VANCOUVER, BC, May 13, 2021 /CNW/ - (TSX: AOI)
(Nasdaq-Stockholm: AOI) – Africa Oil Corp. ("Africa
Oil", "AOC" or the "Company") is pleased to announce its financial
and operating results for the three months ended March 31, 2021. The Company is also pleased to
announce that it has achieved one of its primary objectives for
2021 with the signing of a new term loan agreement ("Corporate
Facility"), to refinance its existing term facility ("Term Loan")
that is due to mature in January
2022. This achieves significant reduction in borrowing
costs, strengthens the balance sheet and improves the Company's
liquidity position. View PDF version
Highlights
- First quarter net income of $38.9
million and end of quarter cash balance of $29.4 million.
- Selected Prime's first quarter 2021 results net to Africa Oil's
50% shareholding*:
-
- average daily working interest ("W.I") production of 27,700
barrels of oil equivalent per day ("boepd) and economic entitlement
production of 30,300 boepd (84% light and medium crude oil and 16%
conventional natural gas)2,3;
- EBITDA of $143.1
million4 and cash flow from operations of
$85.9 million for the quarter;
and
- end of quarter cash position of $165.3
million.
- Africa Oil published its 2020 year-end reserves report (NI
51-101) confirming working interest 2P reserves replacement ratio
of 117%. Strong reservoir performances with positive technical
revisions and resource transfers of 12.2 MMboe, compared to a
production of 10.5 MMboe net to Africa Oil's 50% shareholding in
Prime, reiterating the quality of AOC's producing assets.
- The Corporate Facility is for an amount of up to $150 million, out of which $130 million is committed at signing, with an
uncommitted accordion option for an additional $20 million and has a three-year term.
- Interest is payable at a rate of LIBOR plus a margin of 6.5% in
the first year increasing to 7.0% in the second year and 7.5% in
the third year.
- Subject to the satisfaction of customary conditions precedent,
the Corporate Facility will be available by end of July 2021 and the proceeds will be used to repay
the Term Loan and for general corporate purposes.
Africa Oil President and CEO Keith
Hill commented: "I am delighted with the strong support
from our banking syndicate, a clear endorsement of our investment
case and high-quality assets. As well as the immediate benefits of
lower borrowing costs and improved liquidity, this refinancing
strengthens our banking relationships, a strategic advantage as we
seek to acquire additional producing assets in this attractive
market and progress our South Lokichar project in Kenya. We also look forward to the results
from our high impact Venus and Gazania exploration wells as we
progress Brulpadda and Luiperd discoveries towards
development."
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* Important
information: Africa Oil's interest in Prime is accounted for as an
investment in joint venture. Refer to Note 1 on page 4 for further
details. Please also refer to other notes on page 4 for important
information on the material presented.
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CORPORATE LOAN REFINANCE
On May 13, 2021 the Company signed
the new Corporate Facility, for an amount up to $150 million and a three-year term, which can be
drawn from end of July 2021 until
12 May 2022. $130 million has been committed at signing and an
uncommitted accordion feature allows for an additional $20 million to be drawn. Completion is subject to
customary conditions precedent and is expected to occur by end of
July 2021.
The purpose of the Corporate Facility is to refinance the
existing Term Loan, and general corporate purposes. It will be
repaid from the proceeds of dividends received from Prime, while
ensuring the Company preserves sufficient minimum cash balances to
conduct operations. This loan has an interest rate of LIBOR plus a
margin of 6.5% in the first year, 7.0% in the second year and 7.5%
in the third year.
The initial $130 million of the
commitments received, together with the existing cash balances will
be used to repay the existing Term Loan in full, which is expected
to occur by the end of July 2021. Any
amounts of the Corporate Facility available after the repayment of
the existing Term Loan and the potential exercise of the
uncommitted accordion would be used for general corporate
purposes.
If the Company makes a repayment under the Corporate Facility
prior to May 12, 2022, unless the
repayment is made from a dividend received from Prime, a make whole
provision is payable at LIBOR+6.5%. The security provided on the
loan is similar to the existing Term Loan. The loan will be subject
to financial and liquidity covenants for facilities of this
nature.
The banking syndicate currently includes Rand Merchant Bank, Mauritius Commercial Bank,
Natixis, and Standard Bank.
