VANCOUVER, BC, Nov. 14,
2023 /CNW/ - (TSX: AOI) (Nasdaq-Stockholm: AOI) –
Africa Oil Corp. ("Africa Oil", "AOC" or the "Company") is
pleased to announce its operating and interim condensed
consolidated financial results for the three and nine months ended
September 30, 2023. View PDF
Highlights*
- Successfully completed Venus-1X drill stem testing ("DST")
program after flowing oil at positive rates, supporting the Venus
commercial development case, and as confirmed by the operator's
public statements that there will be an oil development on
Venus.
- The Tungsten Explorer drilling rig has spudded the Mangetti-1X
exploration well in the northern part of Block 2913B with the results expected by early next
year.
- AOC participated in a $40.0
million equity placement by Impact after the period end,
investing $13.0 million with the
proceeds to fund Impact's continuing activities for the remainder
of 2023.
- Prime distributed a dividend of $125.0
million, $62.5 million net to
the Company's 50% shareholding.
- In Q3 2023 OML 127 was voluntarily converted to operate under
the new Petroleum Industry Act from March 1,
2023, and is now subject to 30% Corporate Income Tax regime
compared to the previous 50% Petroleum Profit Tax regime.
- OML 130 drilling campaign continues with two water injection
wells and one production well on the Egina oil field having been
successfully completed and put online.
- Q3 2023 average daily WI production rate of 20,300 boepd was
approximately 4% higher than Q2 2023 average of 19,500 boepd.
- Achieved an average realized oil sales price of $84.5/bbl compared to the average Bloomberg Dated
Brent price of $81.5/bbl for the
offtake dates in July and August.
- Prime's cash position of $118.9
million and debt balance of $375.0
million resulting in a Prime net debt position of
$256.1 million, in each case net to
the Company's 50% shareholding at September
30, 2023.
- AOC's cash and cash equivalents at September 30, 2023, of $201.5 million.
Africa Oil President and CEO, Roger
Tucker commented: "Third quarter 2023 was a positive
period for the Company with notable achievements for our two main
assets offshore Namibia and
Nigeria. The Venus-1X testing
program achieved positive flow rates for the world-class Venus
light oil discovery offshore Namibia, and I am encouraged to note the
public statements by the operator, TotalEnergies, that there will
be a development on the Venus field.
I am pleased to confirm the conversion of OML 127 to
Nigeria's new Petroleum Industry
Act regime, that reduces the effective tax rate for the Agbami
field. Our Nigerian assets continue to perform well and we received
a dividend for $62.5 million during
the period. We also saw the first quarterly increase in the average
daily production since the second quarter 2021, as the Egina infill
drilling program offset the field's production decline.
We have a strong balance sheet and liquidity position, high
netback production and unique transformational catalysts in our
portfolio. We are focused on optimizing our business structure and
delivering on our organic growth opportunities. I look
forward to updating you in due course as we make progress on
several fronts towards delivering the next phase of value
creation."
* 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 Third Quarter Results Summary
(Millions United States Dollars, except Per Share and Share
Amounts)
|
Three months
ended
|
Nine months
ended
|
Year
ended
|
|
Unit
|
September
30,
2023
|
September
30,
2022
|
September
30,
2023
|
September
30,
2022
|
December
31,
2022
|
AOC highlights
|
|
|
|
|
Net income/ (loss)
|
$'m
|
47.1
|
70.5
|
175.9
|
121.8
|
(60.3)
|
Net income/ (loss)
per share - basic
|
$/ share
|
0.10
|
0.15
|
0.38
|
0.26
|
(0.13)
|
Cash
position
|
$'m
|
201.5
|
207.3
|
201.5
|
207.3
|
199.7
|
Prime highlights, net to AOC's
50% shareholding1
|
|
|
|
|
|
WI production3
|
boepd
|
20,300
|
22,100
|
20,200
|
24,200
|
23,500
|
Economic
entitlement production4
|
boepd
|
23,000
|
25,200
|
22,800
|
26,500
|
25,600
|
Cash
flow from operations2,5
|
$'m
|
76.7
|
100.7
|
236.3
|
213.8
|
279.4
|
EBITDAX2
|
$'m
|
117.5
|
227.4
|
348.0
|
476.7
|
617.4
|
Free Cash
Flow2
|
$'m
|
84.8
|
65.1
|
132.4
|
316.7
|
299.8
|
Net debt
|
$'m
|
256.1
|
165.1
|
256.1
|
165.1
|
225.3
|
The financial information in this table was selected from the Company's
interim condensed
consolidated financial statements for the three
and nine months ended September 30, 2023 and the Company's audited
consolidated financial statements for the year ended December
31, 2022. The Company's interim condensed
consolidated financial statements, notes to the financial statements, management's
discussion and analysis for the three and nine months ended
September 30, 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 Q3 2023 and first nine months of 2023, the Company recognized
net operating income amounting to $47.1
million and $175.9 million
respectively (Q3 2022 and first nine months of 2022 - $70.5 million and $121.8
million respectively).
