Afentra Share Discussion Threads

[mount teide] 18/5/2023 09:56

The better researched spotted many months ago that for a May/June 2023 completion date for the Angolan acquistions, the structure of the deals would see Afentra only pay a small fraction of the published headline price for the assets.

The Sonangol and INA deal structures and recent oil price weakness(since recovered after OPEC+ cut production to support its preferred $80-$90 oil price range) has created a very material market dislocation investment opportunity at Afentra.

Despite Afentra now paying only a small fraction of the headline price for the assets under the terms of the deals, and with the price of oil averaging in 2023 some $8/bbl above the $75 average price in Q4/2021 when the O&G industry broke it's all time FCF record(set nearly a decade before when oil averaged nearly $150/bbl after adjustment for inflation).......Afentra shares can still be picked up at barely the price they averaged in the 8 months following the announcement of the acquisitions, when the full acquisition headline price was expected to be paid.

ie: Afentra shares are now available at the price when the market expected the company to pay the full headline price for the Angolan acquisitions, rather than the loose change it will now pay for the assets!

Additionally, the total debt required to finance the Sonangol deal should now be reduced to a small fraction of that announced in the Aug 2022 Presentation, as the additional cash accrued since 1st October 2022 through to June, is likely to be worth circa $50m, against an expected debt facility for the asset of $62m.

The Key terms for the $62m debt facility are: 5-year tenor, 8% margin over 3-month SOFR2 - so a massive future debt interest payment saving will be made as a result of the expected June 2023 completion date and high average Brent rate from the previous expected closure date in October 2022.

[onedayrodders] 17/5/2023 13:54

hubs ... apologies for late reply

You can thank me when the share price hits £1 next year :0)

[smackeraim] 17/5/2023 12:38

https://afentraplc.com/wp-content/uploads/2023/05/2023.05.17-Afentra_Paul-McDade-vF_Frontier-Africa-Energies-Summit.pdf

[jungmana] 17/5/2023 12:35

Hopefully the Sonangol deal completes within the next 6 weeks and then a third acquisition. Now my second largest holding after axl

[parob] 17/5/2023 12:09

And to help things move along I reckon Griffiths has finished selling.Breakout on the cards soon.

[1senn] 17/5/2023 11:31

Today 11:23

By way of Executive Decree 63/23, of 10 May 2023, the Angolan Ministry of Mineral Resources, Petroleum and Gas has approved the extension of the Block 3/05 license from 1 July 2025 to 31 December 2040. Together with the extension, the economic and fiscal terms of the license have been strengthened through the unitization of the existing 8 producing fields into a single (non-ring fenced) development area. These fields consist of Palanca, Pacassa, Cabo, Impala, Impala SE, Pambi, Oombo 1 and Búfalo.

Block 3/05 is located in the Lower Congo Basin and produces and average of just under 20.000 barrels per day. It is operated by Sonangol P&P (50% interest) which is associated under a Production Sharing Contract with Maurel & Prom (20%), Azule Energy (12%), Somoil (10%), NIS Nafta Gas (4%) and Afentra (4%). Afentra, a London-listed independent, has agreed to buy an additional 20% stake from Sonangol, a transaction which is expected to be completed in June 2023.

[mount teide] 17/5/2023 09:14

Block 3/05 - what is remarkable about the production performance of these conventional, swallow water field's is that despite not having an infill well drilled on them for 18 years, they're still producing at close to 20,000 bopd!

Peak production was 193,000 bpd of crude oil and condensate.

[jungmana] 16/5/2023 10:39

My thoughts too MT; "Would not surprise me if the third transaction in Angola is for a further chunk of Block 3/05:Maybe ENI's 12% or Somoil's 10%."

[mount teide] 16/5/2023 09:27

Block 3/05 - 'Sonangol assumed operatorship in 2005 and has since focused entirely on sustaining production through workovers and maintaining asset integrity.

