Highlights
- Record full-year net income of
$190.7 million or$0.40 per share. - Cash balance at
December 31, 2021 of$58.9 million . Our corporate facility has been fully repaid and$100m of the facility remains available for general corporate purposes untilDecember 2022 . - The Company will institute a shareholder dividend policy with an initial 2022 aggregate annual distribution of
$0.05 per share (approximately$25 million ) to be paid semi-annually, with the first payment payable onMarch 31, 2022 , to shareholders of record at the close of business onMarch 17, 2022 . - Venus 1-X exploration well results in a major light oil discovery on Block 2913B (the Company has a 6.2% indirect interest through its shareholding in
Impact Oil & Gas Limited ), offshoreNamibia , that together with the nearby Graff-1 discovery on the adjacent Block 2913A (the Company has no interest in this block), herald the opening of a major petroleum province with significant upside potential for the Company. - Positive year-end 2021 statement of reserves with working interest (W.I.) proved plus probable reserves ("2P") replacement ratio of 102% (year-end 2020: 114%).
- Selected Prime's results net to
Africa Oil's 50% shareholding*: - full-year W.I. production of 27,300 boepd and economic entitlement production of 29,700 boepd (84% light and medium crude oil and 16% conventional natural gas) are at the top end of 2021 Management Guidance2,3; and
- In Q4 2021, EBITDAX of
$163.4 million (full-year period:$654.5 million )4. - In Q4 2021, cash generated from operating activities of
$60.6 million (full-year period:$526.7 million , includes$152.5 million of Agbami Security Deposit received). - Cash position of
$258.9 million and debt balance of$508.4 million atDecember 31, 2021 ; Robust Net Debt to EBITDAX of 0.4x in 2021. - 2022 Management Guidance (refer to page 3 for more details):
- Average daily W.I. production range of 22,500-25,500 boepd and net entitlement production range of 23,000-27,000 boepd net to the Company's 50% shareholding in Prime, with approximately 84% expected to be light and medium crude oil and 16% conventional natural gas; and
- Prime's cash flow from operating activities of
$300-$400 million net to the Company's 50% shareholding in Prime. - Inaugural ESG Review published in
March 2021 , followed by a comprehensive Sustainability Report, including TCFD compliant scenario analysis, published today,28th February 2022 . - In 2021, the Company set a target to achieve
carbon neutrality by 2025. Towards this goal, the Company purchased an initial tranche of offsets covering >20% of Scope 1 and 2 emissions from a Gold Standard certified clean cookstove project inKenya , and began feasibility studies for direct investment in a proprietary nature-basedcarbon removal project.
* Important information: |
2021 Fourth Quarter Financial Results
(Thousands United States Dollars, except Per Share and Share Amounts)
Cash and cash equivalents | 58,885 | 40,474 | ||||||||
Total assets | 991,618 | 910,499 | ||||||||
Short-term debt | - | - | ||||||||
Long-term debt | - | 141,000 | ||||||||
Total liabilities | 43,560 | 156,212 | ||||||||
Total equity attributable to common shareholders | 948,058 | 754,287 | ||||||||
Year ended | Year ended | Three months ended | Three months ended | |||||||
Share of profit from investment in joint venture | 224,384 | 208,981 | 56,053 | 59,193 | ||||||
Share of profit from investment in associates | 2,495 | 31,381 | 5,790 | 32,041 | ||||||
Total operating income | 226,879 | 240,362 | 61,843 | 91,234 | ||||||
Net operating income | 208,854 | 10,633 | 56,821 | 86,151 | ||||||
Net income/(loss) | 190,722 | (17,614) | 54,912 | 79,845 | ||||||
Net income/(loss) per share - basic and diluted | 0.40 | (0.04) | 0.12 | 0.17 | ||||||
Weighted average number of share outstanding - basic ('000s) | 473,332 | 471,792 | 474,192 | 471,954 | ||||||
Weighted average number of share outstanding - diluted ('000s) | 477,361 | 471,792 | 479,611 | 475,144 | ||||||
Number of shares outstanding ('000s) | 474,655 | 471,960 | 474,655 | 471,960 | ||||||
Cash flows used in operating activities | (10,209) | (5,348) | (2,440) | (1,916) | ||||||
Cash flows generated by/(used in) investing activities | 187,703 | (394,272) | 47,295 | 54,418 | ||||||
Cash flows (used in)/generated by financing activities | (159,119) | 110,644 | (24,889) | 42,541 | ||||||
Total change in cash and cash equivalents | 18,411 | (288,990) | 20,031 | 10,078 | ||||||
Total change in equity | 193,771 | (12,416) | 55,758 | 73,531 | ||||||
The financial information in this table was selected from the Company's audited consolidated financial statements for the year ended
FINANCIAL POSITION AND EARNINGS
The Company recognized a total operating income of
The Company ended 2021 fourth quarter with cash of
On
PRIME'S FOURTH QUARTER 2021 PERFORMANCE
Prime's fourth quarter 2021 average daily W.I. production was 26,400 boepd and economic entitlement production was 28,500 boepd (83% light and medium crude oil and 17% conventional natural gas), net to
During the fourth quarter, Prime was allocated 4 oil liftings with total sales volume of approximately 4.0 million barrels or 2.0 million barrels net to
Prime achieved an average realized oil price of
Prime achieved fourth quarter 2021 sales revenue of
Prime's 2021 capital expenditure of
2022 MANAGEMENT GUIDANCE
The Company's 2022 production will be contributed solely by its 50% shareholding in Prime. The 2022 Management Guidance includes WI production guidance range of 22,500-25,500 boepd and net entitlement production range of 23,000-27,000 boepd with approximately 84% expected to be light and medium crude oil and 16% conventional natural gas.
