VANCOUVER, BC, Nov. 15, 2021 /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 months ended September 30, 2021, and to provide selected
results for Prime Oil and Gas Cooperatief UA ("Prime"), a company
in which Africa Oil has a 50% equity interest. View PDF
version.
Highlights
- Net income of $58.5 million
(first nine-month 2021 total of $135.8
million) and end of quarter cash balance of $38.9 million.
- Received two dividends for a total amount of $112.5 million from Prime during the quarter
(received three dividends in the first nine-month 2021 for total of
$150.0 million).
- Reduced the corporate debt facility to $23.0 million with an end of quarter positive net
cash position of $15.9 million.
- Selected Prime's third quarter 2021 results net to Africa Oil's
50% shareholding*:
-
- end of quarter cash position of $244.9
million and debt balance of $514.7
million;
- average daily working interest ("W.I") production of 27,500
barrels of oil equivalent per day ("boepd) and economic entitlement
production of 30,100 boepd (84% light and medium crude oil and 16%
conventional natural gas)2,3; and
- EBITDA4 of $191.5
million (first nine-month 2021 total of $489.8 million) and cash flow from operations of
$128.4 million (first nine-month 2021
total of $466.6 million).
- All assets produced without OPEC+ quota restrictions during the
third quarter of 2021. Overall production performance during the
period fell within the top quartile of the 2021 management guidance
and reservoir performance remains broadly in line with
expectation.
- Post third quarter 2021, Prime signed and closed a pre-export
finance facility ("PXF Facility") for an initial amount of
$150 million and a 7-year tenor. The
use of proceeds of the PXF Facility is to partly repay Prime's RBL
facility and other general corporate purposes. The PXF Facility can
be increased to an amount up to $300
million, subject to the PXF Lenders' approval.
- Venus-1 exploration well on Block 2913B, offshore Namibia, is expected to spud by the end of
this year. Venus-1 will target a large basin floor fan system with
significant undiscovered petroleum initially in place that has been
identified using 3D seismic data.
________________________________
|
* Important
information: Africa Oil's interest in Prime is accounted for as an
investment in joint venture. Refer to Note 1 on page 4 for further
details. Please also refer to other notes on pages 4 and 5 for
important information on the material presented.
|
Africa Oil President and CEO Keith
Hill commented: "Third quarter 2021 was a very strong
period for us with the receipt of two significant Prime dividends.
These have resulted in substantial deleveraging and I am delighted
that Africa Oil is now in a positive net cash position. We have
access to significant liquidity, including $62 million of undrawn credit facility, cash on
hand, our 50% share of Prime's cash balance and operating cash
flows from Prime. Therefore, I am confident that we can deliver on
two strategic goals; the acquisition of accretive producing assets
and implementing shareholder capital return programs. The Africa
Oil team is working hard on both fronts and in relation to
shareholder returns, we are finalizing the management plans that
will be considered by the board of directors in December. I expect
to update the markets once we have the board approved plan by end
of this year. "
2021 Third Quarter Financial Results
(Thousands United
States Dollars, except Per Share and Share Amounts)
|
30 September
2021
|
31 December,
2020
|
|
|
Cash and cash
equivalents
|
38,854
|
40,474
|
|
|
Total
assets
|
959,606
|
910,499
|
|
|
Short-term
debt
|
-
|
-
|
|
|
Long-term
debt
|
23,000
|
141,000
|
|
|
Total
liabilities
|
67,306
|
156,212
|
|
|
Total equity
attributable to common shareholders
|
892,300
|
754,287
|
|
|
|
|
|
|
|
|
Nine months
ended
|
Nine months
ended
|
Three months
ended
|
Three months
ended
|
|
30 September,
2021
|
30 September,
2020
|
30 September,
2021
|
30 September,
2020
|
Share of profit from
investment in joint venture
|
168,331
|
149,788
|
70,953
|
32,472
|
Share of
(loss)/profit from investment in associates
|
(3,295)
|
(660)
|
