VANCOUVER, BC, May 12, 2023
/CNW/ - (TSX: AOI) (Nasdaq-Stockholm: AOI) – Africa Oil
Corp. ("Africa Oil", "AOC" or the "Company") is pleased to
announce its operating and interim consolidated financial results
for the three months ended March 31,
2023. View PDF version
Highlights
- The high impact Venus appraisal campaign commenced with the
spud of Venus-1A well, located 13km to the north of the discovery
well Venus-1X, on March 4, 2023. A
second drilling rig is expected to join the campaign soon.
- On April 27, 2023, the Company
subscribed for 39,455,741 shares in Impact for $31.4 million, payable in two tranches, and
following the transaction the Company will ultimately hold 31.1% of
the enlarged share capital in Impact.
- The OML 130 drilling campaign commenced on February 22, 2023, with the spud of the first
infill well on the Egina oil field. This is the first well in a
multi-well program that is planned for up to 9 wells on Egina and
Akpo in the license area during 2023 and 2024.
- Cash position of Prime* net to the Company's 50% shareholding
of $198.5 million and debt balance of
$360.2 million at March 31, 2023, resulting in a Prime net debt
position of $161.7 million, which is
a further deleveraging of Prime since Q4 2022.
- AOC's cash and cash equivalents at March
31, 2023, of $158.2
million.
- The Company declared and paid a semi-annual dividend of
$0.025 per share (approximately
$11.5 million) at the end of
March 2023. Since end of March 2022, the Company has returned more than
$80.0 million to its shareholders
through the share buyback program and the dividend policy.
Africa Oil President and CEO Keith
Hill commented: "The Venus appraisal program is
progressing per our expectation with a second rig, DeepSea Mira,
expected to arrive in Namibia
shortly to join the campaign. As already reported, we stood our
corner in Impact's Open Offer and will ultimately increase our
shareholding in Impact to 31.1%. The interest in Impact provides
our shareholders with material exposure to, possibly the most
exciting appraisal and exploration work program globally during
2023. We remain the only publicly-listed Independent E&P
company with exposure to Venus and its possible westerly extension
that will be explored later this year. I am pleased that first
quarter 2023 was another robust quarterly period for Prime as
demonstrated by its EBITDAX and cash from operations metrics. We
have high quality production assets in Nigeria, held through our shareholding in
Prime and, these are complemented by our exciting and potentially
high impact exploration assets. These include attractive
infrastructure-led exploration opportunities in Equatorial Guinea, together with our Block
3B/4B
exploration inventory in the Orange Basin, that lie on trend with
the recent oil discoveries offshore Namibia."
* Important
information: Africa Oil's interest in Prime is accounted for as an
investment in joint venture. Refer to Note 1 on page 4 for further
details. Please also refer to other notes on page 4 for important
information on the material presented.
|
2023 First Quarter Results Summary
(Millions United States Dollars, except Per Share and Share
Amounts)
|
Three Months
Ended
|
Year
Ended
|
Unit
|
March 31,
2023
|
March 31,
2022
|
December 31,
2022
|
AOC highlights
|
|
|
Net income/ (loss)
|
$'m
|
21.9
|
45.6
|
(60.3)
|
Net income/ (loss)
per share - basic
|
$/ share
|
0.05
|
0.10
|
(0.13)
|
Cash
position
|
$'m
|
158.2
|
140.6
|
199.7
|
Prime highlights, net to AOC's
50% shareholding1,2
|
|
|
|
WI production3
|
boepd
|
20,900
|
25,400
|
23,500
|
Economic
entitlement production4
|
boepd
|
23,200
|
27,400
|
25,600
|
Cash
flow from operations5
|
$'m
|
59.5
|
56.1
|
250.5
|
EBITDAX
|
$'m
|
113.6
|
122.2
|
600.5
|
Free Cash
Flow
|
$'m
|
75.0
|
119.8
|
299.8
|
Net debt
|
$'m
|
161.7
|
235.3
|
225.3
|
The financial information in this table was selected from the Company's
unaudited consolidated financial statements for the
three months ended March 31, 2023 and the Company's audited
consolidated financial statements for the year ended December
31, 2022. The Company's
consolidated financial statements, notes to the financial statements, management's
discussion and analysis for the three months ended March 31, 2023
and 2022 and the 2022 Report to Shareholders and Annual Information
Form have been filed on SEDAR (www.sedar.com) and are available on
the Company's website (www.africaoilcorp.com).
|
In Q1 2023, the Company recognized net income amounting to
$21.9 million (Q1 2022: $45.6 million).
In Q1 2023, included in the Company's share of income from
equity investments is income from its 50% investment in Prime of
$37.5 million (Q1 2022: $51.0 million).
The figures used in the explanations for movements period on
period below are based on Prime's gross balances per the interim
condensed consolidated financial statements.
Prime recorded lower revenues of $134.1
million in Q1 2023 compared to Q1 2022, mainly from lower
volumes sold compared to Q1 2022 despite a higher realized price of
$81.5/bbl in Q1 2023 compared with
$68.8/bbl in Q1 2022. Prime also
recorded a decrease in cost of sales of $146.3 million, mainly driven by an underlift
movement during Q1 2023 of $7.6
million compared to a overlift movement in Q1 2022 of
$154.7 million. This resulted in a
slightly higher gross profit in Q1 2023 compared to Q1 2022. In
addition, there was a decrease of $51.5
million in other operating income, primarily consisting of
investment tax credits which can be offset against petroleum profit
tax ("PPT"), and an increase in finance costs of $33.1 million, partly offset by lower tax charges
of $45.2 million. These factors
explain the lower profit in the period of $26.9 million in Q1 2023 compared to Q1 2022.
