AFRICA OIL ANNOUNCES FOURTH QUARTER AND FULL YEAR 2023 RESULTS
Highlights
- Successfully met 2023 Management Guidance on production and cash flow from operations2,5.
- The Company received three dividends totaling
$175.0 million in 2023 from its shareholding in Prime, including one dividend of$50.0 million in Q4 2023. AOC's cash and cash equivalents atDecember 31, 2023 , of$232.0 million . - 2023 Full year net income of
$87.1 million (2022: net loss of$60.3 million ) or$0.19 per share (2022: net loss of$0.13 per share). - The Company launched a new NCIB share buyback program on
December 6, 2023 , and post year-end, onJanuary 10, 2024 , started share buybacks under the new NCIB. The Company will pay a dividend of$0.025 per share onMarch 28, 2024 . - OML 130 renewed for 20 years securing AOC's long term production base and enabling the refinancing of Prime's debt. Prime's OML 130 and OML 127 were converted to operate under
Nigeria's new Petroleum Industry Act ("PIA") and are now subject to a 30% Corporate Income Tax regime compared to the previous 50% Petroleum Profit Tax ("PPT") regime. - Commenced the appraisal campaign for the Venus light oil and associated gas discovery, with the positive results supporting the commercial development of the field.
- Subsequent to the year-end, the Company announced a strategic farmout agreement between its investee company
Impact Oil and Gas Limited ("Impact"), and TotalEnergies, that allows the Company to continue its participation in the world class Venus oil development project, and the follow-on exploration and appraisal campaign on Blocks 2913B and 2912 with no upfront costs. - Selected Prime's results net to
Africa Oil's 50% shareholding*:- Recorded full-year average daily WI production of approximately 19,800 barrels of oil equivalent per day ("boepd") and average daily net entitlement production of approximately 22,400 boepd. These compare with mid-range 2023 Management Guidance figures of 20,000 boepd and 22,000 boepd for WI and net entitlement production, respectively.
- Recorded cashflow from operations2,5 of
$298.8 million , which compares with the guidance mid-point of$290.0 million . - Prime's cash position of
$76.1 million and debt balance of$375.0 million resulting in a Prime net debt position of$298.9 million atDecember 31, 2023 .
* Important information: |
The appraisal of the Venus field during 2023 was very encouraging and we note the operator's positive public statements regarding the development of this world-class discovery. We are also excited by the wider prospectivity in the area, as evidenced by the recent Mangetti discovery. Post period end we announced the farmout agreement between Impact and TotalEnergies. Under this transformational agreement
Our focus for 2024 is to enhance the value of our core assets, including our operated exploration assets through strategic farm down transactions, and pursuing opportunities to consolidate and streamline our asset ownerships."
2023 Full Year and Fourth Quarter Results Summary
(Millions United States Dollars, except Per Share and Share Amounts)
|
Three months ended |
Year ended |
|||
|
Unit |
December 31, 2023 |
December 31, 2022 |
December 31, 2023 |
December 31, 2022 |
AOC highlights |
|
|
|
|
|
Net income/ (loss) |
$'m |
(88.8) |
(182.1) |
87.1 |
(60.3) |
Net income/ (loss) per share - basic |
$/ share |
(0.19) |
(0.39) |
0.19 |
(0.13) |
Cash position |
$'m |
232.0 |
199.7 |
232.0 |
199.7 |
Prime highlights, net to AOC's 50% shareholding1 |
|
|
|
|
|
WI production3 |
boepd |
18,500 |
21,300 |
19,800 |
23,500 |
Economic entitlement production4 |
boepd |
21,700 |
23,500 |
22,400 |
25,600 |
Cash flow from operations2,5 |
$'m |
62.5 |
65.6 |
298.8 |
279.4 |
EBITDAX2 |
$'m |
110.7 |
140.7 |
458.7 |
617.4 |
Free Cash Flow2 |
$'m |
16.7 |
(16.9) |
149.1 |
299.8 |
Net debt |
$'m |
298.9 |
225.3 |
298.9 |
225.3 |
The financial information in this table was selected from the Company's audited consolidated financial statements for the year ended |
In 2023, the Company recorded a net income attributable to common shareholders of
The share of profit from the Company's 50% investment in Prime in Q4 2023 was impacted by a non-cash impairment of
The figures used in the explanations for movements period on period below are based on Prime's gross balances per the financial statements.
