Afentra Share Discussion Threads

[mount teide] 20/4/2024 10:20

Chart many have been waiting for Bloomberg to publish for years - Oil Price Adjusted for inflation from 1970 - 2024.

Confirming that the oil price today in real terms would have to nearly double to reach the level it averaged for 4 years between 2011 and 2014, and would have to go up by 122% to reach its all time inflation adjusted 2008 high price.

[tim000] 19/4/2024 20:48

AET’s assets do seem like the proverbial gold mine. It will just take a little time to get each field up to peak efficiency. As non-operator, AET management have the time to focus on M&A to replicate this business model. The potential of the company looks amazing.

[mount teide] 19/4/2024 19:57

xxnjr - 'There's nothing marginal about 48K bopd from 2 wells!'

Exactly - took the information in good faith since it was published in a well regarded O&G industry journal. Unable to corroborate it elsewhere, but I did recall that each of the early wells on a previously retired oil field that Advance Energy once planned to re-open had flowed at between 25,000 and 30,000 bopd.

'2 wells in a sweet spot could equate to Afentra's CPR'

All for a low cost, high graded, initial development of the Punja field provided it doesn't materially impact the longer term reserves recovery.

Block 3/05 - Interesting to note in the CPR that of the 108 mmbbls (gross) of 2P reserves, 35.9 mmbbls is attributed to water injection restoration....$3.1bn of gross future revenue at $85 Brent potentially generated from restoration of water injection.

A huge incentive to the field partners to make further progress on this relatively low cost production development initiative, since the peak water injection target calculated to deliver the P2 figure is just 50% of the design capacity of the existing equipment/infrastructure, at which it consistently performed for many years, before the impact of a lack of planned maintenance and failure to carry out machinery repairs, extracted its toll.


AIMHO/DYOR

[xxnjr] 19/4/2024 08:40

Mount Teide - Impressive numbers. Have to say I'm slightly surprised by those. There's nothing marginal about 48K bopd from 2 wells! If that is what the suggestion is.

Digging around a bit I found this linkedin CV


"PUNJA
jun. de 2012 - ago. de 2012
FEED project for PUNJA oil field located within Block 3-05A in Angola. Production facilities include two remote wellhead platforms with a Total of 16 Wells and a Processing platform with Gas compression capabilities. Was involved into the Process Design of the Processing Platform at Technip Office in Luanda, from full HYSYS simulation to PFD production of the main processes."

If the two marry up then 16 wells for 48K gross = 3K bopd per well

2 wells in a sweet spot could equate to Afentra's CPR

"contingent consideration of US$7.5 million is payable to Azule in respect of the Block 3/05A Acquisition if [amongst other conditions]: average daily oil production from the Punja Development Area over the 'relevant period' exceeds 5,000 boe per day."

Maybe project has been scaled back as economics now considered 'marginal'?
Who know? Hopefully we'll get more info after Azule deal closes and Afentra host their upcoming presentation.

[mount teide] 18/4/2024 20:35

Punja Development Area Block 3/05A - outrageous good fortune that Punja has been approved by the Angolan Government as a Marginal field for tax purposes, when considering that peak production is estimated at 48,372 bopd of oil and condensate, with 203 million bbls of recoverable reserves.......from two production wells, tied back to Block 3/05. Estimated Capex: $125m-$175m?

Post closure of the Azule deal Afentra will have a 21.33% working interest in an asset considered to have the potential to produce 10,318 bopd(Net) at estimated peak production. Average production during the first 10 years is estimated at 34,000 bopd gross, 7,252 bopd net.

This suggests AET's production target of 30,000 bopd(Gross) for Blocks 3/05 and 3/05A combined, has the potential to prove the understatement of the decade.


Punja Conventional Oil Field, Angola - Offshore Technology - April 2022

'Punja is a conventional oil development located in shallow water in Angola and is operated by Sonangol P&P. Discovered in 1982, Punja lies in block Block 3, with water depth of around 167 feet.

The project is currently in approval stage and is expected to start commercial production in 2024. The Punja conventional oil development will involve the drilling of approximately two wells and includes subsea tree.

Production from the Punja conventional oil development project is expected to begin in 2024 and is forecast to peak in 2025, to approximately 48,372 bpd of crude oil and condensate. Based on economic assumptions, the production will continue until the field reaches its economic limit in 2062.

Recoverable reserves - The field is expected to recover 203.9 Mmboe of crude oil & condensate.'

[xxnjr] 18/4/2024 14:46

Anybody happen to know if a relevant gov.dept in Angola publishes monthly production data by field?

