Afentra Share Discussion Threads

[mount teide] 20/11/2024 23:07

Tennyson Equity Research - RISING STAR - Afentra
My first sight of this company research published 24 June 2020 at a share price of 55p - well worth a read for both existing and prospective investors.



Some content:

'Afentra (AET) announced closing of the Azule deal in May, concluding its amalgamation of interests in Angolan Blocks 3/05 (AET 30% WI) & 3/05A (AET 21.33% WI).

The company’s three-part entry into Angola illustrates the potential for value creation in West Africa and affirms its ability to source, structure and finance acquisitions, whilst effectively managing host Government relations.

Following deal conclusion, AET is well positioned for follow-on M&A, either in Angola or further afield, with a robust balance sheet (net cash positive by
YE24), access to capital and a rising corporate profile in the region.

It also has a compelling organic growth story to drive shareholder value. Through a catalogue of well-defined redevelopment initiatives there is the potential to double production within the next 5 years.

In terms of valuation metrics, AET shares trade on a FCF yield of 36%($57.9m) in FY24 and 0.7x P/NAV, leaving ample scope for a re-rating. We would add that our analysis excludes the potential for further acquisitions which are expected to be a key value driver going forward.

We reiterate our BUY recommendation with a raised target price of 80p/shr (vs 75p).'......

....'Longer term, AET sees production peaking at ~40 kbopd net by 2030 (vs. ~35kbopd before), with the layering in of 2C volumes from heavy workovers, infill drilling and, eventually, the tie back of satellite fields. Incremental capital costs are estimated at US$12-13/bbl of 2C, equating to ~US$800m gross over FY24-31 (~US$240m net to AET).

Fiscal enhancements; potential cost pool upside: In April AET reported that the undeveloped
Punja field in Block 3/05A has been awarded marginal field status and qualifies for
preferential tax terms. This follows news of fiscal enhancements on Block 3/05 introduced at the end of 2023.

Running the new regime through our Punja DCF model yields a >50% uplift in our value per bbl (to US$10.9/bbl) on ~18 mmbbls of gross 2C resources (~4 mmbbls net to AET).

Looking ahead, we believe there is a reasonable chance that other undeveloped fields in Block 3/5A (Caco-Gazela) could qualify for similar tax treatment.

Furthermore, there is a possibility of the cost pool on Block 3/05A (~US$600m gross) being amalgamated with 3/05, allowing for accelerated cost recovery. These mooted changes come amidst a wider push by
the Angolan Government to encourage inward investment and arrest declining oil production.'

[mount teide] 20/11/2024 22:28

Denis O'Brien: held 6.96% of the company - ie: 15,750,000 ordinary shares as of July 2024.

To increase his shareholding to 7.07% of Afentra means he's acquired an additional 250,000 shares, thereby triggering a 7% threshold notification.

A very welcome increase to this billionaires holding.

[trawl] 20/11/2024 21:36

Strong possibility it is
No doubt an investment of 7 mil isn't done lightly

[extrader] 20/11/2024 20:39

Yes!If it he...

[yasrub] 20/11/2024 19:20

That looks a very interesting holding notice!

[mount teide] 19/11/2024 20:28

Some useful recent research that is well worth a read on how a number of smaller African nations have materially adjusted their O&G industry fiscal and operating terms to become leading African and, increasingly global destinations for new energy market investment seeking cost efficient Exploration and mid/late life, high quality production opportunities.

Article provides a good in depth analysis as to how Angola has significantly sharpened its competitive edge in this connection.

'Cost recovery is another crucial aspect where Angola’s new fiscal terms have a competitive edge. Under Angola’s revised terms, the cost recovery ceiling for certain oil fields, like Block 3/05, has been raised from 65% to 75%.'

“This change allows operators to recover their investment more quickly, enhancing project cash flows and making it easier for companies to move into profitability faster.” '

Nigeria oil deals no match for smaller African countries’ - Business Day 12th Nov

[zengas] 15/11/2024 14:06

I believe cash should always be kept handy.