(1,205)
|
(717)
|
Total operating
income
|
165,036
|
149,128
|
69,748
|
31,755
|
Net operating
income/(loss)
|
152,033
|
(75,518)
|
63,694
|
28,465
|
Net
income/(loss)
|
135,810
|
(97,459)
|
58,506
|
21,189
|
Net income/(loss) per
share - basic
|
0.29
|
(0.21)
|
0.12
|
0.04
|
Net income/(loss) per
share - diluted
|
0.28
|
(0.21)
|
0.12
|
0.04
|
Weighted average
number of share outstanding - basic ('000s)
|
472,973
|
471,738
|
473,505
|
471,950
|
Weighted average
number of share outstanding - diluted ('000s)
|
477,268
|
471,738
|
477,799
|
475,150
|
Number of shares
outstanding ('000s)
|
473,929
|
471,950
|
473,929
|
471,950
|
|
|
|
|
|
Cash flows (used in)/
provided by operations
|
(7,769)
|
(3,433)
|
(3,858)
|
(2,679)
|
Cash flows used in
investing
|
140,408
|
(448,690)
|
112,286
|
18,944
|
Cash flows (used
in)/provided by financing
|
(134,230)
|
153,185
|
(104,648)
|
(25,244)
|
Total change in cash
and cash equivalents
|
(1,620)
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(299,067)
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3,764
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(9,032)
|
|
|
|
|
|
Total change in
equity
|
138,013
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(85,171)
|
65,586
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26,839
|
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The financial information in this table was selected from the Company's unaudited consolidated financial statements for the
three months ended September 30, 2021. The Company's
consolidated financial statements, notes to the financial
statements, management's discussion and analysis for the three
months ended September 30, 2021 and 2020, and the 2020 Report to
Shareholders and Annual Information Form have been filed on SEDAR
(www.sedar.com) and are available on the Company's website
(www.africaoilcorp.com).
|
FINANCIAL POSITION AND EARNINGS
The Company recognized net operating income amounting to
$63.7 million during the three months
ended September 30, 2021, compared
with a net operating income of $28.5
million during the same period in 2020. Included in the
Company's share of profit from equity investments is profit from
its 50% investment in Prime of $71.0
million in the third quarter of 2021 compared with
$32.5 million during the third
quarter of 2020. As at September 30,
2021, the Company had cash of $38.9
million, compared with cash of $40.5
million at December 31,
2020.
Prime distributed two dividends to its shareholders in the third
quarter of 2021 with $112.5 million
received by Africa Oil. Since completing the acquisition of a 50%
shareholding in Prime in January 2020
for $520 million, Africa Oil has
received 9 dividends from Prime for a total amount of $350.0 million.
On July 16, 2021, the Company
closed a new corporate loan facility ("Corporate Facility") with
$160 million committed by the
lenders. On July 30, 2021,
$98.0 million was drawn down under
the Corporate Facility in order to repay the Company's previous
term loan in full. Africa Oil made a repayment of the
Corporate Facility from the proceeds of the second Prime dividend
received during third quarter 2021, reducing the outstanding
balance to $23.0 million. The undrawn
Corporate Facility amount of $62.0
million is available to Africa Oil until May 12, 2022, subject to the satisfaction of
customary covenants.
PRIME'S THIRD QUARTER 2021 PERFORMANCE
OPEC+ quotas impacting Egina field were relaxed in June 2021, enabling all assets to produce without
restrictions during the third quarter of 2021. Overall production
performance for the third quarter of 2021 fell within the top
quartile of the 2021 management guidance and reservoir performance
remains broadly in line with expectation. Prime's third quarter
2021 average daily W.I. production was 27,500 boepd and economic
entitlement production was 30,100 boepd (84% light and medium crude
oil and 16% conventional natural gas), net to Africa Oil's 50%
shareholding in Prime.
During the third quarter of 2021, Prime was allocated four oil
liftings with total sales volume of approximately 4.0 million
barrels or 2.0 million barrels net to Africa Oil's 50%
shareholding.
