Highlights
- Venus-1X exploration well makes a significant light oil discovery on Block 2913B, offshore
Namibia . AOC has a 6.2% interest through its investment inImpact Oil and Gas Limited . - Q1 2022 net income of
$45.6 million (Q1 2021:$38.9 million ) and end of quarter cash balance of$140.6 million (December 31, 2021 :$58.9 million ). - The Company paid its maiden semi-annual dividend of
$0.025 per share (approximately$11.9 million ) to its shareholders. This is the initial step in delivering on the Company's commitment of returning capital to the shareholders. - The Corporate Facility was amended to provide the Company with a stand-by line of liquidity of
$100.0 million , available for general corporate purposes, including acquisitions, until end 2022. - Prime drew down a further
$150.0 million under its pre-export finance facility ("PXF Facility"), increasing the outstanding balance to$300.0 million and further extending the duration of its debt profile. - The Company received one dividend from its shareholding in Prime, totaling
$100.0 million 1. - Selected Prime's results net to
Africa Oil's 50% shareholding*: - Average daily W.I. production of 25,400 boepd and economic entitlement production of 27,400 boepd (83% light and medium crude oil and 17% conventional natural gas) in Q1 2022 (Q1 2021: 26,200 boepd and 30,100 boepd respectively)3,4,5;
- Cash position of
$265.7 million and debt balance of$501.0 million atMarch 31, 2022 ; Robust Net Debt to EBITDAX6 for the twelve months endedMarch 31, 2022 , of 0.4x (twelve months endedDecember 31, 2021 : 0.4x); - in Q1 2022, EBITDAX6 of
$122.2 million (Q1 2021:$143.4 million ); and - in Q1 2022, cash generated from operating activities of
$116.6 million (Q1 2021:$78.8 million )7.
* Important information: |
2022 First Quarter Financial Results
(Thousands United States Dollars, except Per Share and Share Amounts)
Cash and cash equivalents | 140,607 | 58,885 |
Total assets | 1,029,380 | 991,618 |
Short-term debt | - | - |
Long-term debt | - | - |
Total liabilities | 43,832 | 43,560 |
Total equity attributable to common shareholders | 985,548 | 948,058 |
Three months ended | Three months ended | |
Share of profit from investment in joint venture | 51,005 | 48,814 |
Share of profit/ (loss) from investment in associates | 2,733 | (885) |
Total operating income | 53,738 | 47,929 |
Net operating income | 46,789 | 44,206 |
Net income | 45,608 | 38,920 |
Net income per share - basic | 0.10 | 0.08 |
Net income per share - diluted | 0.09 | 0.08 |
Weighted average number of share outstanding - basic ('000s) | 475,090 | 472,147 |
Weighted average number of share outstanding - diluted ('000s) | 485,113 | 475,011 |
Number of shares outstanding ('000s) | 477,141 | 473,252 |
Cash flows used in operations | (4,780) | (3,401) |
Cash flows provided by/ (used in) investing | 99,332 | (2,338) |
Cash flows used in financing | (12,812) | (5,288) |
Total change in cash and cash equivalents | 81,722 | (11,039) |
Total change in equity | 37,490 | 27,923 |
The financial information in this table was selected from the Company's unaudited consolidated financial statements for the three months ended |
FINANCIAL POSITION AND EARNINGS
The Company recognized a total operating income of
The Company ended first quarter 2022 with cash of
On
On
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.
PRIME'S FIRST QUARTER 2022 PERFORMANCE
Prime's first quarter 2022 average daily W.I. production was 25,400 boepd and economic entitlement production was 27,400 boepd (83% light and medium crude oil and 17% conventional natural gas), net to
During the first quarter 2022, Prime was allocated 5 oil liftings with total sales volume of approximately 5.0 million barrels or 2.5 million barrels net to
Prime achieved an average realized oil price of
Prime achieved first quarter 2022 sales revenue of
During the first quarter 2022, Prime increased its PXF Facility on the back of the approval by the PXF lenders received last year and drew down a further
As at
The debt outstanding has decreased slightly following gross repayments on the RBL Facility of
As at
OUTLOOK
Performance of the Company's investment in Prime has continued to exceed expectations with strong cash flows, dividend distributions and very modest investments on the upstream assets, offshore
The successful drilling and completion of Akpo-P4 infill well, that came onstream late last year and which was ramped up to 6,000 bopd, is very encouraging for the upcoming drilling program on OML 130. The operator is finalizing an extendable one-year rig contract with the plan to drill up to 9 development wells and up to 2 near field exploration/appraisal wells on the current rig schedule, with the drilling expected to commence at end of Q3 2022. Processing of the 2021 Egina 4D seismic survey is ongoing and is helping to confirm the final well locations. Up to 3 development wells are expected to be completed on the asset by the end of this year, with further infill drilling or near field exploration/appraisal expected after the completion of the first 3 infill wells on Egina. The rig will move to Akpo upon completion of the Egina drilling campaign.
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
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
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
NOTES
1. Prime does not pay dividends to its shareholders, including
2. 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.
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. Q1 2021 comparative figures have been revised from those previously reported to ensure comparability and consistency of calculation as a result of a change in the conversion factor (to 6 Mcf:1bbl from 5.8:1bbl) used in converting gas production to barrels oil equivalent.
6. 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 | Twelve months ended | |||
$'m | ||||
Per Prime's financial statements | ||||
Total profit | 102.0 | 97.6 | 446.0 | 441.6 |
Add back: | ||||
Tax | 85.2 | 91.5 | 453.7 | 460.0 |
Finance costs | (12.7) | 18.0 | 69.7 | 100.4 |
Finance income | (0.1) | (0.1) | (0.4) | (0.4) |
DD&A and Impairment | 69.4 | 79.2 | 293.6 | 303.4 |
Exploration expenses | 0.5 | 0.6 | 3.8 | 3.9 |
EBITDAX | 244.3 | 286.8 | 1,266.4 | 1,308.9 |
Net to AOC's 50% shareholding: | ||||
EBITDAX | 122.2 | 143.4 | 633.2 | 654.5 |
7. Q1 2021 comparative figures have been revised to ensure compatibility and consistency of calculation as a result of a change in the classification of items between cash generated from operating activities, cash used in investing activities and cash used in financing activities.
8. Q1 2021 comparative figures have been revised to ensure compatibility and consistency of calculation. Royalties were previously recognized net in Prime's income statement and are now presented gross in both revenue and cost of sales.
9. All dollar amounts are in
Management Conference Call
Senior management will hold a conference call to discuss the results on
+1 647 484 0472 | |
800-207-0148 | |
+46 (0)8 5664 2754 | |
0200 898 697 | |
+44 (0)330 165 3641 | |
Participant Passcode | 858894 |
Webcast URL | https://event.webcasts.com/starthere.jsp?ei=1549259&tp_key=fea75ba35e |
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 2022 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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