2021 First Quarter Financial Results
(Thousands United
States Dollars, except Per Share and Share Amounts)
|
31 March,
2021
|
31 December,
2020
|
Cash and cash
equivalents
|
29,435
|
40,474
|
Total
assets
|
935,368
|
910,499
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Short-term
debt
|
141,000
|
-
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Long-term
debt
|
-
|
141,000
|
Total
liabilities
|
153,158
|
156,212
|
Total equity
attributable to common shareholders
|
782,210
|
754,287
|
|
Three months
ended
|
Three months
ended
|
|
31 March,
2021
|
31 March,
2020
|
Share of profit from
investment in joint venture
|
48,814
|
85,585
|
Share of
(loss)/profit from investment in associates
|
(885)
|
1,470
|
Total operating
income
|
47,929
|
87,055
|
Net operating
income/(expense)
|
44,206
|
(130,987)
|
Net
income/(loss)
|
38,920
|
(137,882)
|
Net income/(loss) per
share - basic and diluted
|
0.08
|
(0.29)
|
Weighted average
number of share outstanding - basic ('000s)
|
472,147
|
471,311
|
Weighted average
number of share outstanding - diluted ('000s)
|
475,011
|
471,311
|
Number of shares
outstanding ('000s)
|
473,252
|
471,950
|
|
|
|
Cash flows (used in)/
provided by operations
|
(3,320)
|
771
|
Cash flows used in
investing
|
(2,338)
|
(454,005)
|
Cash flows (used
in)/provided by financing
|
(5,369)
|
196,352
|
Total change in cash
and cash equivalents
|
(11,039)
|
(256,939)
|
|
|
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Total change in
equity
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27,923
|
(129,608)
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The financial
information in this table was selected from the Company's unaudited
consolidated financial statements for the three months ended March
31, 2021. The Company's consolidated financial statements, notes to
the financial statements, management's discussion and analysis for
the three months ended March 31, 2021 and 2020, and the 2020 Report
to Shareholders and Annual Information Form have been filed on
SEDAR (www.sedar.com) and are available on the Company's website
(www.africaoilcorp.com).
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FINANCIAL POSITION AND EARNINGS
The Company recognized net operating income amounting to
$44.2 million during the three months
ended March 31, 2021 compared with a
loss of $131.0 million during the
same period in 2020. Included in the Company's net operating income
is profit from its 50% investment in Prime of $48.8 million in the first quarter of 2021
compared with $85.6 million during
the first quarter of 2020. Prime's profit has reduced due to a
lower realized oil price of $58.14/bbl in the first quarter of 2021 compared
with $72.28/bbl during the first
quarter of 2020, and the timing of liftings, moving from a net
underlift position as at March 31,
2020, to a net overlift position as at March 31, 2021.
In the three months ended March 31,
2021, profit from equity investments was offset by operating
expenses relating to corporate overheads. In the three months ended
March 31, 2020, the operating expense
was primarily due to the recognition of a $215.6 million impairment of intangible
exploration assets relating to the valuation of Block 10BB/13T and
Block 10BA, both in Kenya.
As at March 31, 2021, the Company
had cash of $29.4 million, compared
with cash of $40.5 million at
December 31, 2020.
Prime did not distribute a dividend to its shareholders in the
first quarter of 2021. During the year ended December 31, 2020, Prime distributed six dividend
payments totaling of $400.0 million
to its shareholders, with a net payment to Africa Oil of
$200.0 million related to its 50%
interest. The dividends earned during 2020 were applied partly to
the repayment of its loan facility, reducing the balance from
$250.0 million to $141.0 million at December
31, 2020.
Going forward, the company will continue to apply dividends in
priority to debt repayment and continuing to maintain a minimum
cash balance.
PRIME'S FIRST QUARTER 2021 PERFORMANCE
Prime's first quarter 2021 average daily W.I. production was
27,700 boepd and economic entitlement production was 30,300 boepd
(84% light and medium crude oil and 16% conventional natural gas),
net to Africa Oil's 50% shareholding in Prime.
Production of the Egina field continued to be affected in the
first quarter of 2021 by the imposition of Opec+ quotas. These
quotas limited production from Egina in the first quarter of 2021
to an average of approximately 152,000 bopd. In April 2021 Opec+ members agreed to gradually
increase the crude production quotas and production from Egina is
now expected to exceed 160,000 bopd in the second quarter 2021.