Net entitlement production estimate is based on a 2022 Brent price of
Prime is continuing its hedging program with the target of covering 50%-70% of its planned cargoes over a rolling 12-month look-ahead period. For the period Q2 2022 to end Q1 2023, only 5 out of 11 cargoes that are scheduled to be lifted by Prime have been hedged, providing the Company with material exposure to oil prices.
It is expected that Prime will lift 11-13 cargoes (5.5-6.5 cargoes net to the Company) in 2022 for its share of cost and profit oil. The average cargo lifted is for one million barrels of oil. Prime has forward sold its first 10 cargos in 2022 at average Dated Brent price of
Based on the above production and cargo lifting ranges and Prime's current 2022 hedging program, the Company's management estimate Prime to generate cash flow from operations of approximately
Any dividends 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 2022 capital investment is expected to be in the range of
The Company's 2022 corporate budget is estimated to be approximately
Prime, net to AOC's 50% shareholding: | 2022 Guidance | 2021 Actuals |
WI production (boepd) | 22,500-25,500 | 27,300 |
Economic entitlement production (boepd) | 23,000-27,000 | 29,700 |
Cash flow from operations before working capital (million) | ||
Expenditure on oil and gas properties (million) | ||
Net Debt repayment (million) | ||
2022 OUTLOOK
The Company's debt-free balance sheet, its share of Prime's cash flows and access to debt funding on competitive terms, supports a range of opportunities for the Company to achieve accretive growth and create shareholder value. The Company's valuation is underpinned by its 50% shareholding in Prime, which accounts for all of the Company's reserves and production interests.
The Company will work to maximize Prime's dividends by distributing its excess cash, whilst maintaining a prudent treasury management policy at Prime. The near-term priority is to extend Prime's debt tenor with the primary objective over the next year of refinancing Prime's RBL facility, possibly facilitated by the voluntary early conversion of Prime's licenses in
Dividends received from Prime will support the Company's shareholder capital return programs and business development activities that are focused on the acquisition of producing assets.
The Company is committed to a sustainable dividend policy for its shareholders over the future years. The Company is pleased to announce that its Board of Directors has declared an initial aggregate annual dividend of
Dividends on shares traded on the
This initial annual dividend has been determined by the Board to strike a prudent balance between allocating capital for potential acquisitions, shareholder capital returns and maintaining a robust balance sheet in a range of oil market conditions. The Board will regularly review this policy and depending on the Company's progress in maturing acquisition opportunities and the market outlook, the Board may approve additional distributions and/or share buybacks, subject to the customary approvals. As always, the declaration of dividends is at the discretion of the Board.
The Company has been actively working on the acquisition of strategic producing assets that are accretive on per share valuation and cashflow metrics. The Company has maintained a very disciplined approach towards this goal with detailed technical, commercial and legal due diligence applied for each opportunity and the primary goal of not diluting or risking the current strong investment case. The Company's focus remains on buying producing assets offshore
Through its 30.9% shareholding in
Through its shareholdings in Africa Energy, the Company has exposure to the Gazania-1 exploration well that will be drilled in Block 2B offshore
During 2021, the Company and its
NOTES
1. | 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. |
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, Amortization and Exploration Expenses ("EBITDAX") 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 EBITDAX that may be used by other public companies. This is used by management as a performance measure to understand the financial performance from Prime's business operations without including the effects of the capital structure, tax rates, DD&A, impairment and exploration expenses. Non-IFRS measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. A reconciliation from total profit (a GAAP measure) to EBITDAX (a non-GAAP measure) is shown below. |
Three months ended | Year ended | |||||
$'m | ||||||
Per Prime's financial statements | ||||||
Total profit | 119.5 | 118.4 | 441.6 | 443.6 | ||
Add back: | ||||||
Tax | 114.8 | 8.0 | 460.0 | (5.7) | ||
Finance costs | 16.8 | 23.4 | 100.4 | 76.1 | ||
Finance income | (0.3) | (0.1) | (0.4) | (12.4) | ||
DD&A and Impairment | 74.6 | 107.9 | 303.4 | 737.3 | ||
Exploration expenses | 1.3 | 1.2 | 3.9 | 4.4 | ||
EBITDAX | 326.7 | 258.8 | 1,308.9 | 1,243.3 | ||
Net to AOC's 50% shareholding: | ||||||
EBITDAX | 163.4 | 129.4 | 654.5 | 621.7 | ||
5. | Prime does not pay dividends to its shareholders, including |
6. | All dollar amounts are in |
Management Conference Call
Senior management will hold a conference call to discuss the results on
+1 647 484 0473 | |
800-289-0459 | |
+46 (0)8 5033 6573 | |
0200 883 447 | |
0800 358 6374 | |
Participant Passcode | 419230 |
Webcast URL | https://event.webcasts.com/starthere.jsp?ei=1532170&tp_key=71e74182db |
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.
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.
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 2021 Management Guidance including production, cashflow from operation and capital investment estimates, 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, 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.
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