Scarbender307
5 days ago
MORE INFO
[Stolen from the Value portfolio]
Africa Oil Corporation Plans To Bump Its Yield Past 8%
Jun. 30, 2024 12:05 PM ETAfrica Oil Corp. (AOIFF) Stock, AOI:CA Stock
The Value Portfolio profile picture
Investing Group Leader
Summary
Africa Oil Corporation has a single producing asset in Prime Oil and Gas, which is being consolidated to enable strong shareholder returns.
The company has revamped its strategy to focus on growth potential, including farm downs, equity investments, dividends, and share buybacks.
Africa Oil Corporation's assets in Nigeria have strong production potential, with plans for substantial shareholder returns through dividends and buybacks.
I am The Value Portfolio, an experienced analyst specializing in stock research and wealth growth. I run the investing group The Retirement Forum where I focus on ideas to prepare you for retirement.
Oil drilling well alone in the middle of sandy desert
Africa Oil Corporation (NYSEARCA: OTCPK:AOIFF) has numerous exciting assets, however, at the end of the day, it has a single producing asset. That asset is a 50% shareholding in Prime Oil and Gas and it's associated offshore Nigerian production. That asset had substantial debt, with dividends paid to the parent companies. As we'll see throughout this article, the company's consolidation moves will enable strong shareholder returns.
Africa Oil Corporation New Strategy
Africa Oil Corporation revamped its strategy in mid-2023 and over the past year has worked to focus on its growth potential.
Africa Oil Corporation Investor Presentation
That includes two farm downs to de-risk the company's growth prospects, along with an equity investment placing for Impact. The company has also continued to pay a reasonable dividend of roughly 3% and has continued to buyback shares, buying back $40 million USD of shares or ~5% of its outstanding float. It can repurchase up to 10% of shares.
That, combined with the proposed consolidation we'll see below, will enable continued long-term growth and shareholder returns.
Africa Oil Corporation Proposed Consolidation
The company is consolidating with BTG, specifically BTG's 50% stake in Prime Oil and Gas.
Africa Oil Corporation Investor Presentation
That will result in Prime Oil and Gas becoming a subsidiary of AOC, with all earnings and reserves going straight to AOC. As a result, BTG will have a 35% growth through the issuance of new shares. The $800 million USD company will grow to a $1.2 billion USD company, valuing the company's Prime Oil and Gas assets at $800 million.
Africa Oil Corporation Investor Presentation
The deal provides immediate cash flow from strong Nigerian assets that have strong long-term growth potential. It doubles the reserves and production of the company and enables streamlined financial reporting and an increase in FCF to shareholders. The company is now committed to a $100 million USD base dividend, or a high single-digit yield of more than 8%, along with stronger overall returns.
That doesn't count the company's strong buyback program or its excess FCF that it can utilize for shareholder returns.
Africa Oil Corporation Asset Overview
The company has strong assets in Nigeria, assets that it will now have full ownership of, partaking in 3 of the top 5 fields in Nigeria by production.
Africa Oil Corporation Investor Presentation
The 3 fields have ~310 thousand barrels / day in aggregate gross field production with experienced operators. The vast majority of the company's reserves are proven, with continued development opportunities, and products such as Preowei to expand production. The company expects 2024 production to be a pro forma 36k barrels / day, with an 8-year reserve life.
The assets have generated $850 million in dividends in the last 4 years alone, and that dividend production is expected to remain strong. Pro forma year-end net debt will be $365 million, a comfortably affordable level from Prime, and one that can be managed. At current prices, Prime Oil and Gas earns more than $700 million in annual EBITDA.
Africa Oil Corporation Shareholder Returns
Africa Oil Corporation will have a strong pro-forma balance sheet committed to substantial shareholder returns.
Africa Oil Corporation Investor Presentation
The company expects to maintain at least $150 million in liquidity while maintaining LTM net debt / EBITDAX at <1.0x. The company plans to re-finance Prime debt / RBL, and we expect the combined structure will make that much easier for the company. The company is committed to hefty shareholder returns with $100 million in base dividends + 50% of excess FCF.
That's a dividend yield of more than 8%, plus continued shareholder returns, through buybacks. The company has exciting organic growth opportunities, with minimal risk due to its farm-down transaction. At the same time, the company is still looking for alternative long-term growth opportunities, something worth paying close attention to, given its historical success here.
Thesis Risk
The company's largest risk is weakness in oil prices as long-term demand tops out and low-cost competition exists from numerous sources such as American shale. That could hurt its ability to generate returns from its existing assets, while slowing down its ability to develop new assets. That's worth paying close attention to.
Conclusion
Africa has long been an unpopular jurisdiction for oil companies to invest in, with instability presenting a major risk. That's visible through the company's original project, Kenya, which was never built due to an inability to raise the necessary capital for a takeaway pipeline. That's combined with long-term growth concerns as oil demand remains weak and cheap production arises.
The company is issuing 35% more equity, to BTG, to enable it to take full ownership of Prime Oil and Gas. That will move the company to a net debt position, but enable it to grow substantially and have additional cash. The company is planning to move to a more than 8% debt load plus additional share buybacks. All of that makes the company a valuable investment.
Scarbender307
1 week ago
History: THIS IS A BIG DEAL!
BTG Pactual began in 1983 in Rio de Janeiro as the brokerage firm Pactual DTVM,[12] when its initial and primary activity was proprietary trading and securities sales and trading. In 1986, the asset management and investment bank areas were created. In 1989, the bank opened its São Paulo's office and started the internationalization of operations. Eleven years after the foundation, the bank started the wealth management activities.
In 1998, the company replaced its executive officers with a team led by André Esteves, Eduardo Plass, Marcelo Serfaty and Gilberto Sayão, and acquired Banco Bamerindus.[13] In 2000, the bank opened Pactual Asset Management S.A. DTVM and an office in Cayman Islands.[14] In 2003, the expansion continued with offices in Belo Horizonte and Recife.