Prime revenues decreased by
Outlook
2024 Priorities and Business Plan
The Company's focus for 2024 is to advance its main opportunity set comprised of its core assets in deepwater
Namibia Orange Basin Appraisal and Exploration Campaign
The successful Venus-1X drill stem test and Venus-1A appraisal well, both completed in 2023, support the commercial development case for the Venus oilfield. The appraisal program and the development studies to be carried out during 2024 are expected to define the Venus development concept. The Mangetti-1X exploration well, located approximately 35km to the North West of the Venus-1X well, intersected hydrocarbon bearing intervals in the Mangetti fan prospect, a separate fan system to the Venus oil discovery. Mangetti-1X also achieved its secondary objective of successfully intersecting and appraising the northern area of the Venus discovery. Drilling continues at the Venus-2A appraisal well, approximately 17 km to the northwest of the Venus-1X location. The results from these wells will be incorporated in the development studies.
In addition to the Venus opportunity, the Company has retained upside exposure to the exploration opportunities that in case of success, could significantly increase the existing discovered resource base. Furthermore, the processing of the 3D seismic data that is currently being acquired could better define the prospectivity on Block 2193B to the south of the Venus discovery. It is possible that the JV could drill further high-impact exploration wells on separate fan structures on this Block during 2024 or 2025.
At the date of this report, AOC has an interest in this program through its 31.1% shareholding in Impact, which in turn has a 20.0% WI in Block 2913B (PEL 56) and 18.9% in Block 2912 (PEL 91). On closing of the farm-out transaction with TotalEnergies, Impact will retain a carried 9.5% WI in each of the two Blocks.
The OML 130 drilling campaign that commenced on
Acquisition of 4D monitor seismic surveys are planned for Akpo, Egina and Agbami during late 2023, through 2024. The acquisition plan also includes a baseline 4D seismic survey of the Preowei field. The surveys will support future drilling decisions across both OML 127 and OML 130.
Full year 2023 production was in line with the midpoint of the management guidance for both working interest and economic entitlement. Beyond the aforementioned drilling campaign on Egina and Akpo, which will offset production decline, there is a planned maintenance shutdown for the Akpo field which will occur in Q1 2024, this was previously planned for Q4 2023. A planned maintenance shutdown will also be executed on Agbami during H1 2024.
Following the 20-year renewal of OML 130 on
Following the approval from the Government of the
The Company and its JV parties are progressing plans to conduct a two-well campaign on Block 3B/4B and are in discussions with various potential parties to farm out a share of their working interest in the Block. The JV parties are also working with a leading South African environmental consulting firm to conduct a comprehensive Environmental and Social Impact Assessment ("ESIA") process in preparation for permitting and drilling activity on the Block.
The Company continued its geological and geophysical works for Blocks EG-18 and EG-31 with subsurface studies conducted during 2023 defining multiple prospects on both Blocks. Seismic reprocessing and subsurface studies will continue over the coming months to further refine and rank the identified prospects, identify any further prospects and prioritize a potential drilling target on the shallow water EG-31 Block, for drilling in 2025. The Company's objective is to farm-down part of Blocks EG-18 and EG-31 in 2024.
The Company holds an operated WI of 80.0% in each of Blocks EG-18 and EG-31.
2024 Management Guidance
The Company's 2024 production will be contributed solely by its 50% shareholding in Prime. The 2024 Management Guidance includes WI production guidance range of 16,500 – 19,500 boepd and net entitlement production range of 18,000 – 21,000 boepd with approximately 78% expected to be light and medium crude oil and 22% conventional natural gas.
