Scarbender307
2 weeks ago
From Seeking Alpha: Dividends and Dividend Yields Relative to Share Structure, Pre- and Post-Prime Oil & Gas Amalgamation
Fig. 2. Dividends and dividend yields relative to share structure, pre- and post-Prime Oil & Gas amalgamation (Laurentian Research, based on Africa Oil financial reports)
Dividend safety
Africa Oil also announced two additional uplifting news last week, concerning the Nigerian oilfields:
The Nigerian Upstream Petroleum Regulatory Commission has given timely regulatory clearance for the combination of two partners in Prime Oil & Gas Coöperatief U.A., i.e., Africa Oil and BTG Pactual Holding S.à r.l. NUPRC has confirmed that the amalgamation does not amount to a change of control in the beneficial ownership of Prime's local subsidiaries, and ministerial consent is not required for the transaction; therefore, the transaction may proceed as proposed. The NUPRC regulatory approval
Africa Oil: A Strong Buy With Positive News Flows And De-Risked 11.6% Dividend Yield
Nov. 06, 2024 4:41 AM ETAfrica Oil Corp. (AOI:CA) Stock, AOIFF StockCVX, GLPEF, GLPEY, TTE, TTFNF7 Comments
Laurentian Research
Investing Group Leader
(13min)
Summary
The completion of the farm-down of Impact's interest in Namibian blocks 2912/2913B cleared the path for Africa Oil to complete its consolidation of Prime Oil & Gas in Nigeria.
Africa Oil: A Strong Buy With Positive News Flows And De-Risked 11.6% Dividend Yield
Nov. 06, 2024 4:41 AM ETAfrica Oil Corp. (AOI:CA) Stock, AOIFF StockCVX, GLPEF, GLPEY, TTE, TTFNF7 Comments
Laurentian Research
Investing Group Leader
(13min)
Summary
The completion of the farm-down of Impact's interest in Namibian blocks 2912/2913B cleared the path for Africa Oil to complete its consolidation of Prime Oil & Gas in Nigeria.
Owning 100% of Prime will double production, enabling 11.63%-yielding dividends. Nigerian regulatory approval of the Prime consolidation and the 20-year PML-52 extension de-risk these dividends for the foreseeable future.
Here, I argue AOIFF's recent pullback has made the stock deeply undervalued. Near-term catalysts and tripling of base dividends may drive the share price significantly higher.
I am Laurentian Research, I have a PhD in geoscience and decades of investment experience. I run the investing group The Natural Resources Hub, where I aim to uncover hidden gems in the mining and energy sectors.
FPSO Oil Rig
Dividends to be tripled
Those following E&P activities in the Orange Basin off southwestern Africa know that I previously recommended Africa Oil Corp. (OTCPK:AOIFF) as the preferred way to gain exposure to this emerging oil province. Judging by the progress of E&P activities since then, the investment thesis has proven correct, though it may take a bit longer for shareholders to reap the rewards.
To that end, Africa Oil said last week that its investee company Impact Oil & Gas Limited has completed the farm-down of its interests in Blocks 2912 and 2913B offshore Namibia to TotalEnergies (TTE), with US$99 million in cash payments received as reimbursement for the net costs incurred on the blocks prior to January 1, 2024. Impact has retained a 9.5% interest in each of the blocks, which in accordance with industry farm-down customs are carried until the first sales proceeds from the Venus field, as shown in Figure 1.
The completion of the farm-down is expected to trigger a chain reaction of events:
It "satisfies a condition precedent to the amalgamation to effect the consolidation of all of Prime Oil & Gas Coöperatief U.A. in Africa Oil," which holds interests in two oil complexes in deepwater Nigeria that collectively produce approximately 36,000 boe/d.
The completion of the Prime consolidation will officially double the reserves and production of Africa Oil, leading to a 2X increase in corporate FCF.
The doubling of corporate FCF will enable Africa Oil to significantly expand its shareholder return program. Indeed, the company is committed to paying out US$100 million (or US$0.15 per share) in base dividends after the Prime amalgamation, a 3X increase over the current dividends (US$23 million or US$0.05 per share) that existing shareholders have been receiving, and distributing 50% of the excess FCF in the form of supplementary dividends and/or share buybacks.
At US$0.15 per share, the base dividends will have a forward yield of 11.63%. Africa Oil now expects to close the Prime amalgamation by the end of the first quarter of 2025, implying that the 11.63%-yielding base dividends may start to be paid out as soon as the second quarter of 2025, as illustrated in Figure 2.
Dividends and Dividend Yields Relative to Share Structure, Pre- and Post-Prime Oil & Gas Amalgamation
Fig. 2. Dividends and dividend yields relative to share structure, pre- and post-Prime Oil & Gas amalgamation (Laurentian Research, based on Africa Oil financial reports)
Dividend safety
Africa Oil also announced two additional uplifting news last week, concerning the Nigerian oilfields:
The Nigerian Upstream Petroleum Regulatory Commission has given timely regulatory clearance for the combination of two partners in Prime Oil & Gas Coöperatief U.A., i.e., Africa Oil and BTG Pactual Holding S.à r.l. NUPRC has confirmed that the amalgamation does not amount to a change of control in the beneficial ownership of Prime's local subsidiaries, and ministerial consent is not required for the transaction; therefore, the transaction may proceed as proposed. The NUPRC regulatory approval was originally expected in mid-2025 or later.
NUPRC has also renewed Petroleum Mining Lease 52 (PML 52), containing the Chevron (CVX)-operated Agbami field, for 20 years effective from November 24, 2024. This follows last year's renewal of the licenses for the TotalEnergies-operated Akpo, Egina, and Preowei fields. Production at Agbami averaged 98,000 bo/d in 2023 from 30 producers, 5 gas injectors, and 10 water injectors, or 7,840 bo/d net to the 8% working interest of Prime Oil & Gas Coöperatief U.A.
The 20-year renewal of these leases secures the long-term production outlook from these high-quality assets. Infill drilling programs at Egina, Akpo, and Agbami and the development of the Preowei field will further derisk the cash flow outlook of Africa Oil. The Africa Oil board of directors considers the above-described base dividends to be sustainable in a range of through-cycle oil price scenarios, as shown in Figure 3.
Estimated Operating Cash Flow, Free Cash Flow, and Base Dividends (in US$100 million) for 2024-2033. Free cash flow is derived from operating cash flow, based on a 2-year forward curve and US$70 long-term oil prices (inflated at 2% per year), and nominal CapEx
Fig. 3. Estimated operating cash flow, free cash flow, and base dividends (in US$100 million) for 2024-2033. Free cash flow is derived from operating cash flow, based on a 2-year forward curve and US$70 long-term oil prices (inflated at 2% per year), and nominal CapEx (modified by Laurentian Research based on Africa Oil presentations and financial reports)
In summary, the 11.63%-yielding dividends are believed to be safe because:
The Nigerian deepwater oilfields have been granted a 20-year lease extension, are of extremely low costs (US$15/boe in OpEx), and are being further developed by leading E&P operators (TotalEnergies and Chevron) for production stability;
With the farm-down in Blocks 2912/2913B and 3B/4B in the Orange Basin and Prime amalgamation in Nigeria, Africa Oil will become leaner and incur lower G&A;
Being carried until first oil production in Namibia, Africa Oil no longer has any significant capital commitment, enabling it to return FCF to shareholders.
Why the recent selloff then?
The stock of Africa Oil has been in a serious pullback since September 2023, as shown in Figure 4. First, it was sell the news of a successful drill-stem test in the discovery well Venus-1X and the drilling of the Venus-1A appraisal well. Next, Africa Oil CEO Roger Tucker negotiated the farm-down of the working interest of investee company Impact in blocks 2912/2913B as well as Africa Oil's stake in South Africa block 3B/4B, which many shareholders hated to see, perhaps due to loss aversion. Then, Africa Oil agreed with BTG Pactual Holding S.à r.l. to merge their respective 50% stakes in Prime Oil & Gas Coöperatief U.A., which some shareholders thought was done at an inopportune time when Africa Oil's share price had undergone a recent selloff. Amidst the uncertainty resulting from the series of transactions, the pause of share buybacks in the aftermath of the announcement of the Prime consolidation certainly did not help.Considering that Africa Oil trades at US$8.2 per barrel of low-cost, high-margin, producing 2P reserves, or 0.49X its NAV (pro forma the Prime consolidation and excluding exploration upside in blocks 2912, 2913B, 3B/4B, and Equatorial Guinea) as shown in Figure 5, I believe Africa Oil stock has been grossly oversold and is now deeply undervalued—especially as it currently trades at the same level as when news of the giant Venus discovery first broke (Figure 4).
NAV build-out of Africa Oil, shown with its market cap as of November 1, 2024. The NAV of the Nigerian producing assets is estimated from Africa Oil’s NI 51-101 statement of reserves for year-end 2023, with the gross asset value at 13% discount rate being US$1,065 million, adjusted for 50% of Prime’s net debt and Nigerian dividend withholding tax. The value of the Namibian assets is calculated from Africa Oil’s offer to Impact’s minority shareholders
Fig. 5. NAV build-out of Africa Oil, shown with its market cap as of November 1, 2024. The NAV of the Nigerian producing assets is estimated from Africa Oil’s NI 51-101 statement of reserves for year-end 2023, with the gross asset value at 13% discount rate being US$1,065 million, adjusted for 50% of Prime’s net debt and Nigerian dividend withholding tax. The value of the Namibian assets is calculated from Africa Oil’s offer to Impact’s minority shareholders (modified by Laurentian Research based on Africa Oil presentation and Seeking Alpha)
As Venus is being considered for accelerated development, it is prudent for Tucker to farm down Impact's (and Africa Oil's) exposure in blocks 2912/2913B to lower the financing risk. The forgone upside (10.5% farmed out), in my opinion, cannot compare with the benefit of eliminating all of the risks associated with having to come up with potentially billions of dollars of capital to develop Venus and conduct further exploration; it spares shareholders from severe equity dilution that would inevitably result from project participation. Farm-outs are a standard oil industry practice for project participants—especially small-cap companies like Africa Oil—to lower risks, and energy equity investors must learn to accept this. We cannot eat our cake and have it too. As for the temporary halt of share Fig. 5. NAV build-out of Africa Oil, shown with its market cap as of November 1, 2024. The NAV of the Nigerian producing assets is estimated from Africa Oil’s NI 51-101 statement of reserves for year-end 2023, with the gross asset value at 13% discount rate being US$1,065 million, adjusted for 50% of Prime’s net debt and Nigerian dividend withholding tax. The value of the Namibian assets is calculated from Africa Oil’s offer to Impact’s minority shareholders (modified by Laurentian Research based on Africa Oil presentation and Seeking Alpha)
As Venus is being considered for accelerated development, it is prudent for Tucker to farm down Impact's (and Africa Oil's) exposure in blocks 2912/2913B to lower the financing risk. The forgone upside (10.5% farmed out), in my opinion, cannot compare with the benefit of eliminating all of the risks associated with having to come up with potentially billions of dollars of capital to develop Venus and conduct further exploration; it spares shareholders from severe equity dilution that would inevitably result from project participation. Farm-outs are a standard oil industry practice for project participants—especially small-cap companies like Africa Oil—to lower risks, and energy equity investors must learn to accept this. We cannot eat our cake and have it too. As for the temporary halt of share repurchases, it was a smart move on the part of Africa Oil management because continued share buybacks using Africa Oil's cash before the completion of the Prime consolidation mostly benefit BTG. I believe those investors who have sold will likely come around once the 11.63%-yielding dividends begin to be paid out. At least the high yield will cause much pain to the short sellers. That takes us to what near-term catalysts there are for Africa Oil.
