Afentra Share Discussion Threads

[x54v] 22/5/2023 15:51

"Exciting times ahead

As we enter our third year as Afentra, we are very satisfied with the progress we have delivered. Our first year was about defining the strategy and identifying our first deals, and the second year was about putting in the building blocks to deliver that strategy and execute value accretive transactions. This current year will be truly transformative for the Company as we complete the Angolan deals and set about working closely with our partners to deliver mutually beneficial outcomes for all the stakeholders.

In parallel with the work we will be doing in Angola, we will continue to screen compelling opportunities in line with our strategy. We believe the efforts to establish Afentra as a credible counterparty of choice have been successful and we have built up the internal resources and capabilities to ensure we can deliver the next wave of growth in tandem with our new operational focus in Angola. We are excited about the opportunities that lie ahead in Angola, and will be active in other core target markets if we find opportunities that deliver the criteria we seek in terms of creating value and delivering positive outcomes for all stakeholders."

[mount teide] 21/5/2023 23:48

Small Oil Moves In Where Big Oil Moves Out - Oilprce.com today

'A Dutch court ruled against Shell two years ago in a case targeting the supermajor’s emission footprint. It obliged the company to slash its emissions by almost half from 2019 by 2030.

In response, then CEO Ben van Beurden wrote a post on LinkedIn, noting an obvious fact that seems to have remained a mystery for the environmentalists that sued Shell and many more like them.

“Imagine Shell decided to stop selling petrol and diesel today. This would certainly cut Shell’s carbon emissions. But it would not help the world one bit. Demand for fuel would not change. People would fill up their cars and delivery trucks at other service stations.”

In confirmation of the above simple truth that while there is demand for a product, supply will find its way, the Wall Street Journal this week reported that as oil majors pulled out of higher-emission projects across the world, smaller companies came and took their place.

We are now witnessing the same thing that happened in 2016 and 2017 in the North Sea but at a larger scale. Back in 2016/17, majors were leaving the North Sea to focus on lower-cost assets. At the time, emission reduction was not such an emergency. Supermajors just wanted to save on platform decommissioning and high UK taxes.

Yet it turned out that there were companies willing to take on those platform decommissioning costs and high taxes, plus the fact of natural depletion, that turned the North Sea into the hottest spot for oil and gas mergers and acquisitions in the world, second only to U.S. shale.

Shell sold some North Sea assets in 2017. Chevron remained there. BP put up some of its North Sea assets for sale but kept its presence in the region. Meanwhile, a lesser-known firm by the name of Chrysaor bought $3.8 billion worth of oil and gas assets in the North Sea that same year and three years later merged with Premier Oil to become the largest oil and gas operator in the area.

The story is repeating now on a global scale. The supermajors have been quite explicit in their intentions to focus on low-cost, high-return assets with the added consideration of emission footprints. So, many of them are leaving emission-intensive projects in Africa, Latin America, and Asia.

Yet, just like nature, the oil industry cannot stand a vacuum, and smaller companies are taking the freed-up space. “What we are seeing is that the larger companies are reducing their share in aging assets with little upside production that have relatively large emissions,” Audun Martinsen, head of energy service research at Rystad Energy, told the WSJ. “Their space has been filled by smaller exploration and production companies.”

According to Rystad, the trend will continue, with offshore investments coming from large public oil companies declining from 45% of the total in 2019 to 37% of the total in 2025. At the same time, smaller, often private companies will increase their share of total investments in oil and gas.

Also, the Norwegian-based energy research firm said, investments in new oil and gas production this year, thanks to these smaller companies, are set to hit $100 billion for the second year in a row. All this is happening while Chevron, TotalEnergies, Shell, BP, and Exxon focus on reducing their emissions without going bust.

According to the WSJ report, the smaller, often privately owned companies are more nimble than Big Oil supermajors and, as such, are better positioned to take risks with projects that are either new, with a high emission footprint or both.

They have lower costs than mammoth organizations like the supermajors and can, according to the WSJ, more quickly recoup their investments in case a downturn looms on the horizon.

In Africa, according to Rystad data cited in the report, Big Oil is reducing its presence, but smaller players are happy to fill the void. As a result, the value of new oil and gas deals on the continent hit $21 billion last year, up from $5.5 billion in 2020. The share of oil production held by smaller, independent players is also on the rise.

The same trend is noticeable in Latin America. Following the partial exit of the supermajors as they focused on their lower-cost and lower-risk assets, small independents moved in and continued exploring for more oil and gas and extracting what was already discovered.

It seems this shift in oil and gas investments will continue, with more and more investment in new production coming from small companies. This is not a welcome development for environmentalists. Because smaller companies cannot be held up to the scrutiny of shareholders that increasingly include representatives of those same environmentalists.

Many of the smaller energy firms taking on emission-intensive projects are privately owned. They are only accountable to their owners and relevant regulators. They cannot be pressured into dropping this or that project. All that because of the simple truth expressed in Ben van Beurden’s LinkedIn post from 2021: while there is demand for a product, supply will find a way.'

[mount teide] 20/5/2023 18:40

1S - I would think that post the expected completion of the Sonangol asset in June 2023, that the market cap would likely be greater than the headline value of another 10-12% chunk of Block 3/05 or an asset of a similar value, and so would not trigger a RTO.

If it were another chunk of Block 3/05, would expect that to complete a lot quicker than the first two acquisitions, as the Executive Decree to formally approve the period of the Block 3/05 licence extension, which extends the production sharing agreement to 31 December 2040, has been now negotiated, improved upon, agreed and published.

AIMHO/DYOR

[1senn] 20/5/2023 12:30

If the next deal is less than the market cap here ? Am presuming no need for a suspension,? MT thanks

[1senn] 19/5/2023 22:47

Thank you MT

[mount teide] 19/5/2023 15:08

1S - scroll back through this week's posts - some of us have given our thoughts on that very subject.

[1senn] 19/5/2023 14:57

Suspension would not be required Correction sorry

[1senn] 19/5/2023 12:59

Anyone got any thoughts on the 3rd deal

With up to 35 mill available

Am presuming now suspension of shares would be required as the market cap should be past 45 p once the deal completes in June

[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