanding of the Block prospectivity can be worked during the
course of 2023.
During the course of the 3(rd) quarter of 2022 a water well
drilled by the ministry of Water Resources Development at the
village of Baha-Dhamal, within the Odewayne exploration license
flowed a dark viscous liquid following water. Samples were
collected and geochemical analysis undertaken in order to define
potential hydrocarbon content of the fluid. Initial results appear
to indicate the presence of trace hydrocarbons with further
advanced analysis ongoing. Afentra has also undertaken independent
analysis confirming the presence of trace oil in a sample. The
operator, will as part of its 2023 work programme, attempt to
resample the fluid at the original well location to define the
future work programme.
Contract type PSA
Participants
Company Interest
------------------------------------------------
Genel Energy Somaliland Limited
(Op.) 50%
------------------------------------------------
Afentra (East Africa) Limited 34%
------------------------------------------------
Petrosoma Limited 16%
------------------------------------------------
Exploration Term
Current Period 3 May-25
Period 3 work commitment
(fully carried) 500km 2D seismic acquisition
Period 4 work commitment 1,000km 2D seismic acquisition and
(fully carried) one exploration well
Twenty five years, renewable for additional
Production Term ten years.
State may back in for up to a 20% participating
interest in
State Participation any development and production area.
FINANCIAL REVIEW
2022 has been a truly transformational year for Afentra.
Our focus on value accretive M&A, accessing proven resources
and delivering robust cash flows, has been evidenced by the
progress made with the two inaugural acquisitions in Angola. These
highly cash generative acquisitions provide entry into a core
jurisdiction for the Company and a platform from which we plan to
access further opportunities and to grow Afentra in line with our
strategy to ultimately deliver sustainable shareholder returns.
Our acquisitions will be financed through a mix of debt and cash
on the balance sheet.
Despite a shrinking financing market with a number of mainstream
banks no longer lending into the oil and gas space Afentra has been
successful in securing a conventional Reserve Based Lending ('RBL')
arrangement for up to $75 million of the Sonangol and INA
acquisitions' costs as well as a Working Capital facility of up to
$30 million with Trafigura and Mauritius Commercial Bank.
The resulting aggregate split between debt and equity (cash) at
completion of both deals is likely to be in the 70% / 30% range
with cash contribution made from Afentra cash reserves.
In addition, Afentra has access to a $35 million accordion RBL
to finance a third transaction in Angola.
Key Terms: RBL, up to $75 million
-- 5-year tenor
-- 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)
Key Terms: Working Capital, up to $30 million revolving
facility
-- 5-year tenor
-- 4.75% margin over 1-month SOFR
-- Repayable with proceeds from liftings
Looking forward, our focus for 2023 remains unchanged from an
M&A perspective. We will look to uncover potential further
opportunities to grow and expand our presence in Angola. We will
also continue to seek opportunities to enter new geographies within
West Africa.
From a more general finance perspective, we will be working hard
to become a constructive and reliable commercial partner working
alongside the Operator (Sonangol) to help optimise the assets
safely and sustainably. We will also ensure that we successfully
manage our RBL and working capital facilities, including hedging a
portion of our future production, all executed within a sound
internal control framework.
Selected financial data 2022 2021
Year end cash net to the Group $million 20.4 37.7
Restricted funds $million 10.2 -
Adjusted EBITDAX $million (5.2) (2.0)
Loss after tax $million (9.1) (5.0)
Year end share price Pence 26.4 14.6
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
The loss from operations for 2022 was $9.0 million (2021: loss
$5.0 million). During the year, net administrative expenditure
increased to $9.0 million (2021: $5.0 million) predominantly as a
result of exceptional (one off) costs associated with the RTO
process ($2.6 million in the period) and a 2022 bonus provision of
$1.5 million, payable on completion of the Sonangol
transaction.
In 2022, a portion of the Group's staff costs and associated
overheads have been expensed as pre-licence expenditure ($3.1
million), or capitalised/recharged ($32k) where they are directly
assigned to capital projects. This totalled $3.1 million in the
year (2021: $2.4 million).
Finance income (interest received on deposits) in the year of
$86k (2021: $36k).
Finance costs during 2022 totalled $197k (2021: $45k), represent
by foreign exchange losses ($154k) on cash held by the Group and
other finance charges of $43k).
The loss for the year was $9.1 million (2021: loss $5.0
million):
$' Million
Loss for year 2021 (5.0)
Increase in G&A and pre-licence
costs (4.0)
Increase in finance expense (0.1)
Loss for year 2022 (9.1)
===========
Group adjusted EBITDAX loss totalled $5.2 million (2021: $2.0
million):
2022 2021
$' Million $' Million
Loss after tax (9.1) (5.0)
Interest and finance costs 0.1 0.0
Depletion and depreciation 0.2 0.2
Pre-licence costs 3.5 2.7
Total EBITDAX (Adjusted) (5.2) (2.0)
=========== ==================
The basic loss per share was 4.1 cents per share (2021: loss 2.3
cents per share). No dividend is proposed to be paid for the year
ended 31 December 2022 (2021: $nil).