Near-term catalysts
Besides the threefold increase of dividends likely starting in the 2Q2025, the following catalysts may drive the Africa Oil stock toward its intrinsic value.
Near-term catalysts
Besides the threefold increase of dividends likely starting in the 2Q2025, the following catalysts may drive the Africa Oil stock toward its intrinsic value.
Firstly, Africa Oil currently has an indirect interest of approximately 3.078% in Venus-containing blocks 2912/2913B through its 32.4% shareholding in Impact. Africa Oil is poised to increase its shareholding in Impact to approximately 39.5% via a call and put option agreement before February 27, 2025, which represents an effective economic interest of approximately 3.8% in the blocks.
Secondly, by drilling four wells (Venus-1X, Venus-1A, Venus-2A, and Mangetti-1X) in Block 2913B, the operator TotalEnergies has shown that Venus is a world-class field, possibly containing over 5 billion boe of in-place resources or 2 billion boe of recoverable light oil and associated gas.
Venus is projected to come on stream by 2029 or 2030, initially producing 150,000-160,000 boe/d with one FPSO at a low cost of US$20/boe. Africa Oil is expected to be entitled to 5,890 boe/d of that initial production before carry repayment to TotalEnergies from Impact’s after-tax cash flow. The final investment decision (or FID) for Venus development is expected to be reached by the end of 2025. Although indications are that the Venus FID will be positive, investors should be aware of the risk that Venus development may be delayed.
Thirdly, further exploration in blocks 2912/2913B on the Namibia side and 3B/4B on the South Africa side of the Orange Basin may lead to additional discoveries, although exploration drilling always carries extremely high risks.
The Mangetti discovery may have an additional 1.5 billion boe of in-place oil. On October 20, 2024, TotalEnergies spudded exploration well Tamboti-1X in the far northern part of Block 2913B using the Odfjell DeepSea Mira semisubmersible rig, targeting approximately 2 billion boe of in-place resources in one objective similar to the reservoir penetrated in the nearby Mopane discovery of Galp Energia (OTCPK:GLPEY) and another objective already encountered in the Mangetti-1X well.
Two additional 3D seismic surveys were completed in 2024. The seismic data is currently being processed and interpreted, which is expected to lead to the identification of additional drilling targets in the far northern and southern parts of blocks 2912/2913B.
In South Africa's Block 3B/4B (Figure 6), where Africa Oil has a carried 18% interest and which has multiple exploration prospects on trend with the Venus and Graff discoveries, with an estimated 4 billion boe in unrisked gross P50 prospective resources, TotalEnergies is poised to drill one firm and one contingent well likely in Q1 to Q2 2025.
Investor takeaways
Last week's completion of the farm-down of Impact’s interest in Namibian blocks 2912/2913B paved the way for Africa Oil to finalize its consolidation of Prime Oil & Gas Coöperatief U.A. Owning 100% of Prime will double its production and facilitate the initiation of 11.63%-yielding dividends. The approval of the Prime consolidation and the 20-year extension of PML 52 by the Nigerian regulator substantially de-risk these dividends for the foreseeable future.
The recent pullback in Africa Oil’s share price has left the stock deeply undervalued relative to its NAV, creating an opportunity with approximately 100% upside. A series of near-term operational catalysts, combined with an expected tripling of base dividends likely starting in Q2 2025, is anticipated to drive the share price substantially higher despite the high risks associated with deepwater exploration drilling.
Scarbender307
3 weeks ago
Africa Oil Announces Completion of the Strategic Farm Down of Impact's Namibian Interests and Provides an Operational Update on Namibia
VANCOUVER, BC, Nov. 1, 2024 /CNW/ – (AOI–TSX, AOI–Nasdaq-Stockholm) – Africa Oil Corp. ("Africa Oil", "AOC" or the "Company") is pleased to announce that its investee company Impact Oil & Gas Limited (“Impact”) has completed the farm down (“Farm Down”) of its interests in Blocks 2912 and 2913B offshore Namibia (“Blocks”) to TotalEnergies EP Namibia B.V. Impact has also received a cash payment of approximately USD 99 million, as reimbursement for its share of costs incurred on the Blocks net to the Farm Down interests, prior to January 1, 2024 (“Effective Date”).
Impact has retained a 9.5% interest in each of the Blocks and will benefit from a carry loan for all its remaining development, appraisal and exploration costs on the Blocks from the Effective Date, until the date on which Impact receives the first sales proceeds from oil production on the Blocks (“First Oil Date”). The carry loan is repayable from a share of Impact’s after-tax cash flows, and net of all joint venture costs, including capital expenditures, from production on the Blocks.
Africa Oil President and CEO, Roger Tucker commented: “The Farm Down allows Africa Oil to retain a funded interest in the Venus development project that is expected to add significant reserves and production to our portfolio. We also believe there is tremendous exploration upside on the Blocks starting with the recently spud Tamboti-1X well.
The Farm Down completion also satisfies a condition precedent to the amalgamation to effect the consolidation of all of Prime Oil & Gas Coöperatief U.A. in Africa Oil. We expect to close the amalgamation during the first quarter of 2025 which will then allow us, subject to customary Board approvals, to implement the enlarged shareholder returns program, as previously communicated in our Prime consolidation press release of June 24, 2024”.
Africa Oil currently has a shareholding of approximately 32.4% in Impact. On the closing of the call and put option agreement with three Impact shareholders that was announced on August 27, 2024, the Company will increase its shareholding in Impact to approximately 39.5%, which represents an effective economic interest of approximately 3.8% in the Blocks.
Namibia Operational Update
Following the 2022 Venus-1X discovery well, four further exploration and appraisal wells have been drilled on the Blocks to date. Of the five wells drilled, four have, successfully penetrated and tested the Venus field. As a result, planning is currently progressing for the first development area, with a development scheme expected to be finalized by the end of 2025.
During 2024, two additional 3D seismic acquisition programs were completed to facilitate further exploration over the southern and northern parts of the combined blocks. This has resulted in most of the licensed area now being covered by 3D seismic. This data is currently being processed and interpreted and will help further evaluate prospects and leads in the far northern and southern parts of the Blocks.
On October 20, 2024, the DeepSea Mira spud the Tamboti-1X well, targeting significant additional resource in the north of Block 2913B. Beyond Tambotti-1X, there are a number of prospects in the southern part of the Blocks that are currently being matured by the recent 3D seismic data and create an opportunity for follow-on potential high impact exploration wells.
Block 2913B (PEL 56) and the Venus Discovery
Petroleum Exploration License 56, Block 2913B, is located offshore southern Namibia and covers approximately 8,215 km² in water depths between 2,450m and 3,250m. Following the completion of the Farm Down, Impact now holds a 9.5% interest in this Block. TotalEnergies, the operator, holds a 50.5% interest, QatarEnergy holds a 30.0% interest and NAMCOR, the Namibian state oil company, holds a 10.0% interest.
Block 2913B contains the world class Venus light oil and associated gas field that was discovered by the Venus-1X well drilled in 2022, which encountered high-quality light oil-bearing sandstone reservoir of Lower Cretaceous age. The field has been appraised with the testing of the Venus-1X side-track well plus three additional appraisal wells that have also been flow tested. These wells are: Venus-1A; Venus-2A; and Mangetti-1X.
Block 2912 (PEL 91)
Petroleum Exploration License 91, Block 2912 is adjacent and to the west of Block 2913B. It covers an area of approximately 7,884 km2 in water depths between 3,000m and 3,950m. Following the completion of the Farm Down Impact now holds a 9.5% interest in this Block. TotalEnergies, the operator, holds a 47.2% interest, QatarEnergy holds a 28.3% interest and NAMCOR holds a 15.0% interest.
Additional Information
This information is information that Africa Oil is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 3:15 pm EDT on November 1, 2024.
farrell90
1 month ago
Total may drill South African oil block 3B4B where Aoiff is a partner after planned Namibian well in block 2913b drill. At end below:
https://www.thevillager.com.na/national/2024/totalenergies-targets-billion-barrel-resource-at-next-deepwater-well/
TotalEnergies is aiming for a potential billion-barrel resource with its upcoming deepwater well offshore Namibia, according to the company’s CEO, Patrick Pouyanne.
"Speaking at TotalEnergies’ strategy and outlook event in New York last week, Pouyanne revealed plans for the Tamboti-1X well, which is set to spud soon in the northeast of Block 2913B, home to the company’s major Venus discovery.
When asked by an analyst for a pre-drill resource estimate for Tamboti, Pouyanne described it as “big,” later clarifying that Tamboti is an “elephant” with a potential billion-barrel resource. However, it remains unclear whether this refers to recoverable oil or oil-in-place (OIP).
TotalEnergies’ upstream head, Nicolas Terraz, also spoke at the event, stating that Tamboti had been “de-risked” by the Mangetti-1X well drilled last year.
Mangetti hit two reservoirs with an estimated 1.5 billion barrels of OIP and drilled deeper to appraise the northern extent of the Venus discovery.