During the first quarter of 2021, Prime was allocated five oil
liftings with total sales volume of approximately 4.9 million
barrels or 2.4 million barrels net to Africa Oil's 50%
shareholding.
Prime continues its hedging program in 2021 and has sold forward
or hedged 95% of its 2021 cargoes at an average price of
$56/bbl. These contracts are with
counterparties including oil supermajors and commodity trading
houses. The counterparties are part of groups with investment grade
credit ratings.
First quarter 2021 average operating cost of $6.4 per boe compares to fourth quarter 2020
average operating cost of $5.9 per
boe. The increase is primarily attributed to non-recurring well
intervention costs for Akpo and Egina fields. No leasing costs are
payable for Prime's Floating Production, Storage and Offloading
("FPSO") platforms because they are fully owned by the joint
venture partners.
Prime achieved first quarter 2021 sales revenue of $153.3 million; EBITDA of $143.1 million and cash flow generated from
operating activities of $85.9
million, in each case net to Africa Oil's 50%
shareholding.
Capital expenditure during the quarter, net to the Company's
shareholding was $2.6 million.
SUSTAINABILITY
Africa Oil is committed to be a full-cycle E&P company that
integrates sustainability consideration throughout the
decision-making and operational management. The Company presented
its vision, sustainability goals and ESG performance metrics in its
inaugural ESG Review that was published on March 29, 2021. As part of this commitment,
Africa Oil is working closely with its partners in studying
alternative options for reducing greenhouse gas ("GHG") emissions
from its producing and development assets. In Kenya, the scope includes the possible use of
renewable sources of energy to meet the South Lokichar project's
power requirements and minimize GHG emissions.
2021 OPERATIONAL OUTLOOK
Through its 30.9% shareholding in Impact Oil & Gas
("Impact"), the Company has exposure to the Venus-1 exploration
well in Block 2913B, offshore
Namibia which is expected to spud
by the end 2021. Venus-1 will target a large basin floor fan system
with significant undiscovered petroleum initially in place that has
been identified using 3D seismic data.
Africa Oil has interests in Block 11B/12B and Block
2B, offshore South Africa through its shareholding in
Africa Energy Corp. ("Africa Energy") and Impact.
In 2020, Africa Energy announced the successful drilling and
testing results of its second consecutive discovery on Block
11B/12B. The discovery on the Luiperd Prospect
reconfirms the Paddavissie Fairway as a world-class exploration
play with substantial follow-on potential. Due to the success at
Luiperd, the joint venture decided to proceed with development
studies and engage with authorities on gas commercialization.
Africa Energy management believe the fundamentals are strong for a
gas condensate development on Block 11B/12B, as
South Africa is a large energy
market looking to transition from coal to natural gas and is
currently limited to expensive imports.
The Block 2B joint venture
partners are focused on procuring a rig for the Gazania-1 oil
exploration well offshore South
Africa in order to spud in the third quarter of 2021. Block
2B has significant contingent and
prospective resources in shallow water close to shore and includes
the A-J1 discovery from 1988 that flowed light sweet crude oil to
surface. Gazania-1 will target two prospects in a relatively
low-risk rift basin oil play up-dip from the discovery. In
Kenya, the JV partners are
designing a field development plan for the South Lokichar
development in collaboration with the government of Kenya in order to optimize the economics of
the project, enhance its sustainability performance and secure a
long term extension of the licenses, while minimizing expenditures
in the short term.
NOTES
1.
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The 50% shareholding
in Prime is accounted for using the equity method and presented as
an investment in joint venture in the Consolidated Balance Sheet.
Africa Oil's 50% share of Prime's net profit or loss will be shown
in the Consolidated Statements of Net Income/Loss and Comprehensive
Income/Loss. Any dividends received by Africa Oil from Prime are
recorded as Cash flow from Investing Activities. The guidance
presented here is for information only.
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2.
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Aggregate oil
equivalent production data comprised of light and medium crude oil
and conventional natural gas production net to Prime's W.I. in
Agbami, Akpo and Egina fields. These production rates only include
sold gas volumes and not those volumes used for fuel, reinjected or
flared.
