Afentra Share Discussion Threads

[mount teide] 08/4/2024 07:27

50,000 Automated buy at the full 43p ask price.....encouraging start to the week.

[mount teide] 07/4/2024 10:42

Trafiguru Offtake Agreement

Afentra's 3/05 Block crude oil is sold on standard FOB terms, which means operational, financial and insurance responsibility for the crude oil ends at the Shuttle Tanker's gunwale/cargo manifold.

Buyer Trafiguru is responsible for the Shuttle Tanker charter cost(circa $2-3/bbl) to/from Block 3/05 FSO Palanca, and cargo insurance(circa $0.75/bbl) through to discharge at an oil refinery/port.

These estimated costs are based on an average 450,000 bbl oil cargo and, current ship charter and cargo insurance rates for an Afrimax size shuttle tanker.

[tim000] 07/4/2024 10:22

Publishing natural decline rates should be mandatory. Some companies are better than others in making that info available to investors. It’s a bit like AISC data for gold miners.

[xxnjr] 07/4/2024 10:07

Well, luckily sold my TLW shares at £13something and £15something in old money, having acquired them initially in late 2003/early 2004. I've occasionally bottom fished since without much success. Commentating on the company gives me something to do and hopefully enables others to come to more realistic investment decisions rather than just swallowing the company narrative hook, line and sinker. It could be at an inflexion point but that may depend on production targets being hit in the medium term. I'm a bit of a sceptic on that front but willing to be proved wrong. TLW's Ghana fields have underlying decline rates of about 25% which is rather different from here.

[tim000] 07/4/2024 08:43

I think your final para is perceptive and might explain why this system is popular in West Africa. I’ve been reading your commentary on TLW and am at a loss to understand your continued investment there!

[xxnjr] 07/4/2024 07:43

tim000 - Yes, I am into Africa Oil! I'm no expert in cargo arrangements or anything oil come to that, the above was just my perception of what appears to be fairly common practise in the region. But there will surely be other cases where parties agree to joint offloads, perhaps to mitigate the financial risks you cite, or simply to make life easier for smaller players through collaboration. This alternative arrangement also occurs in Ghana where Petro SA have 2.72% of Jubilee, 3.82% of TEN and share their cargo offloads with Tullow.

One advantage of dedicated cargoes for a politically connected local NOC with friends in high places could possibly be less transparency as to where the NOC cash goes? Same for local players with friends in high places!

[tim000] 07/4/2024 06:12

O/T, xxnjr, are you an investor in Africa Oil by any chance?

[tim000] 07/4/2024 05:33

Maybe this makes AET even more attractive as it looks like it is acquiring a major asset very cheaply at a time of robust prices. And may help to explain why there was not more competition for the asset.

[tim000] 07/4/2024 05:29

This is perhaps an irrelevant comment, but I’m not sure averaging out over the lifetime of 20 years is the correct way to view this - certainly not for liquidity constrained minnows. Oil prices are highly volatile as we all know. It makes a very large difference to the fortunes of a small business whether it gets a short-term cash windfall by selling at high prices, or a short-term deficit by selling at very low prices (near-zero in exceptional circumstances). To say they’ll be alright in the long term won’t cut any mustard with their bankers! You acknowledge this with your point about hedging - but as you know hedging is another can of worms and for an AIM listed business can be disastrous.

[tim000] 07/4/2024 05:18

Many thanks, shows the value of bulletin boards on which experts are willing to share their knowledge. I still think it is very odd, unless I’m missing something it just seems unnecessarily complicated to apportion cargoes (of which there are comparatively few) rather than barrels (of which there are 450,000 times more!).

[xxnjr] 06/4/2024 22:04

tim000,

good question

"MT: rather than apportion sales volumes per cargo according to field interests, it appears AET is allocated a proportion of cargoes per annum. That is very odd, for example it means pricing and end-of-year inventory could vary significantly between partners according to when they were allocated cargoes. Unless there is some accounting balancing procedure at, say, the end of each calendar year. Do you know exactly how the allocation of oil revenues is handled? Thanks."

Unless I misunderstood your central point tim000, I'm not sure this is "very odd", at least in 'West Africa'. For example in Ghana dedicated cargoes are allocated to equity partners; Tullow, Kosmos, GNPC in respect of Jubilee and TEN fields and to ENI, Vitol, GNPC in respect of Sankofa field, respective to their equity share of fields.

I believe this is pretty standard practise. At least in 'West Africa'. One recent exception has been where as part of Impact's farm out deal with Total Energies in Namibia, Impact elected to share their cargoes with Total as it would facilitate oil sales and reduce price volatility but that was driven by the structure of that particular farm out deal whereby Total were providing Impact a gross carry before netting out of say $6bn to $8bn to first oil (all seismic, exploration wells, development wells and first fpso development to 1st oil) with the carry being reclaimed out of a portion of Impact's revenues once Namibia production starts. In effect an interest free loan from Total to Impact. But once the 'loan' is repaid Impact will revert to dedicated cargoes.