Venus-1, discovered in 2022, is Africa’s largest Sub-Saharan oil find, with an estimated 1.5 to 2 billion barrels of oil.
It marked TotalEnergies’ largest discovery in two decades, with phase one expected to exploit around 920 million barrels of oil.
Tamboti-1X is believed to target a prospect separate from Mangetti and Venus. It is not expected to aim for Venus-age reservoir sands but rather the shallower plays encountered at Mangetti.
A drilling rig is en route to Namibia to begin work on the well.
Terraz added that, following Tamboti-1X, TotalEnergies could drill newly identified prospects in the southern part of Block 2913B and explore “large” structures in the company’s two South African blocks — DWOB and 3B/4B — in the untested deepwater Orange basin.
GLTA Farell
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https://www.thevillager.com.na/national/2024/totalenergies-targets-billion-barrel-resource-at-next-deepwater-well/
TotalEnergies is aiming for a potential billion-barrel resource with its upcoming deepwater well offshore Namibia, according to the company’s CEO, Patrick Pouyanne.
"Speaking at TotalEnergies’ strategy and outlook event in New York last week, Pouyanne revealed plans for the Tamboti-1X well, which is set to spud soon in the northeast of Block 2913B, home to the company’s major Venus discovery.
When asked by an analyst for a pre-drill resource estimate for Tamboti, Pouyanne described it as “big,” later clarifying that Tamboti is an “elephant” with a potential billion-barrel resource. However, it remains unclear whether this refers to recoverable oil or oil-in-place (OIP).
TotalEnergies’ upstream head, Nicolas Terraz, also spoke at the event, stating that Tamboti had been “de-risked” by the Mangetti-1X well drilled last year.
Mangetti hit two reservoirs with an estimated 1.5 billion barrels of OIP and drilled deeper to appraise the northern extent of the Venus discovery.
Venus-1, discovered in 2022, is Africa’s largest Sub-Saharan oil find, with an estimated 1.5 to 2 billion barrels of oil.
It marked TotalEnergies’ largest discovery in two decades, with phase one expected to exploit around 920 million barrels of oil.
Tamboti-1X is believed to target a prospect separate from Mangetti and Venus. It is not expected to aim for Venus-age reservoir sands but rather the shallower plays encountered at Mangetti.
A drilling rig is en route to Namibia to begin work on the well.
"Terraz added that, following Tamboti-1X, TotalEnergies could drill newly identified prospects in the southern part of Block 2913B and explore “large” structures in the company’s two South African blocks — DWOB and 3B/4B — in the untested deepwater Orange b
TotalEnergies is aiming for a potential billion-barrel resource with its upcoming deepwater well offshore Namibia, according to the company’s CEO, Patrick Pouyanne.
"Speaking at TotalEnergies’ strategy and outlook event in New York last week, Pouyanne revealed plans for the Tamboti-1X well, which is set to spud soon in the northeast of Block 2913B, home to the company’s major Venus discovery.
When asked by an analyst for a pre-drill resource estimate for Tamboti, Pouyanne described it as “big,” later clarifying that Tamboti is an “elephant” with a potential billion-barrel resource. However, it remains unclear whether this refers to recoverable oil or oil-in-place (OIP).
TotalEnergies’ upstream head, Nicolas Terraz, also spoke at the event, stating that Tamboti had been “de-risked” by the Mangetti-1X well drilled last year.
Mangetti hit two reservoirs with an estimated 1.5 billion barrels of OIP and drilled deeper to appraise the northern extent of the Venus discovery.
Venus-1, discovered in 2022, is Africa’s largest Sub-Saharan oil find, with an estimated 1.5 to 2 billion barrels of oil.
It marked TotalEnergies’ largest discovery in two decades, with phase one expected to exploit around 920 million barrels of oil.
Tamboti-1X is believed to target a prospect separate from Mangetti and Venus. It is not expected to aim for Venus-age reservoir sands but rather the shallower plays encountered at Mangetti.
A drilling rig is en route to Namibia to begin work on the well.
Terraz added that, following https://www.thevillager.com.na/national/2024/totalenergies-targets-billion-barrel-resource-at-next-deepwater-well/
TotalEnergies is aiming for a potential billion-barrel resource with its upcoming deepwater well offshore Namibia, according to the company’s CEO, Patrick Pouyanne.
"Speaking at TotalEnergies’ strategy and outlook event in New York last week, Pouyanne revealed plans for the Tamboti-1X well, which is set to spud soon in the northeast of Block 2913B, home to the company’s major Venus discovery.
When asked by an analyst for a pre-drill resource estimate for Tamboti, Pouyanne described it as “big,” later clarifying that Tamboti is an “elephant” with a potential billion-barrel resource. However, it remains unclear whether this refers to recoverable oil or oil-in-place (OIP).
TotalEnergies’ upstream head, Nicolas Terraz, also spoke at the event, stating that Tamboti had been “de-risked” by the Mangetti-1X well drilled last year.
Mangetti hit two reservoirs with an estimated 1.5 billion barrels of OIP and drilled deeper to appraise the northern extent of the Venus discovery.
Venus-1, discovered in 2022, is Africa’s largest Sub-Saharan oil find, with an estimated 1.5 to 2 billion barrels of oil.
It marked TotalEnergies’ largest discovery in two decades, with phase one expected to exploit around 920 million barrels of oil.
Tamboti-1X is believed to target a prospect separate from Mangetti and Venus. It is not expected to aim for Venus-age reservoir sands but rather the shallower plays encountered at Mangetti.
A drilling rig is en route to Namibia to begin work on the well.
Terraz added that, following Tamboti-1X, TotalEnergies could drill newly identified prospects in the southern part of Block 2913B and explore “large” structures in the company’s two South African blocks — DWOB and 3B/4B — in the untested deepwater Orange basin.
GLTA Farell
Scarbender307
2 months ago
Stolen from Seeking Alpha:
Africa Oil: Simplifying The Balance Sheet While Reducing Cash Needs
Sep. 13, 2024 7:22 PM ETAfrica Oil Corp. (AOI:CA) Stock, AOIFF
Long Player
Investing Group Leader
(9min)
Summary
Africa Oil should grow tremendously over the coming 10 years.
Africa Oil consolidates Prime Oil & Gas ownership.
The second quarter results show an interruption in production due to the drilling campaign.
Africa Oil is debt-free, but Prime's debt is being paid down.
Africa Oil has a number of simplification proposals underway.
The last article on Africa Oil Corp. (OTCPK:AOIFF) discussed the consolidation of prime ownership under the company umbrella in exchange for company stock. Since that time, management has continued to streamline its investments while also reducing future cash needs. The result of this is carried interests in key areas while the company's financials will be a bit easier to understand in the future. There's also a focus on areas that will be growth areas while maybe some more speculative (or uncertain) projects go by the wayside as this process continues. Africa Oil was, for a long time, a story company that's one of the rare companies transitioning to an actual operating entity with a very bright future and some impressive partners.
What made the transition possible was the association at the time with the Lundin Energy Group of companies. That sizable organization is well respected for its record with investors. But that association has now ended. The proposed combination not only simplifies the whole structure, but also places another major (well-respected) shareholder behind the company to help this company continue to grow. It's hard to understate the necessity of that kind of relationship when it comes to growing a small company in the offshore business.
Second Quarter
Another announcement made previously was a drilling campaign to add to production for the company's major producing asset off the coast of Nigeria. That was going to interrupt ongoing production to a certain extent and the current results show that. However, the breakeven results were overshadowed by a distribution from Prime and a reduction in the net debt.
A combination of a different tax structure and the key transactions shown below have affected both comparisons and reported results. The details are shown in the quarterly report. A combination of issues may continue to affect quarterly results until all of this completed, which makes quarterly comparisons a real challenge.
Africa Oil itself is debt-free. However, Prime does have debt that's being paid down and therefore shows on the consolidated balance sheet of Africa Oil.
Probably the most important consideration is the structure and health of the company after all the anticipated transactions are complete. The same goes for the drilling campaign.
Key Transactions
This is a summary of what was announced during the fiscal quarter. After the quarter ended, the company announced an offer to minority shareholders of the subsidiary Impact to buy out their shares.
All of this activity sort of makes the second quarter earnings announcement largely irrelevant. Once the drilling campaign is completed, production interruptions are no longer a concern and the steps shown above are likewise complete, this will be a very different company going forward.
Management also announced an agreement to trade its nearly 15% interest in Eco (Atlantic) Oil & Gas Ltd. (OTCPK:ECAOF) for a 1% interest that Eco held in 3B/4B. This was part of the earnings announcement and further rationalizes the company holdings. As a result, this company now only has interests in the African Continent.
Throughout all of this Africa Oil itself will remain debt-free. The only issue would be the drilling campaign and how production issues as a result of that campaign affect cash flow and debt repayments in the future.
The Business Going Forward
The transaction with Eco Atlantic will, in effect, end the business relationship with that company.
Any relatively small player in the offshore business will have down years and up years rather than a smooth "straight-line" up.
Africa Oil Pro-Forma Future Guidance:In this case, the latest drilling campaign will provide an immediate production (and cash flow) boost until the next campaign. Later, another project will come online and provide another source of cash flow. That diversification will provide the start of the company's effort to smooth earnings.
It's harder to tell the effects on the stock price because the industry has been in the doghouse for some time. As a result, it may well be worth the wait for the better years ahead because the industry could return to more normal historical valuations that would provide some upside potential even if production declines between drilling campaigns. There's also some potential for another accretive acquisition using some cash flow.
The key part of the slide is the low capex required to get to that second production source shown on the lower right-hand corner of the slide. (Couldn't copy and paste it)
Summary Of The Future Business
Africa Oil is a Canadian company that reports in United States dollars.
One of the things that gives this company credibility over many of its size is the partners shown above. Both Chevron Corporation (CVX) and TotalEnergies SE (TTE) are well-regarded operators that very much elevate this offshore operator considerably above many offshore operators of the same size.
This could well make the search for a "name" partner for the Equatorial Guinea project much easier than it otherwise would be.
The end of the strategy of minimizing cash out in exchange for some working interest in a project is finally within the view of the future.
The coming online of projects in South Africa and Namibia is bringing income located in two of the most advanced countries in Africa. They're also two of the most stable countries on the continent. This represents a higher valuation location than the location of the source of the current cash flow.