In Q3 2023 and first nine month of 2023, included in the
Company's share of income from equity investments is income from
its 50% investment in Prime of $57.1
million and $307.3 million
respectively (Q3 2022 and first nine months of 2022 - $78.3 million and $143.7
million respectively).
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 revenues decreased by $125.7
million in Q3 2023 compared to Q3 2022, mainly from a
decrease in oil revenue of $76.1
million driven by lower liftings. Prime also recorded an
increase in cost of sales of $131.7
million, primarily driven by an underlift movement during Q3
2023 of $29.8 million compared to an
underlift movement in Q3 2022 of $147.0
million. This resulted in a decrease in gross profit to
$151.0 million in Q3 2023 from
$408.4 million in Q3 2022. There was
a tax charge in Q3 2023 of $5.1
million compared to $224.0
million in Q3 2022.
In Q3 2023 Prime voluntary converted the OML 127 license to
operate under the new Petroleum Industry Act from March 1, 2023, with all key conditions precedent
fulfilled during the three months ended September 30, 2023. Under these terms, OML 127 is
subject to a 30% Corporate Income Tax regime compared to the
previous 50% PPT regime which resulted in the release of
$62.0 million of deferred income tax
liabilities during the period for OML 127. These factors explain
the lower profit in the period of $42.5
million in Q3 2023 compared to Q3 2022.
2023 Management Guidance
The 2023 Management Guidance is unchanged and a summary is
presented below, including significant assumptions in the
footnotes, for completeness:
Prime, net to AOC's 50%
shareholding:
|
Full-Year 2023
Guidance
|
Nine months ended
September 30, 2023
Actuals
|
WI production
(boepd) (1)(2)
|
18,500 –
21,500
|
20,200
|
Economic entitlement
production (boepd) (2,3)
|
20,500 –
23,500
|
22,800
|
Cash flow from
operations (4,5) (million)
|
$250.0 –
$330.0
|
$236.3
|
Capital investment
(million)
|
$80.0 -
$100.0
|
$35.0
|
(1)
|
The Company's 2023
production will be contributed solely by its 50% shareholding in
Prime.
|
(2)
|
Approximately, 82%
expected to be light and medium crude oil and 18% conventional
natural gas.
|
(3)
|
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. Net entitlement production
is calculated using the economic interest methodology and includes
cost recovery oil, tax oil and profit oil and is different from WI
production that is calculated based on project volumes multiplied
by Prime's effective WI.
|
(4)
|
Cash flow from
operations before working capital adjustments and interest
payments.
|
(5)
|
Prime does not pay
dividends to its shareholders, including the Company, on a fixed
pre-determined schedule. Previous number of dividends and their
amounts should not be taken as a guide for future dividends to be
received by the Company. Any dividends received by the Company from
Prime's operating cash flows will be subject to Prime's capital
investment and financing cashflows, including payments of Prime's
RBL principal amortization, which are subject to semi-annual RBL
redeterminations, and Prime's minimum cash on hand
requirements.
|
Namibia Orange Basin – Venus Oil Discovery
The Company believes that its most impactful catalysts for the
remainder of 2023 are the appraisal and exploration results from
Block 2913B (PEL 56), located
offshore Namibia and operated by
TotalEnergies. These include flow test results from the Venus-1A
appraisal well and the outcome of the Mangetti-1X exploration
well.
At the date of this announcement, AOC has an interest in this
program through its 31.1% shareholding in Impact, which in turn has
a 20.0% WI in PEL 56, giving Africa Oil effective interest of 6.2%
in the license.