Prime has sold forward and hedged 100% of its 2021 cargoes at an
average price of $62/bbl and six
cargoes in the first half of 2022 at an average price of
$69/bbl. These contracts are with
counterparties including oil supermajors and commodity trading
houses. The counterparties are part of groups with investment grade
credit ratings. Prime has not hedged any of its planned cargoes for
the second half 2022, giving the Company exposure to improving oil
prices associated with the economic recovery.
Third quarter 2021 average operating cost of $5.2 per boe compares to second quarter 2021
average operating cost of $5.65 per boe and third quarter 2020
average operating cost of $4.4 per
boe.
Prime achieved third quarter 2021 sales revenue of $164.1 million (first nine-month 2021 total of
$445.0 million); EBITDA4
of $191.5 million (first nine-month
2021 total of $489.8 million) and
cash flow generated from operating activities of $128.4 million (first nine-month 2021 total of
$466.6 million), in each case net to
Africa Oil's 50% shareholding. Capital expenditure during the
quarter, net to the Company's shareholding was $9.6 million (first nine-month 2021 total of
$15.3 million), which compares to the
previous quarter expenditure of $3.1
million. The increase is due to the increased investment
activity on Prime' assets including the drilling of one infill well
on the Akpo field.
As of September 30, 2021, Prime
had a cash balance of $489.7 million
or $244.9 million net to Africa Oil's
50% interest. Prime's gross cash balance includes the security
deposit payment of $305.0 million
($152.5 million net to AOC's 50%
interest) received from Equinor in respect of the tract
participation in the Agbami field. Prime also had an outstanding
debt balance of $1,029.5 million or
$514.7 million net to Africa Oil's
50% interest.
Post third quarter 2021, Prime signed and closed a pre-export
finance facility ("PXF Facility") for an initial amount of
$150 million. The PXF Facility is
arranged by Shell Western Supply and Trading Limited and Africa
Finance Corporation ("PXF Lenders") and has a 7-year tenor,
extending the duration of Prime's debt profile on very competitive
cost terms that are comparable to its RBL facility. The use of
proceeds of the PXF Facility is to partly repay the RBL and other
general corporate purposes. The PXF Facility can be increased to an
amount up to $300 million, subject to
the PXF Lenders' approval.
2021 OPERATIONAL OUTLOOK
On August 16, 2021, the Nigerian
President signed the Petroleum Industry Bill into law as the
Petroleum Industry Act, 2021 ("PIA"). The PIA will change the terms
that are applied to Prime's licenses on renewal, or on voluntary
early conversion and renewal. A number of amendments to fiscal
terms have been made and the Company's analysis of their impact is
ongoing, although these are expected to be positive overall.
In July 2021, the OML 130 Gas
Sales and Purchase Agreement was signed by Prime and all other
parties, settling historical gas sales from July 2018. Payment is now anticipated in the
fourth quarter 2021. This will result in an additional $87.0 million of sales revenue to Prime
($43.5 million net to Africa Oil's
50% shareholding) for the three-year period from July 2018. This agreement has de-risked Prime's
future cash flow generation as it facilitates regular payments to
Prime for future gas sales from OML 130 assets. There is no change
to 2021 Management Guidance announced on February 26, 2021, which is copied below:
Guidance for Prime, net
to AOC's 50% shareholding:
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|
W.I. production
(boepd)
|
24,000-28,000
|
Economic entitlement
production (boepd)
|
26,000-30,000
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Cash flow from
operations (million)
|
$310-$4406
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Capital investment
(million)
|
$35-$50
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Net Debt Repayment
(million)
|
$210-$280
|
Africa Oil's corporate
budget (million)
|
$18-$20
|
In Kenya, Africa Oil and its JV
Partners (Tullow Oil and Total Energies) have completed the
redesign of the Project Oil Kenya to ensure it is technically,
commercially and environmentally robust. Africa Oil and its JV
Partners have presented a draft Field Development Plan ("FDP") to
the government of Kenya ("GoK")
ahead of the plan to submit a finalised FDP by the end of 2021, in
line with license extension requirements provided by the GoK in
December 2020. At the same time
Africa Oil and its JV Partners are actively seeking strategic
partners for the project. Based on the revised plan, Africa Oil
believes that this project is an attractive commercial prospect for
investors looking to access the East
Africa oil and gas sector in both the upstream and
midstream. It is intended that a strategic partner will be secured
ahead of a Final Investment Decision ("FID").