In 2006, the UBS bought Banco Pactual for US$2.5 billion[15][16] and created UBS Pactual, André Esteves became CEO of all UBS' Latin American operations. Two years later, Esteves left the bank to found BTG Investments with nine other founding partners of UBS and UBS Pactual, including Pérsio Arida, a former president of the Brazilian Central Bank. In 2009, BTG bought out UBS shareholders and created Banco BTG Pactual.[17] The following year the bank issued US$1.8bn in capital, representing 18.65%, to a group of international investors and partners. In 2011, they acquired 51.00% of Banco PanAmericano shares. In 2012, BTG Pactual bought brokerages in Chile and Colombia, Celfin Capital and Bolsa y Renta, and held an initial public offering (IPO) raising R$3.65 billion, making it one of the 20 biggest companies listed on the B3.[18]
In 2013, the bank, through its subsidiary BTG Pactual Timberland Investments Group LLC, acquired forest asset management contracts from Regions Timberland Group, a division of Regions Bank, the acquisition expanding its investment in forest assets. The deal established BTG Pactual as the biggest independent forest asset manager in Latin America and one of the biggest in the world, with assets of US$3bn and a portfolio of 716,000 hectares of land in North America, Latin America, Europe and Africa. In 2014, it made two acquisitions in Europe: British reinsurer Ariel Re[19] bought for an undisclosed amount, and also Swiss bank BSI,[20] for US$1.7 billion.[21]
In 2017, BTG Pactual bought shares of companies such Anheuser-Busch InBev, Fibria Celulose, Gerdau, Staples and Telefónica Brasil.[22]
Structure
BTG Pactual was formed by Banco BTG Pactual and BTG Pactual Participations.[23] The latter is the managing partner and controller of BTG Investments. Banco BTG Pactual is the main operating company of the group.
Business lines
Investment banking
BTG Pactual helps companies,[24] financial institutions and governments to obtain funding by issuing securities, and through structured and guaranteed loans. It also provides services in M&A, IPOs, FX operations, as well as trading in derivatives and commodities. The bank works in cross border transactions, involving counterparties from all continents and most of the IPOs and secondary offers made in the Brazilian market.[25]
Corporate lending
It lends funds to businesses.[26] The bank has been growing in this market since the capitalizations in 2009 and 2012.[27]
Sales and trading
Products: market making, brokerage and settlement, transactions with derivatives, interest rates, exchange, equities, energy, insurance and reinsurance.[28] These activities are divided into segments such as FICC (Fixed Income, Currencies and Commodities), Equities Sales & Trading and Energy.[29]
Asset management
It offers investment solutions in fixed income, variable income, hedge funds, infrastructure and real estate opportunities, and public and private equity funds.[30] Also in the global hedge fund management market through BTG's flagship, the GEMM Fund,[31] which manages $22 billion around the world and is among the 20 most profitable funds in the world.[32]
Wealth management
BTG Pactual offers financial advisory services to families that need to protect and expand their wealth, as well as succession and real estate planning.[33][34]
Timberland investment
BTG's timberland investment group (TIG) is responsible for agribusiness and timberland management, including tree farms and natural forests.[35] It is one of the largest forest asset managers in the world, with investments in the US, Latin America, Europe and Africa.[36]
Participations
The bank invests its capital in two segments: private equity and principal investments.[37] Private equity activities refer to the management of investments made in shares of private or publicly traded companies whose share cannot be freely traded on stock exchanges, and the capital is financed by other qualified investors and by the bank itself. The principal investments division is dedicated to the activities of owning investment in financial instruments and real estate worldwide.[38]
BTG Pactual Digital
The bank's online investment platform launched in 2014.[39][40] Its retail clients have access to investment funds, fixed income products (CDB, LCA, LCI and LF), private pension (PGBL and VGBL) and COE - Certificate of Structured Operation, aimed at high-income retail in Brazil.[41][42]
Startup
BTG Pactual created a startup support program, a venture debt area specific to offer credit to startups, and started a fund to invest in global venture capital firms.[43] The boostLAB is Banco BTG Pactual's program for connecting and leveraging startups at an advanced level.[44] The partners and executives of BTG Pactual participate in the program as mentors, as well as a number of entrepreneurs, including from Silicon Valley.[45][46][47]
In August 2020, boostLab held the sixth edition of its startup potentiation program at the advanced level, selecting eight startups: Acordo Certo, Atta, Belvo, Conta Simples, iClubs, Ludos Pró (edtech), Provi and Rede Compras.[48][49]
Awards
Best Private Bank in Latin America by PWM, 2020;[50]
Best Private Bank in Colombia by PWM, 2020;[50]
Best Private Bank in Latin America by Global Finance, 2020;[51]
Best Private Bank in Colombia by Global Finance, 2020;[52]
Best Private Bank for Digital advisory services Latin America by PWM, 2019 and 2020.[53]
Best CEO – First Place – Nominated by the Buy Side and Sell Side 2019 by Institutional Investor.[54][55]
The best of Dinheiro, category Specialized Banking Brazil, 2019.[56]
Best Private Bank in Latin America by Global Finance, 2019.[57]
Best Private Banking in Chile by Global Finance, 2019.[57]
Best Bank to Invest – Digital Category by FGV and Fractal Consult, 2018 and 2019.[58]
Pension Guide Valor Econômico/Fundação Getulio Vargas - Nominated by Featured Multimarkets Asset Manager, 2019.[59]
Best Investment Bank by Euromoney (Awards for Excellence), 2019.[60]
The World’s Best Investment Bank in the Emerging Markets by Euromoney (Awards for Excellence), 2019.[61]
Best Investment Bank (in Brazil, Chile and Colombia) by World Finance, 2019.[62]
Best Private Bak (in Brazil) by World Finance, 2019.[62]
Investment Bank of the Year Brazil, Investment Bank of the Year Latam and Wealth Management Bank of the Year by LatinFinance, 2019;[63]
ECM Leader (Latin America and Brazil) by Dealogic, 2019.[64]