It is going to take some time for that future to arrive and begin to diversify cash flow. Therefore, this stock may be appreciated when the latest drilling campaign is completed. But there's a lot more appreciation potential that's a few years away.
Valuation of the stock will depend upon market conditions at the time another project begins to contribute to total company production and profits. Overall, though, this is a small player with decent-sized interests in some relatively large projects.
Summary
Between the drilling campaign that is affecting the cash flow from the one cash source, and all the announced simplification strategies, the company's financial statements are very likely to undergo a major (positive) transition that will end with the consolidation of Prime within the company. Overall, every step appears to be a major plus for the company.
Africa Oil, as a smaller offshore operator, naturally has an elevated risk to the point it's considered speculative at this point. However, for those who can handle the risk of an issue like this, it's probably a strong buy idea. This company is likely to be a materially different and far more valuable company by the end of a decade (and likely before that). This is that rare company that's making the transition from a "story company" to an operating model.
Africa Oil itself is debt-free. However, Prime does have debt that it's paying down and is consolidated on the balance sheet. That debt is at conservative levels. The low requirements of cash needed to bring the next projects online (because a carry has been negotiated) means that the company will continue to have a strong balance sheet.
Risks
Any upstream company is exposed to the volatility and low visibility of future oil prices. A sustained and severe downturn in commodity prices could change the outlook for this company and some of its promising projects.
The drilling campaign underway has so far been successful. But success for the rest of the campaign is not assured.
Similarly, all the simplification steps have necessary approvals and administrative steps that need to be successful. A review of all of this could find some unforeseen challenges to get all the anticipated steps done. It's unlikely. But it's a risk.
A loss of key personnel could materially set back the company's future prospects.
douginil
3 months ago
AFRICA OIL ANNOUNCES COMPLETION OF THE STRATEGIC FARM DOWN FOR ORANGE BASIN BLOCK 3B/4B
VANCOUVER, BC, Aug. 28, 2024 /CNW/ - (TSX: AOI) (Nasdaq-Stockholm: AOI) – Africa Oil Corp. ("Africa Oil", or the "Company") is pleased to announce the completion of Africa Oil SA Corp.'s ("AOSAC") strategic farm down agreement ("Agreement") with  TotalEnergies EP South Africa S.A.S. ("TotalEnergies") and QatarEnergy International E&P LLC. ("QatarEnergy") for the Orange Basin Block 3B/4B, offshore South Africa, announced on March 6, 2024. AOSAC is a wholly-owned subsidiary of Africa Oil. View PDF version
AOSAC has retained a direct 17.00% interest in Block 3B/4B and transferred the operatorship of the block to TotalEnergies.
Transaction Highlights:
Maximum transaction value of up to $46.8 million to Africa Oil.
Africa Oil will receive, subject to achieving certain milestones defined in the Agreement, staged cash payments for a total cash payment of $10.0 million of which $3.3 million is now due, and the remaining balance in two successive payments conditional upon achievement of key operational and regulatory milestones.
Africa Oil will also receive a full carry of its 17.00% retained share of all JV costs, up to a cap, repayable to TotalEnergies and QatarEnergy from production in case of exploration success and development, which is expected to be adequate to fund the Company's share of drilling for up to two wells on the licence.
Under a separate agreement between Africa Oil, AOSAC, Eco (Atlantic) Oil & Gas Limited ("Eco") and Eco's subsidiary, Azinam Limited ("Azinam"), signed in July 2024, AOSAC will acquire an additional 1.00% in Block 3B/4B from Azinam ("Eco Agreement") subject to the satisfaction of customary conditions precedent, including approvals from the government of South Africa.
Africa Oil Chief Executive Officer, Dr Roger Tucker, commented: "Africa Oil has an unrivalled position amongst its Independent E&P peer group in the world-class Orange Basin. This includes our interest in the Venus discovery and the follow-on appraisal and exploration upside on Block 2913B, offshore Namibia. This farm down with TotalEnergies and QatarEnergy, two companies with deep geological knowledge of the basin, will facilitate exploration activities on Block 3B/4B, and extends our near-term scope for testing significant upside potential in our portfolio."
About Block 3B/4B
Block 3B/4B covers an area of 17,581 km2 within the Orange Basin offshore South Africa in water depths ranging between 300m and 2,500m. This block lies to the southeast and on trend with number of oil discoveries including the Venus discovery. There is approximately 14,000 km2 of 2D seismic and 10,800 km2 of 3D seismic over Block 3B/4B and a large opportunity set of exploration prospects has been identified.
AOSAC has a 17.00% interest in Block 3B/4B (26.25% prior to completion of the Agreement) with TotalEnergies holding a 33.00% operated interest; QatarEnergy holding 24.00%; Ricocure (Proprietary) Ltd ("Ricocure") holding 19.75%; and Azinam holding 6.25%. Â
On the completion of the Eco Agreement, which is subject to the satisfaction of customary conditions precedent, including approvals from the government of South Africa, the interests in Block 3B/4B will be comprised of: 18.00% held by AOSAC; 33.00% held by TotalEnergies; 24.00% held by QatarEnergy; 19.75% held by Ricocure; and 5.25% held by Azinam.
Eco Agreement
In July 2024, Africa Oil and AOSAC signed the Eco Agreement with Azinam, pursuant to which Azinam has agreed to sell and assign a 1.00% interest in Block 3B/4B to AOSAC in exchange for the cancellation of all common shares in Eco and warrants over Eco common shares held by Africa Oil. The Company holds 54,941,744 Eco shares and 4,864,865 in Eco warrants, combined constituting approximately 16% of the total securities in Eco and also constituting the entire security holding of Africa Oil in Eco. Through its current shareholding in Eco, Africa Oil has an indirect 0.93% interest in Block 3B/4B.
douginil
3 months ago
News Release Issued: Aug 14, 2024 (6:00pm EDT)
AFRICA OIL ANNOUNCES SECOND QUARTER 2024 RESULTS
VANCOUVER, BC, Aug. 14, 2024 /CNW/ - (TSX: AOI) (Nasdaq-Stockholm: AOI) – Africa Oil Corp. ("Africa Oil", "AOC" or the "Company") is pleased to announce its financial and operating results for the three and six months ended June 30, 2024. View PDF version
Highlights
Announced the agreement to consolidate the remaining 50% interest in Prime within Africa Oil, thereby increasing the Company's ownership in core cash generating assets and bringing in a new, strategically aligned cornerstone investor. BTG Pactual, and also enabling enhanced shareholder returns and creating a materially stronger growth proposition.
The Company ended Q2 2024 with a cash balance of $185.6 million and no debt.
During Q2 2024, the Company received a $25.0 million dividend distribution from Prime, net to its 50% shareholding.
During H1 2024, the Company returned a total of $50.6 million to its shareholders through its base dividend distribution and share buybacks for amounts of $11.5 million and $39.1 million respectively.
The Board of Directors of Africa Oil approved a second semi-annual dividend of $0.025 per share, payable on September 27, 2024.
Post period, the Company reached an agreement with Eco to acquire an additional 1.00% interest in Block 3B/4B in exchange for its 14.84% shareholding in Eco, pursuing its strategy to rationalize its portfolio of exploration investments.
Selected Prime's highlights and results net to Africa Oil's 50% shareholding*:
Recorded Q2 2024 daily WI production of approximately 15,800 barrels of oil equivalent per day ("boepd") and average daily net entitlement production of approximately 18,300 boepd.
Post Q2 2024 the rolling monthly daily WI production (as of August 11, 2024) averaged approximately 18,100 boepd and net entitlement production averaged approximately 20,800 boepd; full-year 2024 management production guidance is unchanged.
Recorded Q2 2024 cashflow from operations of $69.6 million.
Prime's cash position of $152.8 million and debt balance of $375.0 million resulting in a Prime net debt position of $222.2 million at June 30, 2024. The AOC Net Debt inclusive of 50% Prime Net Debt is $36.6 million.
Africa Oil President and CEO, Roger Tucker commented: "It was an incredibly busy first half of the year as we signed three strategic transactions, taking Africa Oil towards the next phase of value creation and shareholder returns. We have high-quality development projects, high-impact exploration and appraisal catalysts that will all be funded on completion of these deals. The quality of our organic growth opportunity set is demonstrated by the size and calibre of our partners.
The Prime consolidation once closed, will see the roll-out of a new transparent capital allocation framework and will create scope for a significantly enlarged capital returns program for our shareholders. Africa Oil stands with a differentiated investment case of offering sustainable shareholder returns, significant organic growth opportunities, and is well-positioned to pursue new opportunities on the back of a strong balance sheet."
Scarbender307
4 months ago
EnerCom Denver - The Energy Investment Conference will once again include The Energy Transition and Emerging Technology Session featuring quick-pitch investment presentations from promising start-up energy and technology companies focused on innovation and operations in alternative energy, advanced oil and gas technology, environmental sustainability and carbon solutions. The Energy Transition and Emerging Technology Session provides invited start-up companies a platform to give a 15-minute presentation and participate in one-on-one meetings as requested by investors.
EnerCom is currently accepting applications from start-up companies focused on innovation in alternative energy, advanced oil and gas technology, environmental sustainability, and carbon solutions to present at The Energy Transition and Emerging Technology Session at EnerCom Denver. Interested companies can contact Larry Busnardo at lbusnardo@enercominc.com for complete application details; space is limited.
A complete list of companies participating in the conference and schedule of events can be found on the conference website EnerCom Denver – The Energy Investment Conference.
Presenting company lineup as of July 17, 2024, includes:
Africa Oil (TSX: AOI)
Amplify Energy (NYSE: AMPY)
APA Corporation (NASDAQ: APA)
Aureus Energy Services
Avant Natural Resources
Bayswater
Baytex Energy (TSX/NYSE: BTE)
Berry Corporation (NASDAQ: BRY)
Bison Oil & Gas
Blue Spruce Operating
Calfrac Well Services (TSX: CFW)
Chapman Nuclear
Chevron (NYSE: CVX)
Cibolo Energy Partners
Civitas Resources (NYSE: CIVI)
Diversified Energy (NYSE: DEC)
DNOW (NYSE: DNOW)
Donovan Ventures
Drilling Tools International (NASDAQ: DTI)
EnerCom Inc.