Through its 30.9% shareholding in Impact Oil & Gas
("Impact"), the Company has exposure to the Venus-1 exploration
well in Block 2913B, offshore
Namibia which is expected to spud
by year-end 2021. Venus-1 will target a large basin floor fan
system with significant undiscovered petroleum initially in place
that has been identified using 3D seismic data.
Africa Oil, through its direct and indirect (through Impact)
shareholdings, has an effective combined interest of 31.2% in
Africa Energy Corp. ("Africa Energy"). These investments provide
the Company with exposure to Block 11B/12B and Block
2B, offshore South Africa.
On Block 11B/12B, Africa Energy and its joint venture partners
are contemplating an early production system ("EPS") for a phased
development of Block 11B/12B. The joint venture is currently performing
development studies and preparing a field development plan and an
environmental application with the intention of agreeing gas terms
and submitting an application for a Production Right before the
Exploration Right expires in September
2022. The EPS would provide first gas and condensate
production from the Luiperd discovery and would accelerate the
Block 11B/12B development timeline by utilizing existing
nearby infrastructure in the adjacent block in order to supply gas
to existing customers in Mossel Bay. The development of Block
11B/12B
will have positive implications for the South African economy and
will be critical in facilitating the country's energy transition
away from coal with a domestic natural gas supply.
On Block 2B, the operator of the
license is re-tendering for a rig to enable the joint venture to
drill the Gazania-1 well before the Exploration Right expires in
November 2022.
Management Conference Call
Senior management will hold a conference call to discuss the
results on Tuesday, November 16, 2021
at 09:00 (ET) / 15:00 (CET). The conference call may be accessed by
dial in or via webcast:
Canada
|
+1 647 794
1826
|
North America toll
free
|
800-289-0462
|
Sweden
|
+46 (0)8 5033
6573
|
Sweden toll
free
|
0200 883
447
|
UK
|
0800 358
6374
|
Participant
Passcode
|
202742
|
Webcast
URL
|
https://event.webcasts.com/starthere.jsp?ei=1512166&tp_key=4a1d4a9163
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Please join the event conference 5-10 minutes prior to the start
time. A recording of the webcast will be available on the Company's
website after the event.
NOTES
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1.
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The 50% shareholding
in Prime is accounted for using the equity method and presented as
an investment in joint venture in the Consolidated Balance Sheet.
Africa Oil's 50% share of Prime's net profit or loss will be shown
in the Consolidated Statements of Net Income/Loss and Comprehensive
Income/Loss. Any dividends received by Africa Oil from Prime are
recorded as Cash flow from Investing Activities. The guidance
presented here is for information only.
|
2.
|
Aggregate oil
equivalent production data comprised of light and medium crude oil
and conventional natural gas production net to Prime's W.I. in
Agbami, Akpo and Egina fields. These production rates only include
sold gas volumes and not those volumes used for fuel, reinjected or
flared.
|
3.
|
Net entitlement
production is calculated using the economic interest methodology
and includes cost recovery oil, tax oil and profit oil and is
different from working interest production that is calculated based
on project volumes multiplied by Prime's effective working interest
in each license.
|
4.
|
Earnings Before
Interest, Tax, Impairment, Depreciation and Amortization ("EBITDA")
is not a generally accepted accounting measure under International
Financial Reporting Standards ("IFRS") and does not have any
standardized meaning prescribed by IFRS and, therefore, may not be
comparable with definitions of EBITDA that may be used by other
public companies. Non-IFRS measures should not be considered in
isolation or as a substitute for measures prepared in accordance
with IFRS.
|
5.
|
Second quarter 2021
average operating cost was revised from $6.4 per boe to $5.6 per
boe following post period reconciliations.