Prime is expected to sell 10-13 cargoes of approximately one million barrels each during 2024. Based on the above production and Prime's current 2024 cargo lifting schedule, the Company's management estimate Prime to generate cash flow from operations of approximately
Any dividends6 received by the Company from Prime's operating cash flows and cash on hand will be subject to Prime's capital investment and financing cashflows, including Prime's RBL interest payments and principal amortization. Net to the Company's 50% shareholding, Prime's 2024 capital investment is expected to be in the range of
Prime, net to AOC's 50% shareholding: |
2024 Guidance |
2023 Actuals |
WI production (boepd) 7,8 |
16,500 – 19,500 |
19,800 |
Economic entitlement production (boepd) 9 |
18,000 – 21,000 |
22,400 |
Cash flow from operations 5 (million) |
|
|
Capital investment (million) |
|
|
Dividends and AGM
The Company is pleased to announce that its Board of Directors has declared the distribution of the Company's semi-annual cash dividend of
Dividends for shares traded on the
To execute the payment of the dividend, a temporary administrative cross border transfer closure will be applied by
Payment to shareholders who are not residents of
https://africaoilcorp.com/investors/dividend-information/
The Company's Annual General Meeting is planned to be held on
2023 Annual Filings
The Company's 2023 Annual Filings Document, MD&A, Annual Information Form and Financial Statements are available for download from the Company's website:
https://www.africaoilcorp.com/investors/meeting-materials-corporate-filings/
NOTES
1. |
The 50% shareholding in Prime is accounted for using the equity method and presented as an investment in joint venture in the Interim Condensed Consolidated Balance Sheet. |
2. |
Includes non-GAAP measures. Definitions and reconciliations to these non-GAAP measures are provided in Fourth Quarter 2023 MD&A. |
3. |
Aggregate oil equivalent production data comprised of light and medium crude oil and conventional natural gas production net to Prime's W.I. in Agbami, Akpo and Egina fields. These production rates only include sold gas volumes and not those volumes used for fuel, reinjected or flared. |
4. |
Net entitlement production is calculated using the economic interest methodology and includes cost recovery oil, tax oil and profit oil and is different from working interest production that is calculated based on project volumes multiplied by Prime's effective working interest in each license. |
5. |
Cash flow from operations before working capital adjustments and interest payments. |
6. |
Prime does not pay dividends to its shareholders, including the Company, on a fixed pre-determined schedule. Previous number of dividends and their amounts should not be taken as a guide for future dividends to be received by the Company. Any dividends received by the Company from Prime's operating cash flows will be subject to Prime's capital investment and financing cashflows, including payments of Prime's RBL principal amortization, which are subject to semi-annual RBL redeterminations, and Prime's minimum cash on hand requirements. |
7. |
The Company's 2024 production will be contributed solely by its 50% shareholding in Prime. |
8. |
Approximately, 78% expected to be light and medium crude oil and 22% conventional natural gas. |
9. |
Net entitlement production estimate is based on a 2024 average Brent price of |
All dollar amounts are in |
Management Conference Call
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About
Additional Information
This information is information that
Advisory Regarding Oil and Gas Information
The terms boe (barrel of oil equivalent) is used throughout this press release. Such terms may be misleading, particularly if used in isolation. Production data are based on a conversion ratio of six thousand cubic feet per barrel (6 Mcf: 1bbl). This conversion ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value. Petroleum references in this press release are to light and medium gravity crude oil and conventional natural gas in accordance with NI 51-101 and the COGE Handbook.
Forward-Looking Information
Certain statements and information contained herein constitute "forward-looking information" (within the meaning of applicable Canadian securities legislation). Such statements and information (together, "forward-looking statements") relate to future events or the Company's future performance, business prospects or opportunities.
All statements other than statements of historical fact may be forward-looking statements. Statements concerning proven and probable reserves and resource estimates may also be deemed to constitute forward-looking statements and reflect conclusions that are based on certain assumptions that the reserves and resources can be economically exploited. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "seek", "anticipate", "plan", "continue", "estimate", "expect, "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions) are not statements of historical fact and may be "forward-looking statements". Forward-looking statements involve known and unknown risks, ongoing uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements, including statements pertaining to the 2023 Management Guidance including production, cashflow from operation and capital investment estimates, performance of commodity hedges, the results, schedules and costs of drilling activity including those offshore
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