Statement of financial position
At the end of 2022, non-current assets totalled $21.9 million
(2021: $22.0 million) the majority of which relates to the Odewayne
block ($21.3 million).
Net assets/total equity stood at $49.8 million (2021: $58.9
million).
Net current assets reduced to $28.1 million (2021: $37.3
million).
At the end of 2022 cash and cash equivalents totalled $20.4
million (2021: $37.7 million) with the reduction due to a transfer
of $10.2 million to restricted funds (in relation to the Sonangol
and INA transactions) with the balance related to spend on
G&A.
Cash flow
Total decrease in cash and cash equivalents in the year was
$17.3 million (2021: $4.9 million), for the reasons described
above. A full reconciliation is provided in the Consolidated
Statement of Cash Flows.
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 2022 and 2021 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
31st December 31st December
2022 2021
$000 $000
Other administrative expenses (5,484) (2,249)
Pre-licence costs (3,491) (2,734)
---------------------------------- -------------- --------------
Total administrative expenses (8,975) (4,983)
Loss from operations (8,975) (4,983)
Finance income 86 36
Finance expense (197) (45)
Loss before tax (9,086) (4,992)
Tax - -
Loss for the year attributable
to the owners of the parent (9,086) (4,992)
-------------- --------------
Other comprehensive expense
- items to be reclassified
to the income statement in
subsequent periods
Currency translation adjustments - (5)
Total other comprehensive
expense for the year - (5)
-------------- --------------
Total comprehensive expense
for the year attributable
to the owners of
the parent (9,086) (4,997)
============== ==============
Basic and diluted loss per
share (US cents) (4.1) (2.3)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31st December 31st December
2022 2021
$000 $000
Non-current assets
Exploration and evaluation
assets 21,324 21,289
Property, plant and equipment 540 725
21,864 22,014
-------------- --------------
Current assets
Trade and other receivables 419 288
Cash and cash equivalents 20,384 37,727
Restricted Funds 10,200 -
31,003 38,015
-------------- --------------
Total assets 52,867 60,029
============== ==============
Equity
Share capital 28,143 28,143
Currency translation reserve (202) (202)
Retained earnings 21,867 30,953
Total equity 49,808 58,894
-------------- --------------
Current liabilities
Trade and other payables 2,689 518
Lease liability 210 234
2,899 752
-------------- --------------
Non-current liabilities
Lease liability 127 347
Provision 33 36
160 383
-------------- --------------
Total liabilities 3,059 1,135
-------------- --------------
Total equity and liabilities 52,867 60,029
============== ==============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Currency
Share translation Retained
capital reserve earnings Total
$000 $000 $000 $000
At 1 January 2021 28,143 (197) 35,945 63,891
-------- ------------ --------- --------
Loss for the year - - (4,992) (4,992)
Currency translation adjustments - (5) - (5)
--------
Total comprehensive expense
for the year attributable
to the owners of the parent - (5) (4,992) (4,997)
At 31 December 2021 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
======== ============ ========= ========
CONSOLIDATED STATEMENT OF CASH FLOWS
2022 2021
$000 $000
Operating activities:
Loss before tax (9,086) (4,992)
Depreciation, depletion & amortisation 244 241
Finance income and gains (86) (13)
Finance expense and losses 197 45
Operating cash flow prior to
working capital movements (8,731) (4,719)
Increase in trade and other
receivables (131) (95)
Increase in trade and other
payables 2,170 309
(Decrease)/Increase in provision (3) 2
Net cash flow used in operating
activities (6,695) (4,503)
Investing activities
Interest received 86 13
Purchase of property, plant
and equipment (127) (127)
Exploration and evaluation
costs (35) (80)
Increase in restricted funds (10,200) -
Net cash used in investing
activities (10,276) (194)
Financing activities
Principal paid on lease liability (204) (234)
Interest paid on lease liability (21) (39)
Net cash used in financing
activities (225) (273)
Net decrease in cash and cash
equivalents (17,196) (4,970)
Cash and cash equivalents
at beginning of year 37,727 42,674
Effect of foreign exchange
rate changes (147) 23
Cash and cash equivalents
at end of year 20,384 37,727
========= ========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General information
The results announcement is for the year ended 31 December
2022.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2022
or 2021, but is derived from those accounts. Statutory accounts for
2021 have been delivered to the Registrar of Companies and those
for 2022 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 20
June 2023, will be posted to Shareholders on 22 May 2023.
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. Consequently, the Directors believe that both
the Group and Company are well placed to manage their business
risks successfully.