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6.
|
Prime's cash flow
from operations net to Africa Oil's 50% shareholding in the first
nine-month 2021 amounted to $466.6 million. This includes the
$152.5 million (net to Africa Oil) Agbami Security Deposit received
from Equinor in second quarter 2021. Excluding this item, Prime's
cash flow from operations for the first nine-month 2021 is $314.1
million.
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7.
|
All dollar amounts
are in United States dollars unless otherwise indicated.
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About Africa Oil
Africa Oil Corp. is a Canadian oil and gas company with
producing and development assets in deepwater Nigeria; development assets in Kenya; and an exploration/appraisal portfolio
in Africa and Guyana. The Company is listed on the Toronto
Stock Exchange and on Nasdaq Stockholm under the symbol "AOI".
Additional Information
This information is information that Africa Oil is obliged to
make public pursuant to the EU Market Abuse Regulation. The
information was submitted for publication, through the agency
of the contact persons set out above, at 5:30 ET on November 15,
2021.
Advisory Regarding Oil and Gas Information
The terms boe (barrel of oil equivalent) is used throughout this
press release. Such terms may be misleading, particularly if used
in isolation. Production data are based on a conversion ratio of
six thousand cubic feet per barrel (6 Mcf: 1bbl). This conversion
ratio is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value
equivalency at the wellhead. Given that the value ratio based on
the current price of crude oil as compared to natural gas is
significantly different from the energy equivalency of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an
indication of value.
Forward Looking Information
Certain statements and information contained herein constitute
"forward-looking information" (within the meaning of applicable
Canadian securities legislation). Such statements and information
(together, "forward looking statements") relate to future events or
the Company's future performance, business prospects or
opportunities.
All statements other than statements of historical fact may be
forward-looking statements. Statements concerning proven and
probable reserves and resource estimates may also be deemed to
constitute forward-looking statements and reflect conclusions that
are based on certain assumptions that the reserves and resources
can be economically exploited. Any statements that express or
involve discussions with respect to predictions, expectations,
beliefs, plans, projections, objectives, assumptions or future
events or performance (often, but not always, using words or
phrases such as "seek", "anticipate", "plan", "continue",
"estimate", "expect, "may", "will", "project", "predict",
"potential", "targeting", "intend", "could", "might", "should",
"believe" and similar expressions) are not statements of historical
fact and may be "forward-looking statements". Forward-looking
statements involve known and unknown risks, ongoing uncertainties
and other factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
statements, including statements pertaining to instituting a
dividend policy or implementing a share buyback program,
utilization and drawdown under the new Corporate Loan facility,
performance of commodity hedges, the results, schedules and costs
of exploratory drilling activity, uninsured risks, regulatory and
fiscal changes, availability of materials and equipment,
unanticipated environmental impacts on operations, duration of the
drilling program, availability of third party service providers and
defects in title. No assurance can be given that these expectations
will prove to be correct and such forward-looking statements should
not be unduly relied upon. The Company does not intend, and does
not assume any obligation, to update these forward-looking
statements, except as required by applicable laws. These
forward-looking statements involve risks and uncertainties relating
to, among other things, changes in macro-economic conditions and
their impact on operations, changes in oil prices, reservoir and
production facility performance, hedging counterparty contractual
performance, OPEC+ quota impact on production, results of
exploration and development activities, cost overruns, uninsured
risks, regulatory and fiscal changes, defects in title, claims and
legal proceedings, availability of materials and equipment,
availability of skilled personnel, timeliness of government or
other regulatory approvals, actual performance of facilities, joint
venture partner underperformance, availability of financing on
reasonable terms, availability of third party service providers,
equipment and processes relative to specifications and expectations
and unanticipated environmental, health and safety impacts on
operations. Actual results may differ materially from those
expressed or implied by such forward-looking statements.
SOURCE Africa Oil Corp.