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3.
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Net entitlement
production is calculated using the economic interest methodology
and includes cost recovery oil, tax oil and profit oil and is
different from working interest production that is calculated based
on project volumes multiplied by Prime's effective working interest
in each license.
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4.
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Earnings Before
Interest, Tax, Impairment, Depreciation and Amortization ("EBITDA")
is not a generally accepted accounting measure under International
Financial Reporting Standards ("IFRS") and does not have any
standardized meaning prescribed by IFRS and, therefore, may not be
comparable with definitions of EBITDA that may be used by other
public companies. Non-IFRS measures should not be considered in
isolation or as a substitute for measures prepared in accordance
with IFRS.
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5.
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All dollar amounts
are in United States dollars unless otherwise indicated.
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About Africa Oil
Africa Oil Corp. is a Canadian oil and gas company with
producing and development assets in deepwater Nigeria; development assets in Kenya; and an exploration/appraisal portfolio
in Africa and Guyana. The Company is listed on the Toronto
Stock Exchange and on Nasdaq Stockholm under the symbol "AOI".
Additional Information
This information is information that Africa Oil is obliged to
make public pursuant to the EU Market Abuse Regulation. The
information was submitted for publication, through the agency
of the contact persons set out above, at 5:30 p.m. ET on May 13,
2021.
Advisory Regarding Oil and Gas Information
The terms boe (barrel of oil equivalent) is used throughout this
press release. Such terms may be misleading, particularly if used
in isolation. Production data are based on a conversion ratio of
five thousand and eight hundred cubic feet per barrel (5.85 Mcf:
1bbl). This conversion ratio is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. Given that the
value ratio based on the current price of crude oil as compared to
natural gas is significantly different from the energy equivalency
of 5.85:1, utilizing a conversion on a 5.85:1 basis may be
misleading as an indication of value.
Forward Looking Information
Certain statements and information contained herein constitute
"forward-looking information" (within the meaning of applicable
Canadian securities legislation). Such statements and information
(together, "forward looking statements") relate to future events or
the Company's future performance, business prospects or
opportunities.
All statements other than statements of historical fact may be
forward-looking statements. Statements concerning proven and
probable reserves and resource estimates may also be deemed to
constitute forward-looking statements and reflect conclusions that
are based on certain assumptions that the reserves and resources
can be economically exploited. Any statements that express or
involve discussions with respect to predictions, expectations,
beliefs, plans, projections, objectives, assumptions or future
events or performance (often, but not always, using words or
phrases such as "seek", "anticipate", "plan", "continue",
"estimate", "expect, "may", "will", "project", "predict",
"potential", "targeting", "intend", "could", "might", "should",
"believe" and similar expressions) are not statements of historical
fact and may be "forward-looking statements". Forward-looking
statements involve known and unknown risks, ongoing uncertainties
and other factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
statements, including statements pertaining to the refinance
of the existing Term Loan, utilization and drawdown under the new
Corporate Loan facility, performance of commodity hedges, the
results, schedules and costs of exploratory drilling activity,
uninsured risks, regulatory and fiscal changes, availability of
materials and equipment, unanticipated environmental impacts on
operations, duration of the drilling program, availability of third
party service providers and defects in title. No assurance can be
given that these expectations will prove to be correct and such
forward-looking statements should not be unduly relied upon. The
Company does not intend, and does not assume any obligation, to
update these forward-looking statements, except as required by
applicable laws. These forward-looking statements involve risks and
uncertainties relating to, among other things, changes in
macro-economic conditions and their impact on operations, changes
in oil prices, reservoir and production facility performance,
hedging counterparty contractual performance, OPEC+ quota impact on
production, results of exploration and development activities, cost
overruns, uninsured risks, regulatory and fiscal changes, defects
in title, claims and legal proceedings, availability of materials
and equipment, availability of skilled personnel, timeliness of
government or other regulatory approvals, actual performance of
facilities, joint venture partner underperformance, availability of
financing on reasonable terms, availability of third party service
providers, equipment and processes relative to specifications and
expectations and unanticipated environmental, health and safety
impacts on operations. Actual results may differ materially from
those expressed or implied by such forward-looking statements.
SOURCE Africa Oil Corp.