Flotek Industries (NYSE: FTK)
Forum Energy Technologies (NYSE: FET)
Franklin Mountain Energy
Fundare Resources
Geopark (NYSE: GPRK)
Gradient Geothermal
Gran Tierra Energy (TSX/NYSE: GTE)
Granite Ridge Resources (NYSE: GRNT)
GTO Technologies
Hemisphere Energy (TSX: HME)
Hydroacoustics, Inc.
Kelt Exploration (TSX: KEL)
Laramie Energy
Liberty Energy (NYSE: LBRT)
LiTHOS (OTC: LITSF)
Lycos Energy (TSXV: LCX)
Mach Natural Resources (NYSE: MNR)
Mobius Risk Group
NCS Multistage (NASDAQ: NCSM)
NuVista Energy (TSX: NVA)
Oklahoma Environmental Services
Paradigm by Puloli
Parex Resources (OTC: PARXF)
Pason Systems (TSX: PSI)
PetroTal Corp. (TSXV: TAL)
Pine Cliff Energy (TSX: PNE)
Pulse Seismic (TSX: PSD)
Raisa Energy
Ranger Energy Services (TSX: RNGR)
ReconAfrica (OTC: RECAF)
Ring Energy (NYSE: REI)
Sage Butte Energy
SandRidge Energy (NYSE: SD)
Select Water Solutions (NYSE: WTTR)
Sendero ESG Solutions
Serve Robotics (NASDAQ: SERV)
Standard Energy Partners
Tenaz Energy (TSX: TNZ)
U.S. Energy Development Corp.
VAALCO Energy (NYSE: EGY)
Verdun Oil
Vitesse Energy (NYSE: VTS)
W&T Offshore (NYSE: WTI)
Walker Lane Research Partners
Wasatch Energy Management
X Oil Development
Zephyr Energy plc (AIM: ZPHR; OTCQB: ZPHRF)
Conference Details: EnerCom Denver offers investment professionals a unique opportunity to network and listen to senior management teams from leading companies across the energy value chain update investors on their operational and financial strategies and learn how they create value for stakeholders.
Conference Dates: August 18–21, 2024. EnerCom will host its annual Charity Golf Tournament on Sunday, August 18th at the scenic Arrowhead Golf Club in Littleton, Colorado. The EnerCom Denver Golf Tournament -- a fundraiser for IN! Pathways to Inclusive Higher Education -- requires a $150 donation to participate. The Conference Global Sponsor Netherland, Sewell & Associates, Inc. (NSAI) sponsors the tournament, along with EnerCom.
Formal presentations and meetings will be held Monday, August 19th through Wednesday, August 21st.
Venue: Westin Denver Downtown. We highly encourage attendees to book hotel rooms under the EnerCom group block, as space is limited.
Who Attends the Conference: Institutional, private equity, hedge fund investors, family offices, research analysts, retail brokers, trust officers, high net worth investors, investment and commercial bankers, and energy industry professionals gather in Denver throughout the conference.
Scarbender307
5 months ago
MORE INFO
[Stolen from the Value portfolio]
Africa Oil Corporation Plans To Bump Its Yield Past 8%
Jun. 30, 2024 12:05 PM ETAfrica Oil Corp. (AOIFF) Stock, AOI:CA Stock
The Value Portfolio profile picture
Investing Group Leader
Summary
Africa Oil Corporation has a single producing asset in Prime Oil and Gas, which is being consolidated to enable strong shareholder returns.
The company has revamped its strategy to focus on growth potential, including farm downs, equity investments, dividends, and share buybacks.
Africa Oil Corporation's assets in Nigeria have strong production potential, with plans for substantial shareholder returns through dividends and buybacks.
I am The Value Portfolio, an experienced analyst specializing in stock research and wealth growth. I run the investing group The Retirement Forum where I focus on ideas to prepare you for retirement.
Oil drilling well alone in the middle of sandy desert
Africa Oil Corporation (NYSEARCA: OTCPK:AOIFF) has numerous exciting assets, however, at the end of the day, it has a single producing asset. That asset is a 50% shareholding in Prime Oil and Gas and it's associated offshore Nigerian production. That asset had substantial debt, with dividends paid to the parent companies. As we'll see throughout this article, the company's consolidation moves will enable strong shareholder returns.
Africa Oil Corporation New Strategy
Africa Oil Corporation revamped its strategy in mid-2023 and over the past year has worked to focus on its growth potential.
Africa Oil Corporation Investor Presentation
That includes two farm downs to de-risk the company's growth prospects, along with an equity investment placing for Impact. The company has also continued to pay a reasonable dividend of roughly 3% and has continued to buyback shares, buying back $40 million USD of shares or ~5% of its outstanding float. It can repurchase up to 10% of shares.
That, combined with the proposed consolidation we'll see below, will enable continued long-term growth and shareholder returns.
Africa Oil Corporation Proposed Consolidation
The company is consolidating with BTG, specifically BTG's 50% stake in Prime Oil and Gas.
Africa Oil Corporation Investor Presentation
That will result in Prime Oil and Gas becoming a subsidiary of AOC, with all earnings and reserves going straight to AOC. As a result, BTG will have a 35% growth through the issuance of new shares. The $800 million USD company will grow to a $1.2 billion USD company, valuing the company's Prime Oil and Gas assets at $800 million.
Africa Oil Corporation Investor Presentation
The deal provides immediate cash flow from strong Nigerian assets that have strong long-term growth potential. It doubles the reserves and production of the company and enables streamlined financial reporting and an increase in FCF to shareholders. The company is now committed to a $100 million USD base dividend, or a high single-digit yield of more than 8%, along with stronger overall returns.
That doesn't count the company's strong buyback program or its excess FCF that it can utilize for shareholder returns.
Africa Oil Corporation Asset Overview
The company has strong assets in Nigeria, assets that it will now have full ownership of, partaking in 3 of the top 5 fields in Nigeria by production.
Africa Oil Corporation Investor Presentation
The 3 fields have ~310 thousand barrels / day in aggregate gross field production with experienced operators. The vast majority of the company's reserves are proven, with continued development opportunities, and products such as Preowei to expand production. The company expects 2024 production to be a pro forma 36k barrels / day, with an 8-year reserve life.
The assets have generated $850 million in dividends in the last 4 years alone, and that dividend production is expected to remain strong. Pro forma year-end net debt will be $365 million, a comfortably affordable level from Prime, and one that can be managed. At current prices, Prime Oil and Gas earns more than $700 million in annual EBITDA.
Africa Oil Corporation Shareholder Returns
Africa Oil Corporation will have a strong pro-forma balance sheet committed to substantial shareholder returns.
Africa Oil Corporation Investor Presentation
The company expects to maintain at least $150 million in liquidity while maintaining LTM net debt / EBITDAX at <1.0x. The company plans to re-finance Prime debt / RBL, and we expect the combined structure will make that much easier for the company. The company is committed to hefty shareholder returns with $100 million in base dividends + 50% of excess FCF.
That's a dividend yield of more than 8%, plus continued shareholder returns, through buybacks. The company has exciting organic growth opportunities, with minimal risk due to its farm-down transaction. At the same time, the company is still looking for alternative long-term growth opportunities, something worth paying close attention to, given its historical success here.
Thesis Risk
The company's largest risk is weakness in oil prices as long-term demand tops out and low-cost competition exists from numerous sources such as American shale. That could hurt its ability to generate returns from its existing assets, while slowing down its ability to develop new assets. That's worth paying close attention to.
Conclusion
Africa has long been an unpopular jurisdiction for oil companies to invest in, with instability presenting a major risk. That's visible through the company's original project, Kenya, which was never built due to an inability to raise the necessary capital for a takeaway pipeline. That's combined with long-term growth concerns as oil demand remains weak and cheap production arises.
The company is issuing 35% more equity, to BTG, to enable it to take full ownership of Prime Oil and Gas. That will move the company to a net debt position, but enable it to grow substantially and have additional cash. The company is planning to move to a more than 8% debt load plus additional share buybacks. All of that makes the company a valuable investment.
Scarbender307
5 months ago
History: THIS IS A BIG DEAL!
BTG Pactual began in 1983 in Rio de Janeiro as the brokerage firm Pactual DTVM,[12] when its initial and primary activity was proprietary trading and securities sales and trading. In 1986, the asset management and investment bank areas were created. In 1989, the bank opened its São Paulo's office and started the internationalization of operations. Eleven years after the foundation, the bank started the wealth management activities.
In 1998, the company replaced its executive officers with a team led by André Esteves, Eduardo Plass, Marcelo Serfaty and Gilberto Sayão, and acquired Banco Bamerindus.[13] In 2000, the bank opened Pactual Asset Management S.A. DTVM and an office in Cayman Islands.[14] In 2003, the expansion continued with offices in Belo Horizonte and Recife.
In 2006, the UBS bought Banco Pactual for US$2.5 billion[15][16] and created UBS Pactual, André Esteves became CEO of all UBS' Latin American operations. Two years later, Esteves left the bank to found BTG Investments with nine other founding partners of UBS and UBS Pactual, including Pérsio Arida, a former president of the Brazilian Central Bank. In 2009, BTG bought out UBS shareholders and created Banco BTG Pactual.[17] The following year the bank issued US$1.8bn in capital, representing 18.65%, to a group of international investors and partners. In 2011, they acquired 51.00% of Banco PanAmericano shares. In 2012, BTG Pactual bought brokerages in Chile and Colombia, Celfin Capital and Bolsa y Renta, and held an initial public offering (IPO) raising R$3.65 billion, making it one of the 20 biggest companies listed on the B3.[18]
In 2013, the bank, through its subsidiary BTG Pactual Timberland Investments Group LLC, acquired forest asset management contracts from Regions Timberland Group, a division of Regions Bank, the acquisition expanding its investment in forest assets. The deal established BTG Pactual as the biggest independent forest asset manager in Latin America and one of the biggest in the world, with assets of US$3bn and a portfolio of 716,000 hectares of land in North America, Latin America, Europe and Africa. In 2014, it made two acquisitions in Europe: British reinsurer Ariel Re[19] bought for an undisclosed amount, and also Swiss bank BSI,[20] for US$1.7 billion.[21]
In 2017, BTG Pactual bought shares of companies such Anheuser-Busch InBev, Fibria Celulose, Gerdau, Staples and Telefónica Brasil.[22]
Structure
BTG Pactual was formed by Banco BTG Pactual and BTG Pactual Participations.[23] The latter is the managing partner and controller of BTG Investments. Banco BTG Pactual is the main operating company of the group.