No infill drilling campaigns have taken place for 18 years on the asset. The asset currently produces from around 40 production wells and has nine active water injectors.'....Offshore Technology

Would not surprise me if the third transaction in Angola is for a further chunk of Block 3/05:

Maybe ENI's 12% or Somoil's 10%.

[mount teide] 16/5/2023 09:11

jung - pleasing that the M&A focus will remain predominately on Angola, as the Government there is being very proactive in attracting new foreign investment and O&G industry expertise.

[x54v] 16/5/2023 09:07

“In addition, Afentra has access to a $35 million accordion RBL to finance a third transaction in Angola.”

Yes, very specific. A “third” transaction rather than “other transactions” or “future transactions” suggests something in the pipeline.

[jungmana] 16/5/2023 08:27

Another Angloa acquisition, the third one coming soon;"Despite a shrinking financing market with a number of mainstream banks no longer lending into the oil and gas space Afentra has been successful in securing a conventional Reserve Based Lending ('RBL') arrangement for up to $75 million of the Sonangol and INA acquisitions' costs as well as a Working Capital facility of up to $30 million with Trafigura and Mauritius Commercial Bank.The resulting aggregate split between debt and equity (cash) at completion of both deals is likely to be in the 70% / 30% range with cash contribution made from Afentra cash reserves.In addition, Afentra has access to a $35 million accordion RBL to finance a third transaction in Angola."

[jungmana] 11/5/2023 11:14

Zengas, comparing to Panoro that you mentioned on production and reserves once the Sonangol deal completes in June, AET should be valued at 60p to 80p imo.
and we are looking at more deals in h2 this year.
I have a good size holding but will be adding more when i can, if still under 30p.

[hubs] 11/5/2023 10:36

ODR - thanks for this tip! I like the chart and the news. GLA.

[zengas] 11/5/2023 10:11

No longer follow i3E sunbed. Not sure Cashcard but that could be the case.

Panoro were only a minor producer in 2020 before buying the assets for up to $140m including contingency payments in early 21.


Panoro

3/5/23 Trading statement

£241m m/cap $27m net debt. 6320 bopd Q1 2023. (Current 8,500 bopd)35 mmbo 2P.

3 analysts with an average 68% target higher than current valuation which is £400m m/cap if achieved.

If AET get a 2nd deal by year end /Q1-2 next year and have parity on production to Panoro's exit expectation for year end, i can see AET being easily worth Panoro's current valuation if no dilution on the 220.5m shares in issue.

If oil stays $70/b+ it could grow quite rapidly on a 12-18 month time frame even on a modest acquisition.

So overall heartened to see word of further acquisitions on the cards here yesterday.

With the current acquisitions practically paid for, there should be decent leverage for paying down the next assets quite quickly above $70/b.

[mount teide] 10/5/2023 22:41

Strongly suspect Angola will remain Afentra's principal acquisition target.

Angola has over 300 discovered O&G fields, but to date less than half have been developed.

This was the principal reason why the Government materially improved the Fiscal terms recently, to attract new investment & extend existing licences to avoid the assets becoming 'stranded'. It's had some very impressive early commercial success - with Exxon, who are increasingly vacating the rest of Africa, signing up for some large offshore blocks.

The Angolans are actively seeking more oil & gas investors and with Afentra having built a commercial relationship with the divesting National state-owned oil company, Sonangol, its likely to give us first user advantage/'insider' access there to a material pipeline of future mature production acquisition opportunities from the National Oil Company with limited competition from the independent sector.

AIMHO/DYOR

[cashandcard] 10/5/2023 21:18

Zengas,I recall an interview with director or CFO where they stated their oil is sold in two batches a year around prevailing price or some mechanism along those lines - is this still the case?CashPS, Good to see you here

[sunbed44] 10/5/2023 20:30

Z / off topic (so sorry to others) but are you in i3E and what do you think of it? I won't post OT on here again as am not a fan of boards getting clogged up with stuff not relevant to the BB of the stock in question.

[sunbed44] 10/5/2023 17:27

Z / fab info and I bow to your research ' knowledge and praise you for sharing with the board.