Struggling competitors, undervalued assets etc. By all means pay a $5m dividend rewarding the early investors at 20-26p.

Still a young and growing company so you never know what is around the corner.

We all saw what Jadestone did - significant share buy back programme was a complete waste at mid 70s - 80p range only for a year later to come back to the market for $53m approx at 43p.

[dragon35] 15/11/2024 10:23

I maintain that a share buyback would be a good use of funds right now unless they are on the cusp of another deal. It's cheap at 43p so it would be a good use of shareholder funds.

[fatfish] 13/11/2024 10:59

I thought the same about your previous condescending post, hence my reply. Enough said let's leave it at that.

[onedayrodders] 13/11/2024 09:33

Guess after your last negative obviously personally fed up post, I thought you were a relatively a newbie on AIM

[fatfish] 13/11/2024 09:18

ODRodders

I have won and lost in the last 35yrs but thanks for your concerns.

[onedayrodders] 13/11/2024 08:57

fatfish... if you can't handle a share price lower than your purchase price, perhaps the stock market is not for you.

Things have never been better at Afentra

[mount teide] 12/11/2024 20:27

'fatfish' - 'Share price is now lower than when I first bought in April'

It is but, since the closing of the third Angolan deal in April the existing assets have been generating an average of circa $17 million a month of very low production cost and taxed(circa 20%) oil sales revenue .......and moved into a net cash position in September.

Apr-Nov 2024 Sales Revenue: 7 months x $17m = $119m

[fatfish] 12/11/2024 19:14

Share price is now lower than when I first bought in April, this looks like it will be heading for 40p unless we have a whopper of a RNS.
The last RNS, though good, did little to stop the decline.
Shall we blame America. :-)

[zengas] 12/11/2024 12:39

From Up/S

12 November 2024,

Angola seeks investors to develop 10 oil discoveries hosting 500 million barrels of oil

10 dormant finds relinquished by supermajors and state oil company offered to industry

Angolan officials have urged investors to move fast to secure access to an ever-dwindling number of exploration and development opportunities available in the country, including four blocks holding more than 500 million barrels of discovered, but untapped, resources that could be accelerated towards first production.
The offering is the latest in a swathe of initiatives launched by Luanda since 2018, a year after President Joao Lourenco came to power, embarking on a massive shake-up and clean-up of the country’s upstream sector, creating the conditions for all varieties of E&P players to thrive.

Under a just-instigated auction process, Luanda is looking for oil companies to develop 10 discoveries in shallow water Block 4 and deepwater blocks 14, 15 and 18, all of which are within tie-back distance of existing infrastructure.

Perhaps the most sought-after opportunity lies in Block 14 where the former operator has handed three legacy finds to the state.

The Gabela, Lucapa and Malange finds hold estimated contingent oil resources of 84 million, 95 million and 64 million barrels, respectively.

Gabela, located in 400 metres of water, and Lucapa, in a water depth of 1500 metres, could be tied back to Chevron’s Tombua-Landana complex, according to the ANPG, while Malange, in 1200 metres of water, could be developed as a satellite to Chevron’s Benguela-Belize-Lobito-Tomboco compliant tower facilities.

Block 15 hosts three untapped finds — Mbulumbumba, Tchihumba and Vicango — and the abandoned Xikomba field, all originally discovered by ExxonMobil.
The trio of discovered resources lies in about 1000 metres of water and hosts contingent resources of 58 million, 136 million and 18 million barrels of oil, respectively.

ANPG reckons that production from Mbulumbumba and Vicango could be sent to ExxonMobil’s Kizomba B complex, which comprises a floating production, storage and offloading vessel and a tension-leg platform.
These two finds “represent very good investment potential", said an upbeat Lombo.
Xikomba was tapped by an FPSO and had produced 99 million barrels before being abandoned in 2019.

Up for grabs in Block 18 is the former BP-operated Chumbo discovery which houses about 32.5 million barrels of contingent resources, and 277 million barrels of prospective resource, in waters 1575 metres deep.