Best Financial Innovation Centers in the World for BoostLab by Global Finance, 2019.[65]
Highly Commended at Best Private Bank in Brazil category by the Global Private Banking Awards 2016[66]
Best Private Bank in Colombia by the Global Private Banking Awards 2016[67]
Best Private Bank in Colombia by the Global Private Banking Awards 2017[68]
Best Equities Sales bank in Brazil at the 2017 Institutional Investor ranking[69]
Elect Best Global Macro Fund by the 2018 Investors Choice Awards[70]
Elect the Best Investment bank in Brazil, Chile and Colombia by the 2018 World Finance Banking Awards[71]
Controversies
Insider trading
This case was closed and there was no impact to the public offering. In 2012, penalties for André Esteves' insider trading "force[d] the bank to amend its prospectus, give investors the option to reconsidering bids for BTG shares, and put a cloud over one of this year's highest-profile bank deals."[72] In "a statement, BTG Pactual said Esteves believed the allegations had no merit and was determined to appeal the decision."[73] However, Esteves did not appeal, citing cost and a loss of time as his reasons.[74]
Pactual sale to UBS and resale to BTG
Arthur Rutishauser argued that the way 27% of BTG was acquired is an example of an insider case: André Esteves sold the bank in 2006 for 3 billion SFr to UBS, where Huw Jenkins was a key decision maker.[75] Esteves later repurchased Pactual back in 2009 for 2.5 billion SFr after being allowed to leave UBS to set up BTG.[75] Jenkins was ejected from UBS in 2007 and disappeared then resurfaced as a senior partner and board member at BTG Pactual in 2010.[76]
BTG Pactual purchase of BSI
In July 2014, BTG Pactual purchased Banca della Svizzera Italiana (BSI), with this being subject to the approval by the Swiss Financial Market Supervisory Authority (FINMA). The CEO of FINMA, Mark Branson, was previously the CEO of UBS Securities Japan Ltd.[77] and reported directly to Huw Jenkins, CEO of UBS Investment Bank who is now a partner of BTG Pactual.[78][79] Under Mark Branson, FINMA decided whether to approve BTG Pactual's purchase of BSI, although BTG Pactual was owned and operated by former superiors and colleagues Jenkins and Esteves, it clearly does not implicate any illegal activity whatsoever.[79]
Misrepresentation allegation
The case was closed, a final settlement has been reached. An ex-employee of Hong Kong subsidiary BTG Pactual Asia Ltd, Zeljko Ivic, filed a claim alleging Banco BTG Pactual board member Huw Jenkins made fraudulent misrepresentations to Zeljko Ivic to induce him to sign agreements with the bank.[80][81] Ivic said he had played a key role in Banco BTG Pactual's initial public offering (IPO) for which Jenkins had promised him a partnership and shares.[82][83] Ivic, who valued his claim at some US$20 million, started proceedings after being dismissed in October 2013.[84][85] In March 2017, the parties involved reached a final settlement.
External links
Official website
BTG Digital
Scarbender307
2 weeks ago
WOW!!!! BAYBEEE! We just hit a possible home run.
Please read latest news release from AOC on their website...or this.
AFRICA OIL ANNOUNCES AGREEMENT TO CONSOLIDATE THE REMAINING 50% INTEREST IN PRIME
CNW Group
Sun, Jun 23, 2024, 8:00 PM HST25 min read
In this article:
Transaction consolidates ownership in core cash generating assets and brings in a new strategically aligned cornerstone investor, enabling enhanced shareholder returns and a materially stronger growth proposition
VANCOUVER, BC, June 24, 2024 /CNW/ - (TSX: AOI) (Nasdaq-Stockholm: AOI) – Africa Oil Corp. ("Africa Oil", or the "Company") is pleased to announce it has reached an agreement with BTG Pactual Oil & Gas S.a.r.l. ("BTG Oil & Gas") to consolidate their respective shareholdings in Prime Oil & Gas Coöperatief U.A. ("Prime"). This will provide Africa Oil shareholders with significant free cash flows, and enable Africa Oil to commit to an enhanced total shareholder returns model within a robust and clearly defined financial framework, supported by world-class producing assets in Nigeria. Africa Oil shareholders will continue to benefit from funded, high value growth opportunities, including the world-class Venus oil project in the Orange Basin, offshore Namibia. View PDF version
The enlarged Africa Oil, with its greater scale and financial resources, will be better positioned to deliver further growth beyond its existing portfolio, supported by a new cornerstone shareholder with a proven track record of creating value in the global oil and gas industry. With clear strategic alignment between Africa Oil and BTG Oil & Gas, the enlarged Africa Oil will have the mandate to pursue growth opportunities in Africa and other select regions, while adhering to strict strategic, financial and operational criteria. Rebranding of the enlarged Africa Oil to reflect the broader geographic strategy of the business is planned after completion.
Amalgamation Agreement
Africa Oil has entered into a definitive agreement (the "Amalgamation Agreement") with BTG Oil & Gas and BTG Pactual Holding S.a.r.l. ("BTG Holding"), the entity which holds BTG Oil & Gas' interest in Prime, in relation to their joint 50:50 ownership of Prime, Africa Oil's investee company with deep-water assets located offshore Nigeria. Prime today accounts for 100 per cent. of Africa Oil's reserves and production1.
Under the Amalgamation Agreement, BTG Holding will be amalgamated under Canadian corporate law with a newly created subsidiary of Africa Oil, with BTG Oil & Gas receiving newly issued common shares in Africa Oil as part of the amalgamation (the "Proposed Reorganization"). On completion of the Proposed Reorganization, BTG Oil & Gas is expected to hold approximately 35 per cent. of the outstanding share capital of the enlarged Africa Oil (on a partially diluted basis, excluding certain performance share units with a long vesting horizon), based on the current number of Africa Oil shares.
Strategic Rationale for the Proposed Reorganization
In the view of the board of directors of Africa Oil (the "Board"), the Proposed Reorganization is in the best interest of the Company and will create a differentiated upstream oil and gas company. The enlarged Africa Oil will have significant scale with robust long-term free cash flows and a low leverage balance sheet, driven by large-scale and high netback assets in deepwater Nigeria. These are complemented by funded development and exploration projects in the prolific Orange Basin.