[mount teide] 18/4/2024 10:15

M&P - Block 3/05 and 3/05A Q1 Production - a 34% uplift on Q1/23, at an average Brent price of $83 versus $78 in Q1/23.

And an average Brent price to date of $90 in Q2/24, compared to $77 in Q2/23.

Azule deal completion - since the Angolan Government has already approved the sale of a material working interest to Afentra of the same asset from Sonangol, the National Oil Company, it's hardly likely they're going to prevent Afentra from acquiring the Azule working interest, particularly when Azule, owned by two oil majors, is the largest producing independent O&G company operating in Angola and, is currently investing heavily to materially raise production further from its Angolan offshore sector assets.

Sales value of Afentra's Q1/2024 oil production, including the Azule working interest, at the average Brent price would be in $50m-$55m range.

Maurel & Prom: Angolan assets
Block 3/05 - 20.00%
Block 3/05A - 26.67%

M&P working interest oil production of 4,634 bopd in Angola in Q1/2024, an increase of 2% from Q4/2023.

Globally, in Q1/2024 M&P achieved a positive net cash position for the first time since 2007.


AIMHO/DYOR

[onedayrodders] 18/4/2024 09:10

Such a positive dilemma !!

;o)

[catsick] 18/4/2024 08:39

Need to get this deal closed asap.... Even though the delay delivery is the best part of these deals!!!

[croasdalelfc] 18/4/2024 07:07

That's a 34% uplift on Q1 2023

[croasdalelfc] 18/4/2024 05:36

Production for M&P was 4634 bopd in Q1. That is ~ 6950 bopd at 30% stake

[xxnjr] 15/4/2024 14:10

Thanks for Punja stuff MT. I was unfamiliar with Punja. Quick look. A few snippets from 09/2023 Admission Doc/CPR

".....the Punja Development Area Licence was extended by Executive Decree 465/18 on 22 October 2018 until the date falling 20 years after first lifting (expected in 2025).

.....contingent consideration of US$7.5 million is payable to Azule in respect of the Block 3/05A Acquisition if [amongst other conditions]: average daily oil production from the Punja Development Area over the 'relevant period' exceeds 5,000 boe per day.

.....Block 3/05A, contains the undeveloped discoveries Punja, Caco and Gazela with an estimated in place resource of 0.3 billion barrels.

.....The Punja development is also being progressed and different solutions evaluated."

[mount teide] 15/4/2024 13:16

Approval of the Declaration of Marginal Discovery - Significantly improved fiscal terms/tax incentives for Punja Development area of Block 3/05-A, where Afentra has a working interest, soon to be increased to 22.5%



Courtesy of 'Bobinvest' on Investopod

[mount teide] 15/4/2024 11:30

c3 - thanks for your comments. Good to hear the thread has been of value for further investment case research.

[mount teide] 15/4/2024 11:26

d35 - My money would be on a further shallow water Angolan acquisition.....NOC Sonangol have a large number of O&G assets potentially available as part of their huge privatisation programme.

In Jan 2024, the management stated they had been working through further regional M&A opportunities for 18 months.

So, relatively soon after completion of the Azure deal, the likelihood of AET announcing another attractively priced acquisition of high quality, long life, mature assets with excellent reinvestment potential and a significantly backdated effective date, is probably quite high.

Would not be surprised if the next acquisition was similar to Block 3/05 - ie; a non-operated, significant working interest in a large oil asset being vacated by an oil major or NOC.


'Afentra’s entry into Angola in May 2023 saw the Company establish a foothold in a key target geography with a wealth of future growth opportunities. Afentra is acquiring interests in quality assets with scope to enhance and extend production alongside improving environmental performance, while positioning itself as a key stakeholder to support state-owned Sonangol with its transition strategy.'

'Afentra’s strategy is to build a material diverse portfolio of mid-life producing assets that no longer fit the portfolio of major companies. We seek to optimise, redevelop and extend their lives in a safe, responsible manner whilst reducing harmful emissions. These production assets underpin the business with low-risk cash flow. Over time, Afentra aims to build a portfolio of operated positions, levering the extensive technical operating experience possessed by the team. We will also acquire non-operated positions alongside quality operators and credible JV partners with a shared alignment to operational excellence and environmental stewardship.'



AIMHO/DYOR

[dragon35] 15/4/2024 09:40

Wonder when the FCF will be put to use on a new asset? They got to have eyes on something. Anyone seen any obvious candidates?

