TIDMAET
RNS Number : 8630Y
Afentra PLC
10 May 2023
10 May 2023
AFENTRA P L C
Completion of INA Acquisition
Afentra plc ('Afentra' or the 'Company') provides the following
update regarding the previously announced Angolan acquisitions.
Completion of INA Acquisition
Afentra is pleased to announce completion of the acquisition
from INA-Industrija d.d. ('INA') of a 4% interest in Block 3/05 and
4% interest(1) in Block 3/05A offshore Angola (the 'INA
Acquisition') pursuant to a sale and purchase agreement between INA
and Afentra's wholly owned subsidiary, Afentra (Angola) Ltd, dated
18 July 2022 ('SPA'). This acquisition marks Afentra's entry into
Angola where it is well positioned to build a material production
business and contribute to a responsible energy transition for the
country.
-- The transaction effective date of 30 September 2021 results
in a net upfront consideration at completion of $17.0m, which is
offset by the Company inheriting crude oil stock with an
approximate value of $16.6m at $80/bbl (207,868 bbls(2) )
-- The Company has also set aside $10.0m into an escrow deposit
("Escrow") at completion, which will be paid to INA after the Block
3/05 licence extension is formally completed
-- The net upfront consideration and escrow deposit will be
funded by $18.9m from the agreed Reserve Based Lending ('RBL') and
working capital facilities and $8.1m from cash resources
-- The Company expects to sell its first cargo of crude oil in
Q3 2023, thereby monetising the inherited crude oil stock and
subsequent production
-- Block 3/05 current gross production in April averaged 19,000 bbl/d (net 760 bbl/d)
The upfront consideration of $17.0m comprises a $12.0m initial
consideration, $4.8m in working capital and interest(3) and $2.0m
in payments of crystallised contingent consideration,(4) adjusted
downwards by $1.8m due to positive net asset cashflows.(5)
The Company is pleased to announce that 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
for the Block 3/05 crude. The principal terms and conditions for
both the RBL and working capital facility remain unchanged. The
combination of MCB and Trafigura is a further positive step as the
Company strengthens its credit relationships with two lenders who
are supportive of the energy sector.
We have uploaded a short presentation to the Afentra website:
https://afentraplc.com/investors/
Sonangol Acquisition Update
The Block 3/05 JV partners and ANPG, the Angolan Oil & Gas
regulator, have now agreed the terms of the Block 3/05 licence
extension, extending the production sharing agreement ('PSA') from
1 July 2025 to 31 December 2040 with improved fiscal terms that
strengthen the economics of the permit. ANPG will now begin the
process of obtaining the requisite governmental approvals for the
licence extension.
The agreement between ANPG and the JV partners of the terms for
the licence extension, which is a Condition Precedent to the
Sonangol acquisition, now allows Sonangol, as seller, to start the
process of obtaining the requisite government approvals for the
Sonangol transaction where we remain on track to complete by 30
June 2023.
The Company looks forward to providing shareholders with further
updates in due course.
Operations Update
Production from Block 3/05 averaged 17,206 bbl/d in Q1 2023 as a
result of downtime experienced through planned restoration works on
power generation and the distribution network. Recent production
levels have improved with April volumes averaging 19,000 bbl/d.
Furthermore, long-term testing commenced in Block 3/05A, at the
Gazela field, of an additional 1,100 bbl/d, enabling framing of
potential development options.
Updated Competent Persons Report
ERCE has completed its annual update of the Competent Persons
Report ('CPR') on the Block 3/05 assets with an effective date of 1
January 2023. The updated 2P gross reserves, at the new effective
date, are 108 mmbbls (net 4.3 mmbbls) and the updated 2C gross
resources are 43 mmbbls (net 1.7 mmbbls). The outcome is in-line
with previous CPR expectations taking into account 2022
production.
Commenting on the update, CEO Paul McDade said:
"We are very pleased to complete the INA Acquisition and we
would like to thank all involved, especially our shareholders, for
their continued patience and support. The indicative transaction
metrics upon sale of crude inventories speak to the competitiveness
with which we have been able to structure this deal and we are
pleased to mark the inception of our partnership with Sonangol in
Blocks 3/05 and 3/05A. It is also highly encouraging that the terms
for the Block 3/05 licence extension award have been agreed; this
represents a major step towards completion of the Sonangol
transaction within our previously guided timeline. We now look
forward to working with the partnership to enhance production and
reserves to a level that reflects the potential of this very
material asset."
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 final approval of the distribution of the China
Sonangol International ('CSI') interest to the remaining joint
venture partners, Afentra's working interest in Block 3/05A
increases from 4% to 5.33%
(2) As at 30 April 2023
(3) Working capital adjustments and interest on consideration
from effective date to completion date
(4) Further Contingent consideration of up to $9m will also
become payable to INA subject to certain oil price hurdles on Block
3/05 and upon successful future development of discoveries and oil
price hurdles on Block 3/05A. This $9m is split as follows: u p to
$4 million over 2 years on Block 3/05, subject to certain oil price
hurdles and an annual cap of $2 million; and up to $5 million on
Block 3/05A linked to the successful future development of certain
discoveries and oil price hurdles.
(5) Asset cashflow generation from effective date to completion,
comprising crude oil sales less cash calls paid, excluding
significant stock in tank inherited at completion
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END
ACQALMMTMTAMTJJ
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