These pillars provide a strong platform for the enlarged Africa Oil to implement a steady and predictable total shareholder returns model underpinned by an enhanced base dividend policy, whilst delivering organic growth from its core assets and pursuing inorganic growth opportunities supported by a long-term and committed strategic shareholder. The enlarged Africa Oil's objective is to deliver a superior investment case relative to its peer group through a combination of financial discipline, sustainable total shareholder returns, and funded growth.
The Proposed Reorganization would provide the enlarged Africa Oil with strategic and financial benefits:
100 per cent. increase in working interest Proved plus Probable ("2P") reserves and production2 on a pro-forma basis for BTG receiving approximately 35 per cent. of the shares in the enlarged Africa Oil.
Accretion in free cash flow per share for Africa Oil shareholders in the 2025 – 2029 period is expected to be more than 100 per cent., significantly enhancing Africa Oil's capacity to support:
sustainable through-cycle returns to shareholders, underpinning an annual base dividend of US$100 million ("Base Dividend")3 that is deemed by the Board to be sustainable in a range of through-cycle oil price scenarios;
an annual commitment to distribute at least 50 per cent. of excess free cash flow after Base Dividend distribution in the form of supplemental dividends and/or share repurchases; and
ongoing investment in Africa Oil's low-cost, high-margin core producing assets in deepwater Nigeria to extend the production life of these assets, while exploiting in-field and near-field development opportunities.
Increased scale and balance sheet strength, with combined net debt4 / EBITDA5 of 0.4x on a pro-forma basis at year end 2023, along with the potential to benefit from lower borrowing costs.
The introduction of a long-term cornerstone shareholder that is strategically aligned with Africa Oil and committed to growing a sustainable upstream oil and gas business, would deliver superior value creation and shareholder capital returns. BTG Oil & Gas' support could increase the enlarged Africa Oil's access to business opportunities and potentially unlock new sources of growth capital, while complementing Africa Oil's disciplined capital allocation and financial decision making through BTG Oil & Gas' participation on the Board.
Enabling direct control of Prime's cash flows and balance sheet through the consolidation of Africa Oil and BTG Oil & Gas' respective interests in Prime versus the equity accounting method that is followed by Africa Oil today for its investment in Prime. This in turn will facilitate greater transparency and visibility of Prime's financial performance for Africa Oil's shareholders.
Significant scope to streamline the business processes and decision making to achieve cost savings.
Both the Board and the board of directors of BTG Oil & Gas have unanimously approved the Proposed Reorganization.
Completion of the Proposed Reorganization is targeted to occur during or before the third quarter of 2025 and is subject to, among other conditions, Africa Oil shareholder approval, customary consents and approvals from the Nigerian authorities, the Toronto Stock Exchange ("TSX") and Nasdaq Stockholm, completion of the previously announced farm-down of Africa Oil's Namibian interests that are held via Impact Oil & Gas Limited ("Impact"), and a reorganization of the holding structure of BTG Holding to implement the Amalgamation Agreement.
Africa Oil President and CEO, Roger Tucker commented: "Africa Oil's vision is to be a leading independent pure play exploration and production company that consistently delivers peer-leading returns. We have a well-positioned platform with three pillars of a strong balance sheet, high netback production and funded development projects to pursue significant inorganic growth and to take advantage of opportunities in the upstream oil and gas sector as the industry evolves through the energy transition. The consolidation of Prime, together with the farm-downs in Namibia and South Africa, and the stake increase in Impact, are all significant steps in our 2024 business plan. The Proposed Reorganization will enhance our operations, deliver identifiable savings, and increase our capital returns to shareholders on a sustainable basis. We look forward to welcoming our partner BTG Oil & Gas as a shareholder in Africa Oil and its nominees to our board of directors as we work to deliver further value growth."
Huw Jenkins, Vice Chairman of the board of directors at Banco BTG Pactual and Chairman of the board of Prime commented: "We have high regard for Africa Oil's management team, which has demonstrated its ability to deliver innovative and highly accretive industry transactions, and are pleased to become direct shareholders in Africa Oil. We believe that the Proposed Reorganization will create a unique listed vehicle in the exploration and production sector that is capable of industry-leading total shareholder returns. We are committed to working with Africa Oil management, and as part of Africa Oil's board of directors, to support the next phase of the enlarged Africa Oil's growth strategy, in line with our objective of investing in the best businesses and assets in the global upstream oil and gas industry."
Reorganization Structure and Exchange Ratio
The Proposed Reorganization envisages the consolidation of BTG Oil & Gas' and Africa Oil's respective 50 per cent. shareholdings in Prime on completion. The Proposed Reorganization is to be implemented by way of a three-cornered amalgamation structure under Canadian corporate law pursuant to the Amalgamation Agreement.
In connection with the Proposed Reorganization, BTG Oil & Gas will receive newly issued common shares in Africa Oil, that will, based on the current outstanding share capital of Africa Oil, result in BTG Oil & Gas owning approximately 35 per cent. of the outstanding share capital of Africa Oil (on a partially diluted basis) at completion of the Proposed Reorganization. The remaining approximately 65 per cent. of the enlarged Africa Oil (on a partially diluted basis) will continue to be held by existing Africa Oil securityholders.
The relative ownership of existing Africa Oil securityholders and BTG Oil & Gas in the enlarged Africa Oil has been set with reference to a January 1, 2024 effective date (the "Reference Date"), with a compensation mechanism agreed between Africa Oil and BTG Oil & Gas to account for any cash movements to either Africa Oil shareholders from Africa Oil or to BTG Oil & Gas from Prime in the period between the Reference Date and completion of the Proposed Reorganization and will be settled by way of a pre-completion dividend by Prime, or a pre-completion capital contribution into Prime by Africa Oil and/or BTG Oil & Gas.
The Proposed Reorganization requires the approval of at least 50 per cent. of the votes cast by the holders of Africa Oil shares present in person or represented by proxy at a special meeting of the holders of Africa Oil shares to be called to consider the Proposed Reorganization that is expected to be held during October 2024.
Each of the directors and officers of Africa Oil have agreed to vote their Africa Oil shares in favor of the Proposed Reorganization at the Africa Oil shareholder meeting pursuant to voting support agreements, subject to customary exceptions.