Prime's Q1 2023 production was in the upper end of management
guidance for both WI production (18,500 – 21,500 boepd net to
Africa Oil) and economic entitlement production (20,500 – 23,500
boepd net to Africa Oil). Q1 2023 gross field production was lower
than Q1 2022, primarily as a result of expected natural reservoir
decline. OML 130 gas export was also briefly impacted by a process
disruption at Nigeria Liquefied Natural Gas facility during
January 2023.
2023 Management Guidance
The 2023 Management Guidance is unchanged, please refer to Q1
2023 MD&A for the details.
Namibia Orange Basin – Venus Oil Discovery
The multi-well appraisal and exploration campaign in
Namibia's Orange Basin commenced
on March 4, 2023. This program is
targeting up to four wells (including the re-entry of Venus-1X
discovery well, in Block 2913B), to
appraise the Venus light oil discovery and to investigate a
potential westerly extension of Venus, the Nara prospect on Block
2912.
Africa Oil has an interest in this program through its
shareholding in Impact Oil and Gas Ltd. ("Impact"), which in turn
has a 20.0% WI in Block 2913B and a
18.9% WI in Block 2912, giving Africa Oil effective interests of
6.2% and 5.9% in these blocks respectively. Africa Oil is the only
publicly-listed Independent E&P company with an effective
economic interest in Venus, understood to be the world's largest
oil discovery in 2022.
Impact closed an Open Offer to its shareholders on April 27, 2023, to raise $95.0 million. The proceeds from the Open Offer,
together with Impact's existing cash reserves will be used to fund
Impact's share of the 2023 drilling and DST campaign.
Shareholder Capital Returns
The Company declared and paid a semi-annual dividend of
$0.025 per share (approximately
$11.5 million) at the end of
March 2023. The Board of Directors
view the 2023 annual distribution to be prudent with due
consideration for the acquisition-led business strategy and the
priority of maintaining a strong balance sheet in a range of market
scenarios.
During Q1 2023, the Company repurchased 3.1 million shares
through its Normal Course Issuer Bid share buyback plan on the
facilities of Toronto Stock Exchange and Nasdaq OMX, at all-in-cost
of $6.7 million of which 3.1 million
shares were cancelled during Q1 2023.
Since end of March 2022, the
Company has returned more than $80.0
million to its shareholders through the share buyback
program and the dividend policy.
Other Exploration
In the three months ended March 31,
2023, expenditure of $7.7
million was incurred following the signing of the PSCs for
Blocks EG-18 and EG-31 and mainly related to the acquisition of
seismic data.
South Africa
On March 8, 2023, the Company
published an independent review of prospective resources in Block
3B/4B
by RISC Advisory (UK) Limited ("RISC"). This was prepared in
accordance with Canadian National Instrument 51-101 – Standards for
Oil and Gas Activities ("NI51-101"), the Canadian Oil and Gas
Evaluation Handbook ("COGE Handbook") and the Petroleum Resources
Management System 2018 ("PRMS").
RISC reviewed the prospective resources and probability of
geological success of an inventory of exploration prospects within
Block 3B/4B and reported total unrisked gross P50
prospective resources of approximately 4 billion barrels of oil
equivalent. Please refer to the Company's press release of
March 8th, 2023,
announcing the publication of this report for more details. The
independent review can also be found on the Company's website:
https://africaoilcorp.com/operations/block-3b-4b/ .
The Company and its JV partners are progressing plans to conduct
a two-well campaign on Block 3B/4B and are in
discussions with various potential partners to farm out up to a 55%
gross working interest in the Block. The JV Partners have selected
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
On February 20, 2023, the Company
announced that it had signed two Production Sharing Contracts
("PSCs") with the Republic of Equatorial
Guinea for offshore Blocks EG-18 and EG-31, which were
subsequently ratified on March 1,
2023. The Company holds an 80% operated interest, subject to
back in rights by GEPetrol in both blocks. Work programs on both
blocks include re-processing of existing 3D seismic surveys and
identification of prospects within the first 2-year period. The
initial period provides a low-cost opportunity in two highly
prospective blocks.
NOTES
1.
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The 50% shareholding in
Prime is accounted for using the equity method and presented as an
investment in joint venture in the Interim 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.
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2.
|
The table includes
non-GAAP measures. Definitions and reconciliations to these
non-GAAP measures are provided in First 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.
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5.
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Cash flow from
operations before working capital adjustments.
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6.
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Approximately, 82%
expected to be light and medium crude oil and 18% conventional
natural gas.
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7.
|
Net entitlement
production estimate is based on a 2023 average Brent price of
$80.9/bbl being the average of the Brent forward curves between
November 15, 2022, and January 15, 2023.
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All dollar amounts are
in United States dollars unless otherwise indicated.
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Management Conference Call
Senior management will hold a conference call to discuss the
results on Monday, May 15, 2023 at
09:00 (ET) / 14:00 (BST) / 15:00 (CET). Participants should use the
following link to register for the live webcast:
https://onlinexperiences.com/Launch/QReg/ShowUUID=6BAFAE51-46E4-4FF6-AD56-1F6A83924944
Participants can also join via telephone with the instructions
available on the following link:
https://register.vevent.com/register/BIe5dbe998466d4d0385a878529ba32953
Please join the event conference 5-10 minutes prior to the start
time. A recording of the webcast will be available on the Company's
website after the event.
About Africa Oil
Africa Oil Corp. is a Canadian oil and gas company with
producing and development assets in deepwater Nigeria; development assets in Kenya; 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 5:00 p.m.
ET on May 12, 2023.
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.
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 exploratory drilling activity including
those offshore Namibia and
Nigeria, uninsured risks,
regulatory and fiscal changes, outlook for the renewal of OML 130
license in Nigeria, 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 uncertainties around
applicable corporate income tax in Nigeria, 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.