During Q3 2023, Deepsea Mira rig performed the DST program for
Venus-1X well with positive results achieved, which support the
case for a commercial development of the Venus field as confirmed
by the operator's public statements that there will be an oil
development on Venus. The results for Venus-1X are being
incorporated in the development studies and are expected to be
confirmed by the Venus-1A DST program, currently being carried out
by Deepsea Mira.
During Q3 2023, the Tungsten Explorer rig drilled the Nara-1X
exploration well in Block 2912, approximately 30km to the northwest
of Venus-1X. The formation was encountered on prognosis and a thick
interval was drilled with oil and gas shows. This outcome confirms
the presence of a working petroleum system at the Nara-1X location,
a considerable distance from Venus-1X and Venus-1A locations. A
full wireline logging program was completed, and a core taken;
however, the well was not flow tested as the interval drilled was
deemed non-commercial and was plugged and abandoned. The Joint
Venture is continuing to evaluate the results of Nara-1X.
Impact closed a private placement with certain existing
shareholders on October 31, 2023, to
raise $40.0 million. The proceeds
from this placement, together with existing cash reserves, is
intended to fund Impact's participating share of costs for the
remainder of 2023, which include the on-going appraisal of the
Venus discovery, drilling of the Mangetti-1X exploration well and
further 3D seismic acquisition for the southern part of Block
2913B to cover the Damara and South
Damara structures that have been identified on 2D seismic.
Prime
The OML 130 drilling campaign that commenced on February 22, 2023, continues with the 3 wells,
two water injectors and one production well, successfully drilled
and completed on Egina. The infill drilling has offset production
declines with the first quarterly increase in the average daily
production since second quarter 2021.
The drilling rig is currently drilling the first of 3 wells on
Akpo West field. The wells will be
tied into the Akpo FPSO. The multi-well program is planned for up
to 9 wells on Egina and Akpo in the license area during 2023 and
2024.
Acquisition of 4D monitor seismic surveys are planned for Akpo,
Egina and Agbami during late 2023 through early 2024. The
acquisition plan also includes a baseline 4D seismic survey of the
Preowei field. The surveys will support future drilling decisions
across both OML 127 and OML 130.
Full year 2023 production outlook remains within management
guidance for both working interest and economic entitlement after
Q3 2023 production results. Beyond the aforementioned drilling
campaign on Egina and Akpo, which will offset production decline,
there is a planned maintenance shutdown for the Akpo field taking
place during Q1 2024, this was previously planned for Q4 2023.
Following the 20-year renewal of the OML 130 license on
May 28, 2023, FEED studies are
expected to take place through the fourth quarter of 2023, which
could facilitate the final investment decision for the Preowei oil
discovery development project. Preowei oil field is to the north of
Egina FPSO and is a development opportunity via a satellite subsea
tie-back project to the Egina FPSO.
NOTES
1.
|
The 50% shareholding in
Prime is accounted for using the equity method and presented as an
investment in joint venture in the Interim Condensed 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.
|
2.
|
The table includes
non-GAAP measures. Definitions and reconciliations to these
non-GAAP measures are provided in Third 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.
|
5.
|
Cash flow from
operations before working capital adjustments.
|
All dollar amounts are
in United States dollars unless otherwise indicated.
|
Management Conference Call
Senior management will hold a conference call to discuss the
results on Thursday, November 16,
2023 at 09:00 (ET) / 14:00 (GMT) / 15:00 (CET). Participants
should use the following link to register for the live webcast:
Participants should use the following link to register for the
live webcast:
https://onlinexperiences.com/Launch/QReg/ShowUUID=A1806FF6-C426-4F69-B753-724D32CE5198
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Please test your connection prior to joining to ensure a
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Participants can also join via telephone with the instructions
available on the following link:
https://register.vevent.com/register/BI141f840ff99443cdbab7d323626c0f0f
- Click on the call link and complete the online registration
form.
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About Africa Oil
Africa Oil Corp. is a Canadian oil and gas company with
producing and development assets in deepwater Nigeria 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 November 14, 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
in accordance with NI 51-101 and the COGE Handbook.
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 drilling activity including those offshore
Namibia and Nigeria, the outcome of exploration and
appraisal activities including those offshore Namibia, uninsured risks, regulatory and
fiscal changes, 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 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.