Board Composition
On completion of the Proposed Reorganization, the Board will be comprised of nine directors, three of whom will be nominated by BTG Oil & Gas. The enlarged Africa Oil will continue to be led by Dr. Roger Tucker as the Chief Executive Officer and a member of the Board. It is expected that Huw Jenkins will be one of BTG Oil & Gas' nominated directors and will also take on the role of non-executive Chair. Following completion, the Africa Oil Board will be comprised of:
the Chief Executive Officer of Africa Oil;
three independent non-executive directors nominated by Africa Oil;
three non-executive directors nominated by BTG Oil & Gas (including Huw Jenkins as non-executive Chair); and
two additional independent non-executive directors mutually agreed between Africa Oil and BTG Oil & Gas.
Further details on the non-executive directors and executive management team will be provided in due course.
Listing and Headquarters
Africa Oil's shares will continue to be listed on the TSX and NASDAQ Stockholm, post completion.
The existing London office of Africa Oil will serve as the headquarters of the combined business. Africa Oil expects to retain the Rotterdam office of Prime post completion.
The Enlarged Africa Oil Capital Allocation Framework
The Proposed Reorganization will enable the enlarged Africa Oil to put in place a more robust capital allocation framework (the "Enhanced Capital Framework") that the Board believes will be more sustainable across oil and gas price cycles and which will provide shareholders of the enlarged Africa Oil with greater visibility and certainty over the use of capital.
The Enhanced Capital Framework, to be implemented post completion, envisages the following capital priorities:
Maintenance of a US$150 million liquidity position.
Maintenance of a twelve-month trailing ratio of Net Debt6 / EBITDAX7 of no more than 1.0x.
Base Dividend that is deemed sustainable by the Board in a range of conservative oil price scenarios.
Distribution to shareholders of at least 50 per cent. of excess annual free cash flow after the Base Dividend has been paid in the form of supplemental dividends and/or share repurchases ("Supplemental Shareholder Returns") (with the Base Dividend and Supplemental Shareholder Returns collectively being the "Shareholder Distributions Policy").
Capex to be prioritized in the following order: (i) first, to increase short-cycle production growth, (ii) second, for development of future production and (iii) third, for exploration, limited to a small percentage of total annual capex.
BTG Oil & Gas Governance Provisions under Investor Rights Agreement
As part of the Proposed Reorganization, Africa Oil and BTG Oil & Gas have entered into an investor rights agreement (the "Investor Rights Agreement") that provides BTG Oil & Gas with certain Board appointment rights based on specific thresholds of BTG Oil & Gas' continued shareholding in the enlarged Africa Oil. Under this agreement, BTG Oil & Gas will have the right to appoint three non-executive directors to the Board, one of whom will be the non-executive Chair, if BTG Oil & Gas' shareholding is 30 per cent. or greater, reducing to two non-executive directors if BTG Oil & Gas' shareholding is 20 per cent. or greater but less than 30 per cent., and further reducing to one non-executive director if BTG Oil & Gas' shareholding is less than 20 per cent. but at least 10 per cent. BTG Oil & Gas will not have any Board appointment rights under the Investor Rights Agreement if its shareholding reduces to less than 10 per cent.
It is the Company's intention that the Board of Africa Oil will comprise at all times a majority of independent non-executive directors and that each Board committee will have a majority of independent non-executive directors. Subject to applicable law, BTG Oil & Gas will have the right to have one of its Board nominees as a member of each Board committee.
The Investor Rights Agreement (including the additional provisions below) will be automatically terminated if (i) the Amalgamation Agreement is terminated in accordance with its terms or (ii) following completion of the Proposed Reorganization, BTG Oil & Gas' shareholding in the enlarged Africa Oil falls below 10 per cent.
Additional Provisions of the Investor Rights Agreement
BTG Oil & Gas Lockup and Standstill
BTG Oil & Gas has agreed to certain lockup and standstill provisions as part of the Investor Rights Agreement. These stipulate that for a period of two years from the date of completion BTG Oil & Gas will not, without prior approval from the non-BTG Oil & Gas nominated directors, be entitled to:
sell the Africa Oil common shares received in connection with the Proposed Reorganization (and any additional Africa Oil common shares it may acquire as a result of certain participation rights provided to BTG Oil & Gas in the Investor Rights Agreement), subject to certain exceptions, or be entitled to increase its stake in the enlarged Africa Oil to more than 50 per cent.; or
enter into a voting arrangement or similar agreement with a third party regarding its Africa Oil shares if, when any holdings by such third party and its joint actors are aggregated with BTG Oil & Gas' ownership would exceed a 50 per cent. shareholding in the enlarged Africa Oil; or
make, assist, encourage or facilitate a tender offer that would result in the offeror owning 50 per cent. or more of the enlarged Africa Oil; or
initiate any proxy contest, put forth any shareholder proposal, or vote against Africa Oil Board nominees for election as directors, save that BTG Oil & Gas and its affiliates shall otherwise be free to exercise the votes attaching to their shares in the enlarged Africa Oil at their discretion.
Africa Oil to be BTG Oil & Gas' Preferred Investment Vehicle for Upstream Investments in Africa
Provided that BTG Oil & Gas' shareholding does not fall below 20 per cent. (in which case the first look right shall cease) and subject to other customary limitations, BTG Oil & Gas has agreed to give the enlarged Africa Oil a first look at potential equity investments in upstream oil and gas assets and companies BTG Oil & Gas or its affiliates considers in Africa, whether generated by BTG Oil & Gas or its affiliates internally or referred to BTG Oil & Gas or its affiliates by third parties. If the enlarged Africa Oil turns down said opportunity, BTG Oil & Gas can move forward with it by itself or through another entity.
BTG Oil & Gas Consents Relating to Shareholder Distributions, Share Issuances and Significant Merger and Acquisition Transactions
Provided that BTG Oil & Gas' shareholding does not fall below 20 per cent. for a period of more than 150 days (in which case the following consent rights shall terminate), the enlarged Africa Oil will require the consent of BTG Oil & Gas for the following significant decisions:
Changes to the Company's Shareholder Distributions Policy (as outlined above) or declaring or paying dividends or other distributions other than in accordance with the Shareholder Distributions Policy.