But getting back to what I believe is fairly standard practise in Angola and elsewhere in 'West Africa', (1) as MT mentioned, the price is what it is when a dedicated cargo loads to tanker for export from the Palanca FSO. This is usually 5 day ave brent price from Bill of Lading date, adjusted for oil grade and in the case of Afentra, whatever 'take' Trafigura apply under the Trafigura Offtake Agreement. The revenue goes to whichever partner that particular cargo was allocated to and (2) at year end in the accounts for each partner there will be either an "overlift" or "underlift" to take account of any variances between equity produced barrels and actual volume of barrels offloaded by allocated tanker cargos.

To your point on pricing/revenues; yes there may well be timing/pricing anomalies in any one year but over say 20 yrs of a typical field life the "pluses and minuses" will in all likelihood average out to such an extent that individual equity partners carry that risk themselves. But of course smaller, non IOC/NOC type companies usually will additionally offset part of that risk through their OP hedging strategies.

[mount teide] 06/4/2024 15:32

Azule Acquisition - some thoughts:

554 days and counting of accrued revenue at an average $85/bbl Brent price from 1 Oct 2022, the effective economic date of the Azule deal - should have generated circa $118m of gross revenue to date to Afentra (Circa $35m of free cash flow).

Azule Deal - Total consideration of up to $84.5m, split $48.5m upfront and up to $36m in contingent payments:

* Up to $21m in contingent payments payable on a sliding scale above Brent price of $75/bbl with an annual cap of $7m over the years 2023, 2024 & 2025; and

* Up to $15m in contingent consideration linked to the successful future development of the Caco-Gazela and Punja discoveries (split $7.5m equally), payable 1 year after first oil subject to a Brent price of $75/bbl and production hurdles

So, likely payment due to date on completion: $48.5m - $35m + $7m = $20.5m

"We see opportunities for ESPs [electric submersible pumps], infill drilling, water injections really improving. Just all the classic things you'd be doing with an old mature field to offset decline and boost production. We think this asset with the fullness of time, between 3/05 and 3/05A has got the potential to go up to even as high as 30,000 b/d." McDade August 2023

30,000 b/d is circa 80% ABOVE the reported level of production when the deal for the assets was first announced.

Food for thought - Block 3/05 has a STOIIP of 3.15 billion bbls, with a 43% recovery factor as of 30 June 2023. The new fiscal terms significantly incentivises a higher recovery factor from the block - at a 30% working interest, a 10% increase in recovery would equate to an additional circa 93m bbls net to AET.

AIMHO/DYOR

[mount teide] 06/4/2024 15:13

tim000 - Sorry, I don't know. Neither the CPR or 2022 Trafigura OffTake Agreement appears to offer any specific guidance in this connection......AET production is sold FOB the shuttle tanker.

[tim000] 06/4/2024 06:34

MT: rather than apportion sales volumes per cargo according to field interests, it appears AET is allocated a proportion of cargoes per annum. That is very odd, for example it means pricing and end-of-year inventory could vary significantly between partners according to when they were allocated cargoes. Unless there is some accounting balancing procedure at, say, the end of each calendar year. Do you know exactly how the allocation of oil revenues is handled? Thanks.

[apotheki] 05/4/2024 18:05

Plus in my opinion the chart is currently looking very good

[apotheki] 05/4/2024 18:04

Malcy has included AFENTRA on this years bucket list as having great potential
hxxps://www.malcysblog.com/2024/04/the-bucket-list/

[mirabeau] 05/4/2024 16:07

Afentra

Afentra is a stalwart performer, since being in the BL it has doubled more or less on the year which puts it as an out-performer of its peers without doubt. With its fantastic programme in Angola and with another segment about to complete Afentra is in a very good space. '

[mount teide] 05/4/2024 15:58

Closing auction of 34,774 at 41.2p - highest ever closing price for the 'new' Afentra!

Very encouraging to see a blue sky chart before the expected Q2 closure of the Azule Energy Angolan acquisition.

[johnmp] 05/4/2024 15:31

so far so good.

[onedayrodders] 05/4/2024 13:38

Could be today :0)

[lauders] 05/4/2024 12:31

News incoming next week? Hope the strength today is an indicator that we hear something good.

[onedayrodders] 04/4/2024 15:40

40p still a hard nut to crack but I'd like to think the resistance will break soon.

If you look at the trades today there was a good run of buys that took the bid close to 40p and that brought out the round number sellers again.

They'll be exhausted soon IMHO

[jeanesy] 04/4/2024 13:01

All the best Mount Teide.

[mount teide] 04/4/2024 11:58

ODR - since nothing in life is certain, I can't complain, particularly when i've already lived longer than 99.9% of humanity that has come before me!

Told my wife if it does return with a vengeance and takes me down - that I want my GP's comment on my headstone, in response to being asked if what I was concerned about could potentially be serious: He replied "Don't worry, i'm 99% certain its not cancer!"

Three weeks later on paying to see a consultant privately for a second opinion - the first thing he said after introducing himself was "Why is this fit healthy looking man sitting opposite me"....within two minutes of examining me he said: "You have late stage metastatic cancer" The private consultation was the best £200 I have ever spent!

Will send you a PM.

[onedayrodders] 04/4/2024 07:22

Mount Teide .. good to hear you are managing a difficult situation well and with such positivity.

I'm guessing there is a good chance at some point I may need an oncologist like you have so would you be willing to pass on his/her name ?

By private message if you prefer.

thanks in advance

ODR