VANCOUVER, BC, Aug. 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 six months ended
June 30, 2023. View PDF version
Highlights*
- OML 130 license renewed for a period of 20 years, enabling the
refinancing of Prime's debt to $1,050.0
million ($750.0 million drawn
at the end of Q2 2023) and the increase of the Company's undrawn
Corporate Facility to $200.0
million.
- Prime distributed a dividend of $125.0
million or $62.5 million net
to the Company's 50% shareholding.
- The high impact Venus appraisal campaign continued with the
operator completing the drilling and completion of the Venus-1A
appraisal well using the Tungsten Explorer drillship. Tungsten
Explorer has commenced the drilling of the Nara-1X exploration well
to test the westerly extension of the Venus oil discovery.
- A second rig, Deepsea Mira, has joined the campaign and is
currently on the Venus-1X location to drill a side-track section
and perform a drill stem testing ("DST") program, before moving to
Venus-1A to perform a DST.
- OML 130 drilling campaign continues with two water injection
wells completed and put online to provide reservoir pressure
maintenance. The first production well in the infill program is
currently being drilled.
- Achieved an average realized oil sales price of $85.3/bbl compared to the average Bloomberg Dated
Brent price of $78.0/bbl during Q2
2023.
- Cash position of Prime net to the Company's 50% shareholding of
$108.8 million and net debt balance
of $375.0 million at June 30, 2023; resulting in a Prime net debt
position of $266.2 million.
- AOC's cash and cash equivalents at June
30, 2023, of $175.7
million.
- Net income to AOC in Q2 2023 of $106.9
million (Q2 2022 - $5.7
million). Following OML 130 license renewal, Prime released
$346.0 million of deferred income tax
liabilities which has had a positive effect on net income for the
quarter.
- The Company announced the appointment of Dr. Roger Tucker to succeed Mr. Keith Hill as the new President and CEO. Dr.
Tucker has now taken over the leadership responsibilities ahead of
the previously announced date of September
5, 2023.
Africa Oil President and CEO, Roger
Tucker commented: "I am delighted to write my first
message as the new President and CEO of Africa Oil and to report
robust quarterly results for Second Quarter 2023.
The leadership transition process has progressed well and the
decision was made to bring forward formal handover of the
responsibilities by a few weeks, allowing Keith to enjoy his
retirement sooner. I thank him for his support and encouragement,
and I look forward to continuing working with him as he stays on
the Board as a Non-Executive Director.
The decision to join Africa Oil was a compelling one for me
given its excellent opportunity set. We have strong financials,
quality high netback production, a world class oil discovery,
attractive exploration and development assets and a successful
track record of transformational deal making. These provide us with
strategic optionality to take the company through its next phase of
development and shareholder value delivery. I will present my
business plan with an unwavering focus on shareholder returns
during the autumn. In the meantime, I encourage you to reach out to
our Investor Relations if you have any questions."
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* 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.
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2023 Second Quarter Results Summary
(Millions United States Dollars, except Per Share and Share
Amounts)
|
Three months
ended
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Six months
ended
|
Year
ended
|
|
Unit
|
June
30,
2023
|
June
30,
2022
|
June
30,
2023
|
June
30,
2022
|
December 31,
2022
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AOC highlights
|
|
|
|
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Net income/ (loss)
|
$'m
|
106.9
|
5.7
|
128.8
|
51.3
|
(60.3)
|
Net income/ (loss)
per share - basic
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$/ share
|
0.23
|
0.01
|
0.28
|
0.11
|
(0.13)
|
Cash
position
|
$'m
|
175.7
|
191.0
|
175.7
|
191.0
|
199.7
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Prime highlights, net to AOC's
50% shareholding1
|
|
|
|
|
|
WI production3
|
boepd
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19,500
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25,300
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20,200
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25,300
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23,500
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Economic
entitlement production4
|
boepd
|
22,400
|
27,350
|
22,700
|
27,350
|
25,600
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Cash
flow from operations2,5
|
$'m
|
88.7
|
51.3
|
159.6
|
113.1
|
279.4
|
EBITDAX2
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$'m
|
117.0
|
127.2
|
230.6
|
249.3
|
600.5
|
Free Cash
Flow2
|
$'m
|
(27.4)
|
131.9
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47.6
|
251.6
|
299.8
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Net debt
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$'m
|
266.2
|
170.4
|
266.2
|
170.4
|
225.3
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The financial
information in this table was selected from the Company's interim
condensed consolidated financial statements for the three and six
months ended June 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 six months ended June 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).