Issuance of new shares at more than a 10 per cent. discount to the prevailing 30 day volume weighted average share price.
Issuance of new shares representing 20 per cent. or more of the outstanding issued share capital.
A merger or an acquisition (or similar transaction) with transaction consideration (including any assumed debt) greater than 25 per cent. of the market capitalization of the enlarged Africa Oil (to be calculated with reference to the prevailing 30 trading day volume weighted average share price). For the avoidance of doubt, this shall not apply to or restrict an acquisition of issued and outstanding securities of the enlarged Africa Oil by a third party in exchange for consideration paid by such third party.
BTG Oil & Gas Information and Registration Rights
The Investor Rights Agreement contains customary information, inspection, participation and registration rights for BTG Oil & Gas.
Further Information
Further information regarding the Proposed Reorganization, the Amalgamation Agreement and the shareholders' meeting, will be included in a management information circular that will be mailed to shareholders of record in advance of the shareholder meeting. Copies of the Amalgamation Agreement, the forms of voting support agreements, the Investor Rights Agreement and proxy materials in respect of the shareholders' meeting will be available on SEDAR+ at www.sedarplus.com.
Conditions to Completion
As noted above, the Proposed Reorganization is expected to close during or before the third quarter of 2025. Completion is subject to customary closing conditions, including:
approval by the shareholders of Africa Oil;
completion of the farm-out of Africa Oil's Namibian interests (held via Impact) to TotalEnergies;
approval by the TSX, including approval for listing of the Africa Oil shares to be issued in connection with the Proposed Reorganization and the appointment of the BTG Oil & Gas-nominated directors to the Board;
receipt of certain regulatory consents and approvals in Nigeria; and
completion of a pre-agreed pre-completion reorganization of the holding structure of BTG Holding to implement the Amalgamation Agreement.
Advisors
Evercore is acting as exclusive financial advisor to Africa Oil in relation to the Proposed Reorganization. Bracewell (UK) LLP, Torys LLP, Gernandt & Danielsson Advokatbyrå, Loyens & Loeff N.V. and Banwo & Ighodalo are serving as legal counsel to Africa Oil. Stifel is Africa Oil's corporate broker.
BTG Oil & Gas is being advised by Herbert Smith Freehills LLP, Blake, Cassels & Graydon LLP, Templars and Baker & McKenzie LLP.
Management Presentation
Senior management of Africa Oil will host a presentation on the Proposed Reorganization today, June 24, 2024 at 09:00 (EDT) / 14:00 (BST) / 15:00 (CEST).
Scarbender307
1 month ago
Africa Oil Corporation: Buy The Punished Small Cap
May 28, 2024 8:14 AM ETAfrica Oil Corp. (AOIFF) Stock,
The Value Portfolio
Investing Group Leader
Summary
" Africa Oil Corporation has been punished by the market as a small cap oil company as prices have dropped.
The company has incredibly strong cash flow with the potential for additional developments in Nigeria.
Over the next few years, we expect the company to grow production, generating substantial long-term shareholder returns.
I am The Value Portfolio, an experienced analyst specializing in stock research and wealth growth. I run the investing group The Retirement Forum where I focus on ideas to prepare you for retirement.
Vibrant Sunset Sky Behind an Offshore Oil Drilling Rig off the Coast of Orange County, California
Jeremy Poland
Africa Oil Corporation (OTCMKTS: OTCPK:AOIFF) is a small-cap oil company, with a market capitalization of $800 million. The company has worked to steadily improve its balance sheet, ditching its original Kenyan asset that struggled to move towards completion, and acquiring Prime Oil and Gas along with numerous other exploratory stakes.
As we'll see throughout this article, despite recent share price weakness, the company has both strong current cash flow and numerous catalysts.
Follow Up
We last discussed the company prior to its most recent earnings, which the company just announced.
Since then, the company has announced relatively modest earnings, from its side, influenced by the fact that it did not receive any dividends from Prime Oil and Gas during the quarter. However, as we'll see throughout this article, the company has continued to focus on shareholder returns, especially through buybacks, while expanding its overall assets.
The company's earnings, combined with its strong cash flow, and exciting long-term assets, help support the thesis for a long-term investment.
Africa Oil and Gas Developments
The company was completely reoriented roughly a year ago, and since then, it has focused on new developments.
Africa Oil Corporation Investor Presentation
The company has increased its operating working interest in the Orange Basin in South Africa, and participated in a $40m equity placement by Impact. The company also recently implemented a strategic farm down agreement for Impact's blocks in Namibia. It's achieved farmouts for its most exciting assets, and it's made an offer to purchase an additional 8% of Impact.
The company is de-risking its growth profile. Its maintained base dividend and NCIB share buyback program will enable strong shareholder returns as it continues to chase growth opportunities.
Africa Oil and Gas Nigeria
Africa Oil Corporation is working to expand in Nigeria, with Preowei, a low-risk development project.
Africa Oil Corporation Investor Presentation
The company has continued to drill additional infill wells in Egina, with more than 5k barrels / day of production and additional 4D seismic. In Akpo, the company has continued to test better than expected results, with the potential to pass 7k barrels / day after re-start. In Preowei, the company is expecting a potential 2027 start-up with >65k barrels / day in peak production.
That will help to maintain the asset for the long-term, with continued production and shareholder returns.
Africa Oil Corporation Namibia
Among the company's most significant assets, is the Venus discovery in Namibia, which is being developed by TotalEnergies.
Africa Oil Corporation Investor Presentation
The asset is expected to have 1-2 billion barrels, and TotalEnergies CEO is expecting to explore. The potential upside is billions of additional barrels and the company has numerous catalysts for growth. Ongoing operations are continuing with 3D seismic, and we expect a development to come online here before the end of the decade.
Africa Oil Corporation is working to expand its stake, and TotalEnergies is looking to do the same. We are excited to see how the asset turns out and the farmout agreement will be a strong benefit.
Africa Oil Corporation Financial Picture
Africa Oil Corporation expects to utilize its financials to be able to drive substantial shareholder returns.