Business lines
Investment banking
BTG Pactual helps companies,[24] financial institutions and governments to obtain funding by issuing securities, and through structured and guaranteed loans. It also provides services in M&A, IPOs, FX operations, as well as trading in derivatives and commodities. The bank works in cross border transactions, involving counterparties from all continents and most of the IPOs and secondary offers made in the Brazilian market.[25]
Corporate lending
It lends funds to businesses.[26] The bank has been growing in this market since the capitalizations in 2009 and 2012.[27]
Sales and trading
Products: market making, brokerage and settlement, transactions with derivatives, interest rates, exchange, equities, energy, insurance and reinsurance.[28] These activities are divided into segments such as FICC (Fixed Income, Currencies and Commodities), Equities Sales & Trading and Energy.[29]
Asset management
It offers investment solutions in fixed income, variable income, hedge funds, infrastructure and real estate opportunities, and public and private equity funds.[30] Also in the global hedge fund management market through BTG's flagship, the GEMM Fund,[31] which manages $22 billion around the world and is among the 20 most profitable funds in the world.[32]
Wealth management
BTG Pactual offers financial advisory services to families that need to protect and expand their wealth, as well as succession and real estate planning.[33][34]
Timberland investment
BTG's timberland investment group (TIG) is responsible for agribusiness and timberland management, including tree farms and natural forests.[35] It is one of the largest forest asset managers in the world, with investments in the US, Latin America, Europe and Africa.[36]
Participations
The bank invests its capital in two segments: private equity and principal investments.[37] Private equity activities refer to the management of investments made in shares of private or publicly traded companies whose share cannot be freely traded on stock exchanges, and the capital is financed by other qualified investors and by the bank itself. The principal investments division is dedicated to the activities of owning investment in financial instruments and real estate worldwide.[38]
BTG Pactual Digital
The bank's online investment platform launched in 2014.[39][40] Its retail clients have access to investment funds, fixed income products (CDB, LCA, LCI and LF), private pension (PGBL and VGBL) and COE - Certificate of Structured Operation, aimed at high-income retail in Brazil.[41][42]
Startup
BTG Pactual created a startup support program, a venture debt area specific to offer credit to startups, and started a fund to invest in global venture capital firms.[43] The boostLAB is Banco BTG Pactual's program for connecting and leveraging startups at an advanced level.[44] The partners and executives of BTG Pactual participate in the program as mentors, as well as a number of entrepreneurs, including from Silicon Valley.[45][46][47]
In August 2020, boostLab held the sixth edition of its startup potentiation program at the advanced level, selecting eight startups: Acordo Certo, Atta, Belvo, Conta Simples, iClubs, Ludos Pró (edtech), Provi and Rede Compras.[48][49]
Awards
Best Private Bank in Latin America by PWM, 2020;[50]
Best Private Bank in Colombia by PWM, 2020;[50]
Best Private Bank in Latin America by Global Finance, 2020;[51]
Best Private Bank in Colombia by Global Finance, 2020;[52]
Best Private Bank for Digital advisory services Latin America by PWM, 2019 and 2020.[53]
Best CEO – First Place – Nominated by the Buy Side and Sell Side 2019 by Institutional Investor.[54][55]
The best of Dinheiro, category Specialized Banking Brazil, 2019.[56]
Best Private Bank in Latin America by Global Finance, 2019.[57]
Best Private Banking in Chile by Global Finance, 2019.[57]
Best Bank to Invest – Digital Category by FGV and Fractal Consult, 2018 and 2019.[58]
Pension Guide Valor Econômico/Fundação Getulio Vargas - Nominated by Featured Multimarkets Asset Manager, 2019.[59]
Best Investment Bank by Euromoney (Awards for Excellence), 2019.[60]
The World’s Best Investment Bank in the Emerging Markets by Euromoney (Awards for Excellence), 2019.[61]
Best Investment Bank (in Brazil, Chile and Colombia) by World Finance, 2019.[62]
Best Private Bak (in Brazil) by World Finance, 2019.[62]
Investment Bank of the Year Brazil, Investment Bank of the Year Latam and Wealth Management Bank of the Year by LatinFinance, 2019;[63]
ECM Leader (Latin America and Brazil) by Dealogic, 2019.[64]
Best Financial Innovation Centers in the World for BoostLab by Global Finance, 2019.[65]
Highly Commended at Best Private Bank in Brazil category by the Global Private Banking Awards 2016[66]
Best Private Bank in Colombia by the Global Private Banking Awards 2016[67]
Best Private Bank in Colombia by the Global Private Banking Awards 2017[68]
Best Equities Sales bank in Brazil at the 2017 Institutional Investor ranking[69]
Elect Best Global Macro Fund by the 2018 Investors Choice Awards[70]
Elect the Best Investment bank in Brazil, Chile and Colombia by the 2018 World Finance Banking Awards[71]
Controversies
Insider trading
This case was closed and there was no impact to the public offering. In 2012, penalties for André Esteves' insider trading "force[d] the bank to amend its prospectus, give investors the option to reconsidering bids for BTG shares, and put a cloud over one of this year's highest-profile bank deals."[72] In "a statement, BTG Pactual said Esteves believed the allegations had no merit and was determined to appeal the decision."[73] However, Esteves did not appeal, citing cost and a loss of time as his reasons.[74]
Pactual sale to UBS and resale to BTG
Arthur Rutishauser argued that the way 27% of BTG was acquired is an example of an insider case: André Esteves sold the bank in 2006 for 3 billion SFr to UBS, where Huw Jenkins was a key decision maker.[75] Esteves later repurchased Pactual back in 2009 for 2.5 billion SFr after being allowed to leave UBS to set up BTG.[75] Jenkins was ejected from UBS in 2007 and disappeared then resurfaced as a senior partner and board member at BTG Pactual in 2010.[76]
BTG Pactual purchase of BSI
In July 2014, BTG Pactual purchased Banca della Svizzera Italiana (BSI), with this being subject to the approval by the Swiss Financial Market Supervisory Authority (FINMA). The CEO of FINMA, Mark Branson, was previously the CEO of UBS Securities Japan Ltd.[77] and reported directly to Huw Jenkins, CEO of UBS Investment Bank who is now a partner of BTG Pactual.[78][79] Under Mark Branson, FINMA decided whether to approve BTG Pactual's purchase of BSI, although BTG Pactual was owned and operated by former superiors and colleagues Jenkins and Esteves, it clearly does not implicate any illegal activity whatsoever.[79]
Misrepresentation allegation
The case was closed, a final settlement has been reached. An ex-employee of Hong Kong subsidiary BTG Pactual Asia Ltd, Zeljko Ivic, filed a claim alleging Banco BTG Pactual board member Huw Jenkins made fraudulent misrepresentations to Zeljko Ivic to induce him to sign agreements with the bank.[80][81] Ivic said he had played a key role in Banco BTG Pactual's initial public offering (IPO) for which Jenkins had promised him a partnership and shares.[82][83] Ivic, who valued his claim at some US$20 million, started proceedings after being dismissed in October 2013.[84][85] In March 2017, the parties involved reached a final settlement.
External links
Official website
BTG Digital
Scarbender307
5 months ago
WOW!!!! BAYBEEE! We just hit a possible home run.
Please read latest news release from AOC on their website...or this.
AFRICA OIL ANNOUNCES AGREEMENT TO CONSOLIDATE THE REMAINING 50% INTEREST IN PRIME
CNW Group
Sun, Jun 23, 2024, 8:00 PM HST25 min read
In this article:
Transaction consolidates ownership in core cash generating assets and brings in a new strategically aligned cornerstone investor, enabling enhanced shareholder returns and a materially stronger growth proposition
VANCOUVER, BC, June 24, 2024 /CNW/ - (TSX: AOI) (Nasdaq-Stockholm: AOI) – Africa Oil Corp. ("Africa Oil", or the "Company") is pleased to announce it has reached an agreement with BTG Pactual Oil & Gas S.a.r.l. ("BTG Oil & Gas") to consolidate their respective shareholdings in Prime Oil & Gas Coöperatief U.A. ("Prime"). This will provide Africa Oil shareholders with significant free cash flows, and enable Africa Oil to commit to an enhanced total shareholder returns model within a robust and clearly defined financial framework, supported by world-class producing assets in Nigeria. Africa Oil shareholders will continue to benefit from funded, high value growth opportunities, including the world-class Venus oil project in the Orange Basin, offshore Namibia. View PDF version
The enlarged Africa Oil, with its greater scale and financial resources, will be better positioned to deliver further growth beyond its existing portfolio, supported by a new cornerstone shareholder with a proven track record of creating value in the global oil and gas industry. With clear strategic alignment between Africa Oil and BTG Oil & Gas, the enlarged Africa Oil will have the mandate to pursue growth opportunities in Africa and other select regions, while adhering to strict strategic, financial and operational criteria. Rebranding of the enlarged Africa Oil to reflect the broader geographic strategy of the business is planned after completion.
Amalgamation Agreement
Africa Oil has entered into a definitive agreement (the "Amalgamation Agreement") with BTG Oil & Gas and BTG Pactual Holding S.a.r.l. ("BTG Holding"), the entity which holds BTG Oil & Gas' interest in Prime, in relation to their joint 50:50 ownership of Prime, Africa Oil's investee company with deep-water assets located offshore Nigeria. Prime today accounts for 100 per cent. of Africa Oil's reserves and production1.
Under the Amalgamation Agreement, BTG Holding will be amalgamated under Canadian corporate law with a newly created subsidiary of Africa Oil, with BTG Oil & Gas receiving newly issued common shares in Africa Oil as part of the amalgamation (the "Proposed Reorganization"). On completion of the Proposed Reorganization, BTG Oil & Gas is expected to hold approximately 35 per cent. of the outstanding share capital of the enlarged Africa Oil (on a partially diluted basis, excluding certain performance share units with a long vesting horizon), based on the current number of Africa Oil shares.