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In Q2 2023 and H1 2023, the Company recognized net income amounting
to $106.9 million and $128.8 million respectively (Q2 2022 and H1 2022
- $5.7 million and $51.3 million respectively).
In Q2 2023 and H1 2023, included in the Company's share of
income from equity investments is income from its 50% investment in
Prime of $212.7 million and
$250.2 million respectively (Q2 2022
and H1 2022 - $14.4 million and
$65.4 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 $79.7
million in Q2 2023 compared to Q2 2022, mainly from a
decrease in PPT revenue of $86.4
million as Prime exhausted its investment tax credit pool in
2022 as Prime started to pay PPT in cash on OML 130 compared to an
adjustment on entitlement by the operator in 2022. Prime also
recorded a decrease in cost of sales of $67.1 million, mainly driven by an underlift
movement during Q2 2023 of $1.9
million compared to an overlift movement in Q2 2022 of
$85.9 million. This resulted in a
slightly lower gross profit in Q2 2023 compared to Q2 2022.
In addition, there was a decrease of $29.2 million in other operating income,
primarily consisting of investment tax credits which can be offset
against PPT, a decrease in finance costs of $23.6 million and a tax income in Q2 2023 of
$302.2 million compared to a tax
charge of $113.4 million in Q2
2022.
Prime renewed the OML 130 license resulting in OML 130 operating
under the terms of the new Petroleum Industry Act as from
June 1, 2023. Under these terms, OML
130 is subject to a 30% Corporate Income Tax regime compared to the
previous 50% PPT regime which resulted in the partial release of
$346.0 million of deferred income tax
liabilities during the period. These factors explain the higher
profit in the period of $396.6
million in Q2 2023 compared to Q2 2022.
Prime revenues decreased by $213.8
million in H1 2023 compared to H1 2022, mainly driven by
lower liftings despite an increase in the realized oil price to
$83.3/bbl in H1 2023 compared to
$71.9/bbl in H1 2022 and a decrease
in PPT revenue of $114.2 million as
Prime exhausted its investment tax credit pool in 2022.
Prime also recorded a decrease in cost of sales of $213.4 million, mainly driven by an underlift
movement during H1 2023 of $9.5
million compared to an overlift movement in H1 2022 of
$240.6 million partly offset by an
increase in DD&A of $46.7 million
as Prime has changed the method of depletion on its facilities,
including the FPSOs, from straight line to unit of production, to
better reflect the consumption of the reserves' economic benefits.
This resulted in gross profit in H1 2023 to be in line with gross
profit in H1 2022. In addition, there was a decrease of
$80.7 million in other operating
income, primarily consisting of investment tax credits which can be
offset against PPT, and a tax income in H1 2023 of $262.2 million compared to a tax charge of
$198.6 million in H1 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:
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Full-Year
2023
Guidance
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H1 2023
Actuals
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WI production (boepd)
(1)(2)
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18,500 –
21,500
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20,200
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Economic entitlement
production (boepd) (2,3)
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20,500 –
23,500
|
22,700
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Cash flow from
operations (4,5) (million)
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$250.0 –
$330.0
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$159.6
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Capital investment
(million)
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$80.0 -
$100.0
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$22.5
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(1)
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The Company's 2023
production will be contributed solely by its 50% shareholding in
Prime.
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(2)
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Approximately, 82%
expected to be light and medium crude oil and 18% conventional
natural gas.
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(3)
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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.
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(4)
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Cash flow from
operations before working capital adjustments and interest
payments.