Africa Oil Corporation Investor Presentation
The company had barely any net income, with no dividends from Prime Oil and Gas. However, Prime Oil and Gas still had more than $80 million in CFFO for the quarter and almost $100 million in EBITDAX. Africa Oil Corporation still has an almost $200 million cash balance, and counting Prime Oil and Gas, the combined net debt is just a hair under $50 million.
The company spent $25 million in shareholder returns for the quarter, counting dividends and share buybacks. That means double-digit shareholder returns through dividends and share buybacks. The company has a dividend that it can comfortably afford. We expect future quarters to continue to have strong net cash generation and dividends from Prime Oil and Gas.
Africa Oil Corporation Investor Presentation
The above highlights Africa Oil Corporation's goals. The company plans to maintain leverage at <1.0x and its dividend is ~3% annualized. The company has a strong cash buffer as it continues to invest and it plans to re-finance Prime Oil and Gas' debt, which will substantially help its balance sheet. The company is well positioned here.
After that, the company plans to continue chasing organic growth. The company is looking for short-duration production for the next several years, and plans to have development in Namibia and South Africa, with fully funded carries, that will continue through the end of the decade. The company is planning to mostly maintain its dividend with potential special dividends.
We'd like to see the company chase share buybacks as it continues to ramp up production to generate long-term returns.
Thesis Risk
The largest risk to our thesis is that Africa Oil Corporation needs to continue finding new sources of production and development them in a world where climate change is a massive risk. That's a risky proposition, and its ability to continue driving shareholder returns remains a risk worth paying close attention to.
Conclusion
Africa Oil Corporation has an impressive portfolio of assets. The company has seen its share price punished, however, as small-cap oil companies have been punished more than larger companies. That, combined with Brent just a hair over $80 / barrel, means that Africa Oil Corporation continues to generate substantial shareholder returns despite the market punishment.
The company has numerous incredibly exciting assets worth paying close attention to. Not only are the company's existing assets generating strong cash flow, but the company has numerous assets that could
startup over the next several years. That could help generate substantial shareholder returns with dividends and buybacks, making Africa Oil Corporation a valuable investment.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks."
Scarbender307
3 months ago
Apr. 11, 2024 3:49 PM ETAfrica Oil Corp. (AOIFF) Stock, AOI:CA Stock3
The Value Portfolio profile picture
Investing Group Leader
Summary
"Africa Oil Corp. has been aggressively repurchasing shares, indicating strong shareholder returns.
The company's renewal of OML 130 and development of world-class assets like Venus contribute to its strong performance.
Africa Oil Corporation aims to maintain a strong balance sheet and provide future growth in production through strategic asset growth.
I am The Value Portfolio, an experienced analyst specializing in stock research and wealth growth. I run the investing group The Retirement Forum where I focus on ideas to prepare you for retirement.
Africa Oil Corp. (OTCPK:AOIFF) is a small-to-mid capitalization oil company with a market capitalization of around $870 million. The company has been aggressively repurchasing shares, and has repurchased almost 9 million in shares since it started the program in early December 2023. As we'll see throughout this article, the company's cash flow, combined with future assets, means strong shareholder returns for investors with a long horizon.
Africa Oil Corporation 2023 Highlights
Africa Oil Corporation had a strong 2023 that will enable continued shareholder returns.
Africa Oil Corporation Investor Presentation
The biggest deal was the company's renewal of OML 130, which added 20 years and enabled the company to refinance Prime Oil and Gas' debt. This enables the company to make Prime Oil and Gas a cash flow machine, providing reliable cash flow as it scales up other assets. The company hit the midpoint of its guidance and has continued to appraise some world-class assets.
The company is working to maintain a strong balance sheet and provide shareholder returns. It's also working to develop world-class assets such as Venus, which will provide future growth in production.
Africa Oil Corporation early-2024 Performance
The company has had a strong start to 2024, showing its continued performance, as we discussed with share buybacks above.
Africa Oil Corporation Investor Presentation
The biggest deal here is a strategic Impact farm down agreement. This is related to the Venus discovery and the offshore Namibia assets. This will cover all costs through the first production and provide a $100 million reimbursement. Africa Oil Corporation has a 3% stake in these two blocks, which could provide hundreds of thousands of barrels/day in production.
The company has continued to have strong exploration success, especially in Block 3B/4B, where another farm-out agreement could be significant. It's also seen the Akpo West Production start-up, which will add 14k bopd of production. The company has a number of exciting catalysts over the upcoming years that will support growth in attributable production.
Africa Oil Corporation Strategic Asset Growth
Let's delve deeper into Africa Oil Corporation and some of the company's most exciting assets.
Africa Oil Corporation Investor Presentation
The Orange Basin is among the company's most exciting assets as a new petroleum province emerges. The company has stakes in both 2913B/2912 in Namibia and Block 3B/4B in South Africa. The Mangetti discovery is expected to be a third of the size of Venus. Block 3B/4B is particularly exciting due to the size of Africa Oil Corporation's stake.
The asset is on trend with the Namibian oil discoveries and drilling could start a 2025. A farm-out agreement here could be completely game-changing for the company.
Africa Oil Corporation Investor Presentation
This shows the company's goals for 2024 and where it is. The company is excelling across its set of goals. The most important catalyst for the company is being able to secure a farm-out agreement for Block 3B/4B and the company's other assets here. A farm-out agreement given the company's stake there could be a game changer.
Africa Oil Corporation Shareholder Returns
The company is focused on using its existing cash flow for shareholder returns.
Africa Oil Corporation Investor Presentation
The company has given 2024 guidance that is slightly below 2023 guidance. WI production is expected to be at 18k boepd, down almost 10% from the company's 2023 guidance. More importantly, the company's capital investment is expected to be dramatically higher at $115 million, up from $62 million in 2023 as the company continues to grow.
The company has returned $100 million to shareholders since 2022, a double-digit return in two years. The company has continued to pay a $0.05 / share dividend annually, a ~2.7% dividend yield. The company has already repurchased ~11% of its 2024 share buyback limit, and we'd like to see it use its cash flow to ramp that up.
The company is guiding for $160 million in free cash flow, or FCF, which is a hefty double-digit FCF that will enable strong shareholder returns after continued investment. That makes Africa Oil Corporation a strong investment opportunity.