Strategic Rationale for the Proposed Reorganization
In the view of the board of directors of Africa Oil (the "Board"), the Proposed Reorganization is in the best interest of the Company and will create a differentiated upstream oil and gas company. The enlarged Africa Oil will have significant scale with robust long-term free cash flows and a low leverage balance sheet, driven by large-scale and high netback assets in deepwater Nigeria. These are complemented by funded development and exploration projects in the prolific Orange Basin.
These pillars provide a strong platform for the enlarged Africa Oil to implement a steady and predictable total shareholder returns model underpinned by an enhanced base dividend policy, whilst delivering organic growth from its core assets and pursuing inorganic growth opportunities supported by a long-term and committed strategic shareholder. The enlarged Africa Oil's objective is to deliver a superior investment case relative to its peer group through a combination of financial discipline, sustainable total shareholder returns, and funded growth.
The Proposed Reorganization would provide the enlarged Africa Oil with strategic and financial benefits:
100 per cent. increase in working interest Proved plus Probable ("2P") reserves and production2 on a pro-forma basis for BTG receiving approximately 35 per cent. of the shares in the enlarged Africa Oil.
Accretion in free cash flow per share for Africa Oil shareholders in the 2025 – 2029 period is expected to be more than 100 per cent., significantly enhancing Africa Oil's capacity to support:
sustainable through-cycle returns to shareholders, underpinning an annual base dividend of US$100 million ("Base Dividend")3 that is deemed by the Board to be sustainable in a range of through-cycle oil price scenarios;
an annual commitment to distribute at least 50 per cent. of excess free cash flow after Base Dividend distribution in the form of supplemental dividends and/or share repurchases; and
ongoing investment in Africa Oil's low-cost, high-margin core producing assets in deepwater Nigeria to extend the production life of these assets, while exploiting in-field and near-field development opportunities.
Increased scale and balance sheet strength, with combined net debt4 / EBITDA5 of 0.4x on a pro-forma basis at year end 2023, along with the potential to benefit from lower borrowing costs.
The introduction of a long-term cornerstone shareholder that is strategically aligned with Africa Oil and committed to growing a sustainable upstream oil and gas business, would deliver superior value creation and shareholder capital returns. BTG Oil & Gas' support could increase the enlarged Africa Oil's access to business opportunities and potentially unlock new sources of growth capital, while complementing Africa Oil's disciplined capital allocation and financial decision making through BTG Oil & Gas' participation on the Board.
Enabling direct control of Prime's cash flows and balance sheet through the consolidation of Africa Oil and BTG Oil & Gas' respective interests in Prime versus the equity accounting method that is followed by Africa Oil today for its investment in Prime. This in turn will facilitate greater transparency and visibility of Prime's financial performance for Africa Oil's shareholders.
Significant scope to streamline the business processes and decision making to achieve cost savings.
Both the Board and the board of directors of BTG Oil & Gas have unanimously approved the Proposed Reorganization.
Completion of the Proposed Reorganization is targeted to occur during or before the third quarter of 2025 and is subject to, among other conditions, Africa Oil shareholder approval, customary consents and approvals from the Nigerian authorities, the Toronto Stock Exchange ("TSX") and Nasdaq Stockholm, completion of the previously announced farm-down of Africa Oil's Namibian interests that are held via Impact Oil & Gas Limited ("Impact"), and a reorganization of the holding structure of BTG Holding to implement the Amalgamation Agreement.
Africa Oil President and CEO, Roger Tucker commented: "Africa Oil's vision is to be a leading independent pure play exploration and production company that consistently delivers peer-leading returns. We have a well-positioned platform with three pillars of a strong balance sheet, high netback production and funded development projects to pursue significant inorganic growth and to take advantage of opportunities in the upstream oil and gas sector as the industry evolves through the energy transition. The consolidation of Prime, together with the farm-downs in Namibia and South Africa, and the stake increase in Impact, are all significant steps in our 2024 business plan. The Proposed Reorganization will enhance our operations, deliver identifiable savings, and increase our capital returns to shareholders on a sustainable basis. We look forward to welcoming our partner BTG Oil & Gas as a shareholder in Africa Oil and its nominees to our board of directors as we work to deliver further value growth."
Huw Jenkins, Vice Chairman of the board of directors at Banco BTG Pactual and Chairman of the board of Prime commented: "We have high regard for Africa Oil's management team, which has demonstrated its ability to deliver innovative and highly accretive industry transactions, and are pleased to become direct shareholders in Africa Oil. We believe that the Proposed Reorganization will create a unique listed vehicle in the exploration and production sector that is capable of industry-leading total shareholder returns. We are committed to working with Africa Oil management, and as part of Africa Oil's board of directors, to support the next phase of the enlarged Africa Oil's growth strategy, in line with our objective of investing in the best businesses and assets in the global upstream oil and gas industry."
Reorganization Structure and Exchange Ratio
The Proposed Reorganization envisages the consolidation of BTG Oil & Gas' and Africa Oil's respective 50 per cent. shareholdings in Prime on completion. The Proposed Reorganization is to be implemented by way of a three-cornered amalgamation structure under Canadian corporate law pursuant to the Amalgamation Agreement.
In connection with the Proposed Reorganization, BTG Oil & Gas will receive newly issued common shares in Africa Oil, that will, based on the current outstanding share capital of Africa Oil, result in BTG Oil & Gas owning approximately 35 per cent. of the outstanding share capital of Africa Oil (on a partially diluted basis) at completion of the Proposed Reorganization. The remaining approximately 65 per cent. of the enlarged Africa Oil (on a partially diluted basis) will continue to be held by existing Africa Oil securityholders.
The relative ownership of existing Africa Oil securityholders and BTG Oil & Gas in the enlarged Africa Oil has been set with reference to a January 1, 2024 effective date (the "Reference Date"), with a compensation mechanism agreed between Africa Oil and BTG Oil & Gas to account for any cash movements to either Africa Oil shareholders from Africa Oil or to BTG Oil & Gas from Prime in the period between the Reference Date and completion of the Proposed Reorganization and will be settled by way of a pre-completion dividend by Prime, or a pre-completion capital contribution into Prime by Africa Oil and/or BTG Oil & Gas.
The Proposed Reorganization requires the approval of at least 50 per cent. of the votes cast by the holders of Africa Oil shares present in person or represented by proxy at a special meeting of the holders of Africa Oil shares to be called to consider the Proposed Reorganization that is expected to be held during October 2024.
Each of the directors and officers of Africa Oil have agreed to vote their Africa Oil shares in favor of the Proposed Reorganization at the Africa Oil shareholder meeting pursuant to voting support agreements, subject to customary exceptions.
Board Composition
On completion of the Proposed Reorganization, the Board will be comprised of nine directors, three of whom will be nominated by BTG Oil & Gas. The enlarged Africa Oil will continue to be led by Dr. Roger Tucker as the Chief Executive Officer and a member of the Board. It is expected that Huw Jenkins will be one of BTG Oil & Gas' nominated directors and will also take on the role of non-executive Chair. Following completion, the Africa Oil Board will be comprised of:
the Chief Executive Officer of Africa Oil;
three independent non-executive directors nominated by Africa Oil;
three non-executive directors nominated by BTG Oil & Gas (including Huw Jenkins as non-executive Chair); and
two additional independent non-executive directors mutually agreed between Africa Oil and BTG Oil & Gas.
Further details on the non-executive directors and executive management team will be provided in due course.
Listing and Headquarters
Africa Oil's shares will continue to be listed on the TSX and NASDAQ Stockholm, post completion.
The existing London office of Africa Oil will serve as the headquarters of the combined business. Africa Oil expects to retain the Rotterdam office of Prime post completion.
The Enlarged Africa Oil Capital Allocation Framework
The Proposed Reorganization will enable the enlarged Africa Oil to put in place a more robust capital allocation framework (the "Enhanced Capital Framework") that the Board believes will be more sustainable across oil and gas price cycles and which will provide shareholders of the enlarged Africa Oil with greater visibility and certainty over the use of capital.
The Enhanced Capital Framework, to be implemented post completion, envisages the following capital priorities:
Maintenance of a US$150 million liquidity position.
Maintenance of a twelve-month trailing ratio of Net Debt6 / EBITDAX7 of no more than 1.0x.
Base Dividend that is deemed sustainable by the Board in a range of conservative oil price scenarios.
Distribution to shareholders of at least 50 per cent. of excess annual free cash flow after the Base Dividend has been paid in the form of supplemental dividends and/or share repurchases ("Supplemental Shareholder Returns") (with the Base Dividend and Supplemental Shareholder Returns collectively being the "Shareholder Distributions Policy").
Capex to be prioritized in the following order: (i) first, to increase short-cycle production growth, (ii) second, for development of future production and (iii) third, for exploration, limited to a small percentage of total annual capex.
BTG Oil & Gas Governance Provisions under Investor Rights Agreement
As part of the Proposed Reorganization, Africa Oil and BTG Oil & Gas have entered into an investor rights agreement (the "Investor Rights Agreement") that provides BTG Oil & Gas with certain Board appointment rights based on specific thresholds of BTG Oil & Gas' continued shareholding in the enlarged Africa Oil. Under this agreement, BTG Oil & Gas will have the right to appoint three non-executive directors to the Board, one of whom will be the non-executive Chair, if BTG Oil & Gas' shareholding is 30 per cent. or greater, reducing to two non-executive directors if BTG Oil & Gas' shareholding is 20 per cent. or greater but less than 30 per cent., and further reducing to one non-executive director if BTG Oil & Gas' shareholding is less than 20 per cent. but at least 10 per cent. BTG Oil & Gas will not have any Board appointment rights under the Investor Rights Agreement if its shareholding reduces to less than 10 per cent.
It is the Company's intention that the Board of Africa Oil will comprise at all times a majority of independent non-executive directors and that each Board committee will have a majority of independent non-executive directors. Subject to applicable law, BTG Oil & Gas will have the right to have one of its Board nominees as a member of each Board committee.
The Investor Rights Agreement (including the additional provisions below) will be automatically terminated if (i) the Amalgamation Agreement is terminated in accordance with its terms or (ii) following completion of the Proposed Reorganization, BTG Oil & Gas' shareholding in the enlarged Africa Oil falls below 10 per cent.