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. This assessment has been made by the Directors who remain
confident the Group has sufficient cash resources at the date of
signing the annual report to meet its liabilities as they fall due
for a period of at least 12 months from the date of signing these
financial statements, notwithstanding the impact of the situation
in Ukraine and the impact to commodity prices and foreign exchange
rates. With respect to the completion of the INA Angolan asset
acquisition (refer to subsequent events Note 3) and the anticipated
completion of the Sonangol asset acquisition (post signing of the
accounts), the Directors believe that the Group is in a strong
position, due to significant liquid resources being available,
resulting from a combination of on balance sheet cash reserves, a
conventional RBL arrangement, and a revolving working capital
facility, in place with Trafigura and Mauritius Commercial Bank
(refer to the Financial Review). The board has also looked at
scenario's associated with additional acquisitions and believe that
liquidity is sufficient through existing and further debt funding
arrangements to pursue further opportunities and cover all
financial covenants. Thus the Board believes its appropriate to
continue to adopt the going concern basis of accounting in
preparation of the financial statements.
3. Subsequent events
Subsequent to the Balance Sheet date of December 31(st) , the
following business deliverables occurred:
-- In January 2023, Afentra received approval from the Ministry
of Mineral Resources, Oil and Gas for the acquisition of INA's 4%
interests in Blocks 3/05 and 3/05A.
-- In March 2023, Afentra extended the long-stop date from 31
March 2023 to 30 June 2023 in order to facilitate completion of the
Sonangol transaction (completion expected in Q2 2023).
-- On 14 April 2023, the Company and the other Block 3/05A
contractor group members received a letter from ANPG informing us
that it had decided to terminate the interests of China Sonangol
International ('CSI') in the Block 3/05A production sharing
agreement and it intended that CSI's interests in the block would
revert to ANPG. If this decision is implemented, the Company will
not acquire the additional 1.33% interest in Block 3/05A
attributable to the CSI interests that we would otherwise have
acquired from INA. The contractor group members are currently
seeking clarifications from ANPG on their decision.
-- On 10 May 2023, Afentra announced completion of the INA
acquisition (4% interests in Blocks 3/05 and 3/05A) to mark its
formal entry into Angola, including the following completion
settlement figures:
o Net completion payment of $17.0 million with Afentra
inheriting crude oil stock of 207,868 bbls that can be valued at
$16.6 million (based on $80/bbl) on a pre-tax basis.
o $10 million set aside into an escrow deposit account held by
Citibank, which will be paid to INA after the Block 3/05 licence
extension is formally completed.
o Net upfront consideration and escrow deposit to be funded by
$18.9 million from the agreed RBL and working capital facilities
and $8.1 million from cash resources.
o $21.9 million in total debt drawn (RBL and working capital
facilities), which includes $2.9 million in financing costs.
o The Company expects to sell its first cargo of crude oil in Q3
2023, thereby monetising the inherited crude oil stock and
subsequent production.
o Trafigura has transferred both the RBL and working capital
facilities to Mauritius Commercial Bank who will now be the lender
to the Company. Trafigura retains an interest in the RBL facility
and will continue as offtake provider.
o A charge placed on Afentra (Angola) Ltd shares to Mauritius
Commercial Bank Limited as required by the terms of the debt
facilities.
-- Furthermore, in May, the Block 3/05 JV partners agreed terms
to extend the licence from 1 July 2025 to 31 December 2040. This
includes improved fiscal terms that strengthen the economics of the
permit. The process for formal administration of the licence
extension has commenced and the Company awaits the conclusion of
this process.
Given that the INA transaction has completed in close proximity
to the approval of these financial statements, Management are in
the process of evaluating both the accounting for this transaction
and any required valuation of the underlying assets and liabilities
acquired. Further disclosure will be provided in the 2023 interim
financial statements.
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)
bbl/d barrels of oil per day ('k-' / 'mm-' for thousand /
million)
bwi/d 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
ERCe ERC Equipoise Limited (author of the Competent Person's
Report)
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
G&G geological and geophysical
GBP pounds sterling
Genel Energy Genel Energy Somaliland Limited
Group the Company and its subsidiary undertakings
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
IOCs international oil company
JV joint venture
JOA joint operating agreement
k thousands
km kilometre(s)
km(2) square kilometre(s)
KPIs key performance indicators
lead indication of a potential exploration prospect
London Stock Exchange or LSE London Stock Exchange Plc
LTI Lost time Injury
LTIP Long-term incentive plan
M&A mergers and acquisitions
Mauritius Commercial Bank The Mauritius Commercial Bank Limited
m metre(s)
NFA No Further Activity - forecast without new Capex
invested
NOCs national oil company
OECD Organisation for Economic Cooperation and Development
Op. Operator
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 agreement
QCA 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
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END
FR BCGDULUBDGXU
(END) Dow Jones Newswires
May 16, 2023 02:00 ET (06:00 GMT)
Afentra (AQSE:AET.GB)
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