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(5)
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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.
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Namibia Orange Basin – Venus Oil Discovery
During Q2 2023, Tungsten Explorer drilled and completed the
Venus-1A appraisal well located in Block 2913B and approximately 13km to the north of the
Venus-1X discovery well. Venus-1A is ready for its DST program to
be carried out by the Deepsea Mira rig, which is currently
performing the DST work on Venus-1X including the drilling of a
side-track.
Prior to the end of Q2 2023, Tungsten Explorer mobilized to the
location of Nara-1X exploration well, approximately 30km to the
northwest of Venus-1X in Block 2912 and is currently drilling the
well with the plan to perform a DST in case of a discovery. There
is also a contingent appraisal well subject to a successful outcome
from Nara-1X operations. The planned DSTs on all the wells
are expected to provide important data for determining the dynamic
performance of the reservoir(s) and, estimating flowrates that
could be achieved by the production wells. Although, at this stage
there is no guarantee of an economically viable project.
Impact closed an Open Offer to its shareholders on April 27, 2023, to raise $95.0 million. The proceeds from the Open Offer
will be used to fund Impact's share of the 2023 drilling and DST
campaign.
The Company will announce the results of these activities in due
course in coordination with its investee company, Impact Oil and
Gas, and the operator TotalEnergies. The Company has an interest in
this program through its 31.0% shareholding in Impact, which in
turn has a 20.0% WI in PEL 56 and a 18.9% WI in PEL 91, giving
Africa Oil effective interests of 6.2% and 5.9% in these licenses
respectively.
Prime
The OML 130 drilling campaign that commenced on February 22, 2023, continues with the first 2
wells, both water injection wells, completed during June 2023. Water injection will support
production from existing oil wells, with the impact expected to be
seen during Q3 2023. Drilling commenced on the third well, an oil
producer, in early July. 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 H2 2023. The acquisition plan also includes
a baseline 4D seismic survey of the Preowei field. The surveys will
all 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
Q2 2023 production results. Beyond the aforementioned drilling
campaign in OML 130, which will offset production decline, there is
a planned maintenance shutdown for the Akpo field taking place
during 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 second half of 2023, which could
then 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 low-risk development opportunity through a
satellite subsea tie-back project to the Egina FPSO.
Prime and its OML 127 partners continue working with the
Nigerian authorities on the conversion of OML 127 to the PIA terms.
This would result in OML 127 being subject to a 30% Corporate
Income Tax regime compared to the current 50% PPT regime. The
Company will update the market on the process in due course.
Dividends
The Company is pleased to announce that its Board of Directors
has declared the distribution of the Company's semi-annual cash
dividend of $0.025 per common share.
This dividend will be payable on September
29, 2023, to shareholders of record at the close of business
on September 8, 2023. This dividend
qualifies as an 'eligible dividend' for Canadian income tax
purposes.
Dividends for shares traded on the Toronto Stock Exchange
("TSX") will be paid in Canadian dollars on September 29, 2023; however, all US and foreign
shareholders will receive USD funds. Dividends for shares traded on
Nasdaq Stockholm will be paid in Swedish kronor in accordance with
Euroclear principles on October 4,
2023.
To execute the payment of the dividend, a temporary
administrative cross border transfer closure will be applied by
Euroclear from September 6, 2023, up
to and including September 8, 2023,
during which period shares of the Company cannot be transferred
between the TSX and Nasdaq Stockholm. Payment to shareholders who
are not residents of Canada will
be net of any Canadian withholding taxes that may be applicable.
For further details, please visit:
https://africaoilcorp.com/investors/dividend-information/
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 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.
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2.
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The table includes
non-GAAP measures. Definitions and reconciliations to these
non-GAAP measures are provided in Second Quarter 2023
MD&A.
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3.
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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.
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4.
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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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All dollar amounts are
in United States dollars unless otherwise indicated.
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Management Conference Call
The Company will not host a management results webcast for this
period. Please contact Investor Relations with any questions.
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 August 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.
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, 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.