ANPG believes this find could be tied back to Azule Energy’s Greater Plutonio FPSO.
The assets available in Block 4 are two abandoned fields — Kiame and Kiabo — which could potentially be developed through Sonangol’s Gimboa complex, as well as what are described as ‘free areas” that cover the bulk of the block.

In a concerted effort to encourage investment, Lombo stressed that Luanda consistently talks with industry — incumbents and potential new entrants — to establish clear fiscal terms, gas legislation, transparency and definitive licensing schedules and, by walking the talk, boosts trust between government and industry.

Luanda has also instigated marginal field legislation which applies to discoveries of less than 300 million barrels with an internal rate of return (IRR) below than 15%.
This law, explained Lombo, would halve a company’s taxes, increase cost oil up to 80% and accelerate capital spending depreciation, all with the single goal of boosting IRR to more than 15%.
Luanda’s latest piece of legislation, which has just been approved by the National Assembly, covers incremental production and offers better fiscal terms for every barrel of oil that is not classified as proven reserves.
“It’s amazing terms for investors,” argued Lombo.

In mid-October, 30 exploration opportunities were available, but two deepwater concessions — blocks 42/21 and 42/21 in the deepwater Namibe basin — have since been awarded to unnamed parties, leaving 28 opportunities on the table.
“They’re flying fast. Investors, if you want to get hold of them, the time is now,” said Lombo.

[croasdalelfc] 07/11/2024 17:47

Imo - the LWI campaign should keep production steady at todays levels - any increase in the water flood should increase production incrementally . Any new infill wells 2026?? have the potential to increase production substantially

[mount teide] 07/11/2024 13:12

Operational and Financial Update - good to see this high quality management demonstrate they are as reliable as a Swiss watch in delivering what they said they would do(or better).

With respect to the outlook - As Croas pointed out:

'Nice that the lifting is now at the top end of the original forecast which was 450-550k. Also it’s pulled forward to Q4 from previous guidance of Q4/Q1 25'

This is very welcome news and, further confirmation as to how well the new team of Block 3/05 owners are working together with the operator the NOC Sonangol to maximise recovery of reserves from the group of large, high quality, mid life fields previously discovered and put into production in this block.

[xxnjr] 07/11/2024 12:20

If it helps. The last 9 quarters according to M&P for their unchanged % net w/int

(2023 1Q to 2024 3Q)

3,424 4,097 4,341 4,534 4,634 4,621 3,592* bopd
(* there was a planned maintenance shutdown in last qtr.)

things may accelerate with a few infill wells.

[dragon35] 07/11/2024 10:49

Assume $35 gross margin per barrel and they are selling 550k barrels then that's the best part of $20m going into cash balance this year so they should be net $15m cash positive at year end? Be interesting to see if field life and reserves get extended with the work they are doing as that has major balance sheet upside and extends decoms etc too. Anyone got any thoughts on production improvements month on month?

[controlledmadness] 07/11/2024 09:15

So we can assume that there will be no debt at end of year. And next year will have a minimum 2.2 barrels assuming another 3 week shutdown.

[croasdalelfc] 07/11/2024 07:16

Nice update. Small debt due to costs of maintenance and LWI etc . Nice that the lifting is now at the top end of the original forecast which was 450-550k.Also it's pulled forward to Q4 from previous guidance of Q4/Q1 25

[mrscruff] 06/11/2024 14:45

When you have a commodity producer the price of that commodity matters. But if costs are low, then growth and cash generation can still overcome the drag of a commodity price within reason. Don't fear US drilling activity given the costs. In the mean time while China may go EV faster... fast growing India certainly won't.

[dragon35] 06/11/2024 12:59

Thanks for your constructive reply. I will take that into account when considering my position here. You must be a very intelligent person to post with relevance and fact about the company and its global market commodity.

[onedayrodders] 06/11/2024 12:55

Dragon only posts when share price Is Rex

[dragon35] 06/11/2024 11:27

Trump in power affecting confidence here? USA oil production not far off its highest rig count for years so I'm not convinced they can push it too much higher. Anyone got any thoughts? Lower oil price also makes USA shale marginal profits wise so perhaps $70 area is the new norm?