[cardinal3] 13/4/2024 21:20

MT

I've just come across this and find it a most helpful and informative thread, and thanks are due to you. The case appears compelling if you are into O&G but having been bitten/scammed on small explorers over the years I am cautious enough to want to look at it all carefully! In this case the management seems to have good experience of success which is positive.

[croasdalelfc] 13/4/2024 06:41

- Asset level cashflow generation related to 30% equity in 2023 was $67.4 million at an average weighted sales price of $90/bbl.....Production is up 15% for 2024 vs 2023.Brent average is around $85 for 2024. They get a premium of $1/2 per barrel Capex is around $20m. Imo there is a good chance they can generate $50m FCF after capex in 2024

[yumyum] 12/4/2024 22:42

Thank you very much Mount Teide. Appreciated. I will ponder on all that and see if I can concoct an improved spreadsheet. Your share price thoughts look cautiously modest perhaps.

[mount teide] 12/4/2024 12:53

Also worth remembering the modified fiscal terms for Block 3/05 were approved in Q4/2023 and backdated to an effective date of 1/1/2023.

[mount teide] 12/4/2024 12:46

Angola - Afentra's O&G Investment Case View:

'Angola is one of the largest oil producers in Africa with current production of 1.1 million bbl/d from deepwater, shallow water and onshore dating back to 1956. The economy is dependent on responsible management of hydrocarbon resources.

Investment has historically been dominated by IOCs, however assets are starting to change hands. Afentra believes that the situation is similar to the status to the UKCS where a more mature industry transition has already played out.

Global research and consultancy business Wood Mackenzie has identified approx. 15 billion barrels of oil and gas reserves and resources, highlighting the scale of opportunity in Angola.

According to IHS Markit Consulting, close to 300 fields have been discovered with less than half developed (IHS 2022).

Over the last 5 years, the Angolan government led by President João Lourenço has actively sought new oil and gas investors alongside improving fiscal terms and extending licenses. There are large opportunities for growth and limited competition in the independent space.

The regulatory authorities have only shown to demonstrate a pragmatic approach
throughout the negotiation period, providing a strong signal of the Country’s willingness to encourage investment into the upstream sector. This strengthens our confidence that we have entered a supportive market with a firm understanding of the evolving industry landscape, and a recognition of the important role that companies like Afentra can play in delivering a responsible industry transition.'

[mount teide] 12/4/2024 12:35

YY - Ref: Production costs per bbl - have not seen any specific data.

However, what we do know is that after the second working interest on the Block 3/05 asset was announced in July 2022, the following information was provided:

* Break even economics of $35/bbl
* Potential to improve OPEX to $20/bbl
* Average FCF, after Capex, of $30m PA at $75 Brent.
* Average production of circa 16,800 bopd when AET first commenced asset negotiations

Since then, the following changes have been reported based on completion of the Sonangol (18%) and INA (5.33%) deal metrics:

* Potential to improve and MAINTAIN OPEX at $20/bbl
* Average FCF, after Capex, of $35m PA at $75 Brent.
* Full year 2022 gross production of 18,660 bopd
* Minimum Capex to realise P2 Case of 115 million bbls

Post the Azule completion:

* Average FCF, after Capex of $50m PA at $75 Brent based on 18,600 bopd (at $90 Brent and 22,550 bopd the FCF could potentially increase to $60-$70m a year).

* Average production March 2024 of 22,500 bopd (recent peak of 25,000 bopd YE 2023)
* Every 1% incremental recovery factor = 9 million bbls additional resources net to AET

* Debt - If the Azule deal closes during the next few weeks, assuming an average of current Brent price and an average of 22,500 bopd production, AET is likely to be debt free during Q3/2024.

* Apparently 80% of management time has been spent on M&A in the last 18 months . IR confirmed in January 2024 that the next webinar and strategy presentation will come after completion of Azule.

* Infill Drilling Campaign for 2025-26 - first for over 20 years, will be interesting when considering that Pacassa alone has another circa 500m barrels.

Thoughts:
A further 5,000 bopd deal during 2024 with similar non dilutive metrics could well see AET trading at 100p plus.

AIMHO/DYOR

[yumyum] 12/4/2024 08:59

Hi Mount Teide, thank you for your input. Also thanks to others including the earlier thread.

I have been passively invested here ever since before the unsuccessful Repsol deep water drill.

It looks very promising now. I was trying to run some figures and cannot easily find production costs per bbl. Can you tell me what I should be using, just approximately?

Many thanks and best wishes.

[roks] 12/4/2024 08:36

Nice ti see this motoring ahead