[zengas] 10/5/2023 16:30

Sunbed I think both have tremendous growth potential. Saves gas business alone is huge given it's infrastructure. I think there'll be further acquisitions beyond those currently and like i say it's how they fall in terms of announcing/completion when weighing up the entire risk profile rather than 1-2 deals in isolation.

Save doesn't intend to pay major dividends ($10m to start and i can see that delayed for now possibly due to Chad) as they direct funds into growing a renewables division which should add significant value in its own right.

A $10m dividend from say a 10k bopd production profile for AET would be a very decent return if the shares in issue stay at 220.5m - would be about 13% at these levels. So could be good value from a dividend if it gets closer say to $20m in say 2 years. I sold down ENQ2 bonds and IPF to build a better position in AET in terms of potential value for capital growth and dividend but happy to hold both SAVE/AET.

I posted here on 3/4/23 (637) re Panoro

Panoro Energy's m/cap = £233m
Net debt $46.8m
It's African 2P = 35.8 mmboe. Production = 7,000 bopd.

Their quarterly dividend is $3m ($12m/yr $70/b oil)

Also " Panoro intends to pay out a USD 20 million core dividend in 2023 on a quarterly basis in cash weighted towards H2 and subject to average oil price realisation remaining above USD 80 per barrel"

"If they too were to introduce a similar sized $12m dividend in the next year - 18 months it would be a yield of over 20% at these levels or 4.3% if the share price equalled 100p and a m/cap of £220m which would still be lower than Panoro"

[sunbed44] 10/5/2023 16:09

TY Z / from AET & SAVE which do you prefer?

[mount teide] 10/5/2023 16:02

stockhunter - 'surprising strength seeing as oil price plummets'

Only a trader would view it that way.

Whereas an investor would know that the oil price is currently above the average level in Q4/2021 when the O&G industry broke its all time record for generating FCF; previously set in 2013 when Brent averaged $111/bbl or $148 after adjustment for inflation.

[zengas] 10/5/2023 15:47

As for walking before they can run, it might interest you to know Sunbed that AET have been looking at bigger deals than these, it's how they land in any particular order is one point. They were after blocks in Chad with potential to ramp up to 85k bopd. They've already said they want production in the tens of thousands of barrels per day.

With the exception of not building out a renewables division, AETs strategy is very similar to Save by acquiring assets.

AETs suspension lasted 10 months from 8/10/21 to 10/8/22 on these deals.

Save started with Agadem Niger then it's first purchase which is now a significant gas business in Nigeria. An acquisition in Chad has run into difficulty with the government which has gone to arbitration. South Sudan acquisition pending but the problem lies in the neighbouring country. An agreed sale on hold (AI report) of lesser assets to Save by ENI all the way over in Tunisia.

AET with Odewayne Somaliland next to Somalia/ Ethiopia/Djibouti.
Now Angola offshore close to the DRC so when looking at it's current areas of interest they could land a deal anywhere and who knows what may be announced after saying possible deals this year which is in the next 6 months running into 2024.

It all depends what assets are available and at what cost and worth looking at what they've also been interested in, in the African news coverage. So imo don't kid yourself that they won't venture into areas that are higher risk if the terms are right and have a good geographical spread because this is why the price and value reflects that.

AI 7/7/21 "The brand-new oil company Afentra, founded at the start of the year by Paul McDade, has been scouring Africa for its first investment opportunity. According to our sources, McDade, his head of operations Ian Cloke - a fellow former Tullow Oil executive - and the company financial director Anastasia Deulina are currently in talks with the British teams of US private equity firm Warburg Pincus . The topic of their discussion is the purchase of Chadian blocks H, Largeau III, DOC, and DOD."

Either way, if the next assets are greater than the current 2 in Angola in terms of production/reserves, i expect and am prepared for a second suspension period at any time which could be equally lengthy just like Save and indeed stretch to a third spell as they consolidate further.

[stockhunters] 10/5/2023 15:41

surprising strength seeing as oil price plummets