Additional Provisions of the Investor Rights Agreement
BTG Oil & Gas Lockup and Standstill
BTG Oil & Gas has agreed to certain lockup and standstill provisions as part of the Investor Rights Agreement. These stipulate that for a period of two years from the date of completion BTG Oil & Gas will not, without prior approval from the non-BTG Oil & Gas nominated directors, be entitled to:
sell the Africa Oil common shares received in connection with the Proposed Reorganization (and any additional Africa Oil common shares it may acquire as a result of certain participation rights provided to BTG Oil & Gas in the Investor Rights Agreement), subject to certain exceptions, or be entitled to increase its stake in the enlarged Africa Oil to more than 50 per cent.; or
enter into a voting arrangement or similar agreement with a third party regarding its Africa Oil shares if, when any holdings by such third party and its joint actors are aggregated with BTG Oil & Gas' ownership would exceed a 50 per cent. shareholding in the enlarged Africa Oil; or
make, assist, encourage or facilitate a tender offer that would result in the offeror owning 50 per cent. or more of the enlarged Africa Oil; or
initiate any proxy contest, put forth any shareholder proposal, or vote against Africa Oil Board nominees for election as directors, save that BTG Oil & Gas and its affiliates shall otherwise be free to exercise the votes attaching to their shares in the enlarged Africa Oil at their discretion.
Africa Oil to be BTG Oil & Gas' Preferred Investment Vehicle for Upstream Investments in Africa
Provided that BTG Oil & Gas' shareholding does not fall below 20 per cent. (in which case the first look right shall cease) and subject to other customary limitations, BTG Oil & Gas has agreed to give the enlarged Africa Oil a first look at potential equity investments in upstream oil and gas assets and companies BTG Oil & Gas or its affiliates considers in Africa, whether generated by BTG Oil & Gas or its affiliates internally or referred to BTG Oil & Gas or its affiliates by third parties. If the enlarged Africa Oil turns down said opportunity, BTG Oil & Gas can move forward with it by itself or through another entity.
BTG Oil & Gas Consents Relating to Shareholder Distributions, Share Issuances and Significant Merger and Acquisition Transactions
Provided that BTG Oil & Gas' shareholding does not fall below 20 per cent. for a period of more than 150 days (in which case the following consent rights shall terminate), the enlarged Africa Oil will require the consent of BTG Oil & Gas for the following significant decisions:
Changes to the Company's Shareholder Distributions Policy (as outlined above) or declaring or paying dividends or other distributions other than in accordance with the Shareholder Distributions Policy.
Issuance of new shares at more than a 10 per cent. discount to the prevailing 30 day volume weighted average share price.
Issuance of new shares representing 20 per cent. or more of the outstanding issued share capital.
A merger or an acquisition (or similar transaction) with transaction consideration (including any assumed debt) greater than 25 per cent. of the market capitalization of the enlarged Africa Oil (to be calculated with reference to the prevailing 30 trading day volume weighted average share price). For the avoidance of doubt, this shall not apply to or restrict an acquisition of issued and outstanding securities of the enlarged Africa Oil by a third party in exchange for consideration paid by such third party.
BTG Oil & Gas Information and Registration Rights
The Investor Rights Agreement contains customary information, inspection, participation and registration rights for BTG Oil & Gas.
Further Information
Further information regarding the Proposed Reorganization, the Amalgamation Agreement and the shareholders' meeting, will be included in a management information circular that will be mailed to shareholders of record in advance of the shareholder meeting. Copies of the Amalgamation Agreement, the forms of voting support agreements, the Investor Rights Agreement and proxy materials in respect of the shareholders' meeting will be available on SEDAR+ at www.sedarplus.com.
Conditions to Completion
As noted above, the Proposed Reorganization is expected to close during or before the third quarter of 2025. Completion is subject to customary closing conditions, including:
approval by the shareholders of Africa Oil;
completion of the farm-out of Africa Oil's Namibian interests (held via Impact) to TotalEnergies;
approval by the TSX, including approval for listing of the Africa Oil shares to be issued in connection with the Proposed Reorganization and the appointment of the BTG Oil & Gas-nominated directors to the Board;
receipt of certain regulatory consents and approvals in Nigeria; and
completion of a pre-agreed pre-completion reorganization of the holding structure of BTG Holding to implement the Amalgamation Agreement.
Advisors
Evercore is acting as exclusive financial advisor to Africa Oil in relation to the Proposed Reorganization. Bracewell (UK) LLP, Torys LLP, Gernandt & Danielsson Advokatbyrå, Loyens & Loeff N.V. and Banwo & Ighodalo are serving as legal counsel to Africa Oil. Stifel is Africa Oil's corporate broker.
BTG Oil & Gas is being advised by Herbert Smith Freehills LLP, Blake, Cassels & Graydon LLP, Templars and Baker & McKenzie LLP.
Management Presentation
Senior management of Africa Oil will host a presentation on the Proposed Reorganization today, June 24, 2024 at 09:00 (EDT) / 14:00 (BST) / 15:00 (CEST).
Scarbender307
6 months ago
Africa Oil Corporation: Buy The Punished Small Cap
May 28, 2024 8:14 AM ETAfrica Oil Corp. (AOIFF) Stock,
The Value Portfolio
Investing Group Leader
Summary
" Africa Oil Corporation has been punished by the market as a small cap oil company as prices have dropped.
The company has incredibly strong cash flow with the potential for additional developments in Nigeria.
Over the next few years, we expect the company to grow production, generating substantial long-term shareholder returns.
I am The Value Portfolio, an experienced analyst specializing in stock research and wealth growth. I run the investing group The Retirement Forum where I focus on ideas to prepare you for retirement.
Vibrant Sunset Sky Behind an Offshore Oil Drilling Rig off the Coast of Orange County, California
Jeremy Poland
Africa Oil Corporation (OTCMKTS: OTCPK:AOIFF) is a small-cap oil company, with a market capitalization of $800 million. The company has worked to steadily improve its balance sheet, ditching its original Kenyan asset that struggled to move towards completion, and acquiring Prime Oil and Gas along with numerous other exploratory stakes.
As we'll see throughout this article, despite recent share price weakness, the company has both strong current cash flow and numerous catalysts.
Follow Up
We last discussed the company prior to its most recent earnings, which the company just announced.
Since then, the company has announced relatively modest earnings, from its side, influenced by the fact that it did not receive any dividends from Prime Oil and Gas during the quarter. However, as we'll see throughout this article, the company has continued to focus on shareholder returns, especially through buybacks, while expanding its overall assets.
The company's earnings, combined with its strong cash flow, and exciting long-term assets, help support the thesis for a long-term investment.
Africa Oil and Gas Developments
The company was completely reoriented roughly a year ago, and since then, it has focused on new developments.
Africa Oil Corporation Investor Presentation
The company has increased its operating working interest in the Orange Basin in South Africa, and participated in a $40m equity placement by Impact. The company also recently implemented a strategic farm down agreement for Impact's blocks in Namibia. It's achieved farmouts for its most exciting assets, and it's made an offer to purchase an additional 8% of Impact.
The company is de-risking its growth profile. Its maintained base dividend and NCIB share buyback program will enable strong shareholder returns as it continues to chase growth opportunities.
Africa Oil and Gas Nigeria
Africa Oil Corporation is working to expand in Nigeria, with Preowei, a low-risk development project.
Africa Oil Corporation Investor Presentation
The company has continued to drill additional infill wells in Egina, with more than 5k barrels / day of production and additional 4D seismic. In Akpo, the company has continued to test better than expected results, with the potential to pass 7k barrels / day after re-start. In Preowei, the company is expecting a potential 2027 start-up with >65k barrels / day in peak production.
That will help to maintain the asset for the long-term, with continued production and shareholder returns.
Africa Oil Corporation Namibia
Among the company's most significant assets, is the Venus discovery in Namibia, which is being developed by TotalEnergies.
Africa Oil Corporation Investor Presentation
The asset is expected to have 1-2 billion barrels, and TotalEnergies CEO is expecting to explore. The potential upside is billions of additional barrels and the company has numerous catalysts for growth. Ongoing operations are continuing with 3D seismic, and we expect a development to come online here before the end of the decade.
Africa Oil Corporation is working to expand its stake, and TotalEnergies is looking to do the same. We are excited to see how the asset turns out and the farmout agreement will be a strong benefit.
Africa Oil Corporation Financial Picture
Africa Oil Corporation expects to utilize its financials to be able to drive substantial shareholder returns.
Africa Oil Corporation Investor Presentation
The company had barely any net income, with no dividends from Prime Oil and Gas. However, Prime Oil and Gas still had more than $80 million in CFFO for the quarter and almost $100 million in EBITDAX. Africa Oil Corporation still has an almost $200 million cash balance, and counting Prime Oil and Gas, the combined net debt is just a hair under $50 million.
The company spent $25 million in shareholder returns for the quarter, counting dividends and share buybacks. That means double-digit shareholder returns through dividends and share buybacks. The company has a dividend that it can comfortably afford. We expect future quarters to continue to have strong net cash generation and dividends from Prime Oil and Gas.
Africa Oil Corporation Investor Presentation
The above highlights Africa Oil Corporation's goals. The company plans to maintain leverage at <1.0x and its dividend is ~3% annualized. The company has a strong cash buffer as it continues to invest and it plans to re-finance Prime Oil and Gas' debt, which will substantially help its balance sheet. The company is well positioned here.
After that, the company plans to continue chasing organic growth. The company is looking for short-duration production for the next several years, and plans to have development in Namibia and South Africa, with fully funded carries, that will continue through the end of the decade. The company is planning to mostly maintain its dividend with potential special dividends.
We'd like to see the company chase share buybacks as it continues to ramp up production to generate long-term returns.
Thesis Risk
The largest risk to our thesis is that Africa Oil Corporation needs to continue finding new sources of production and development them in a world where climate change is a massive risk. That's a risky proposition, and its ability to continue driving shareholder returns remains a risk worth paying close attention to.
Conclusion
Africa Oil Corporation has an impressive portfolio of assets. The company has seen its share price punished, however, as small-cap oil companies have been punished more than larger companies. That, combined with Brent just a hair over $80 / barrel, means that Africa Oil Corporation continues to generate substantial shareholder returns despite the market punishment.
The company has numerous incredibly exciting assets worth paying close attention to. Not only are the company's existing assets generating strong cash flow, but the company has numerous assets that could
startup over the next several years. That could help generate substantial shareholder returns with dividends and buybacks, making Africa Oil Corporation a valuable investment.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks."
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