Thesis Risk
The largest risk to our thesis is crude oil prices. Brent is at more than $90 / barrel, and that's supporting the company's share price and returns. However, there's no guarantee that prices remain high, especially with long-term structural impacts. That could hurt Africa Oil Corporation on the multi-year timeline it needs to develop its next-generation assets.
Conclusion
Africa Oil Corporation has an impressive portfolio of assets. The company has seen its share price go up some in a strong oil price environment, but it does continue to face long-term risks from a potential decline in crude oil prices. The company has numerous exciting assets within its portfolio; however, it needs multiple years to ramp them up.
The company has achieved a massive accomplishment with a farm-out deal for Namibia 2912/2913B. The biggest thing the company could accomplish this year is a farm-out deal for Block 3B/4B, given the company's hefty positioning in those fields. That combined with future drilling could enable hefty long-term shareholder returns. Please let us know your thoughts in the comments below.
Scarbender307
3 months ago
To whom it may concern:
CNW Group
Wed, Apr 3, 2024, 8:00 PM HST2 min read
In this article:
VANCOUVER, BC, April 4, 2024 /CNW/ - (TSX: AOI) (Nasdaq-Stockholm: AOI) – Africa Oil Corp. ("Africa Oil", or the "Company") is pleased to announce that it will host a physical town hall meeting in Stockholm, Sweden, on Wednesday April 17, 2024, at 17:00 CEST (11:00 EDT). This event will be live streamed. View PDF version
Roger Tucker, President and CEO, Pascal Nicodeme, CFO, and Oliver Quinn, CCO, will present an update on the Company's activities and take part in a Q&A session with investors. The physical meeting will take place at: Aulan (Floor 6), Vasagatan 28, 111 20 Stockholm.
Those shareholders wishing to join the event are requested to register their names, and state whether they wish to attend in person or join the webcast, by sending an email no later than Monday April 15 to: events@africaoilcorp.com.
Scarbender307
3 months ago
VANCOUVER, BC, March 25, 2024 /CNW/ - (TSX: AOI) (Nasdaq-Stockholm: AOI) – Africa Oil Corp. ("Africa Oil", or the "Company") is pleased to announce that the Company repurchased a total of 1,213,100 Africa Oil common shares during the period of March 18, 2024 to March 22, 2024 under the previously announced share buyback program. View PDF version
The launch of Africa Oil's normal course issuer bid (share buyback) program, announced by the Company on December 4, 2023, is being implemented in accordance with the Market Abuse Regulation (EU) No 596/2014 (MAR) and Commission Delegated Regulation (EU) No 2016/1052 (Safe Harbour Regulation) and the applicable rules and policies of the Toronto Stock Exchange ("TSX"), Nasdaq Stockholm, and applicable Canadian and Swedish securities laws.
During the period dated March 18, 2024 to March 22, 2024, the Company repurchased 388,100 Africa Oil common shares on the TSX and/or alternative Canadian trading systems. The repurchases were carried out by Scotia Capital Inc. on behalf of the Company. During the same period, the Company repurchased 825,000 Africa Oil common shares on Nasdaq Stockholm, and these repurchases were carried out by Pareto Securities on behalf of the Company.
For more information regarding transactions under the previously announced share buyback program in Sweden, including aggregated volume, weighted average price per share and total transaction value for each trading day during the period of March 18 to March 22, 2024, see the following link to Nasdaq Stockholm's website:
https://www.nasdaqomxnordic.com/news/corporate-actions/repurchase-of-own-shares
All common shares repurchased by Africa Oil under the share buyback program will be cancelled.
Since December 6, 2023, up to and including March 22, 2024, a total of 6,943,972 Africa Oil common shares have been repurchased under the share repurchase program through the facilities of the TSX, Nasdaq Stockholm and/or alternative Canadian trading systems. A maximum of 38,654,702 Africa Oil common shares may be repurchased under the share buyback program through the facilities of the TSX, Nasdaq Stockholm and/or alternative Canadian trading systems over the period of twelve months commencing December 6, 2023 and ending December 5, 2024, or until such earlier date as the share repurchase program is completed or terminated by the Company.
douginil
4 months ago
AFRICA OIL ANNOUNCES STRATEGIC FARM DOWN AGREEMENT FOR ITS ORANGE BASIN BLOCK 3B/4B
VANCOUVER, BC, March 6, 2024 /CNW/ - (TSX: AOI) (Nasdaq-Stockholm: AOI) – Africa Oil Corp. ("Africa Oil", or the "Company") is pleased to announce its wholly-owned subsidiary, Africa Oil SA Corp. ("AOSAC") has signed a strategic farm down agreement ("Agreement") with TotalEnergies EP South Africa B.V. ("TotalEnergies") and QatarEnergy International E&P LLC ("QatarEnergy") for the Orange Basin Block 3B/4B, offshore South Africa. Through AOSAC, the Company currently has an operated 26.25% interest in Block 3B/4B and has entered the Agreement jointly with its partners Eco (Atlantic) Oil & Gas Limited ("Eco") and Ricocure (Proprietary) Ltd ("Ricocure"), through their respective subsidiaries. View PDF version
On completion of the transaction, Africa Oil will retain a 17.00% interest and the operatorship of Block 3B/4B will transfer to TotalEnergies.
Transaction Highlights:
Maximum transaction value of up to $46.8 million to Africa Oil.
Africa Oil will receive, subject to achieving certain milestones defined in the Agreement, staged payments for a total cash amount of $10.0 million, of which $3.3 million is payable at Completion, as defined below, and the remaining balance in two successive payments conditional upon achievement of key operational and regulatory milestones.
Africa Oil will also receive a full carry of its 17.00% retained share of all JV costs, up to a cap, that is repayable to TotalEnergies and QatarEnergy from production, and which is expected to be adequate to fund the Company's share of drilling for up to two wells on the licence.
Completion of the Agreement ("Completion") is subject to the satisfaction of customary conditions precedent, including approvals from the government of South Africa.
Africa Oil Chief Executive Officer, Dr Roger Tucker, commented: "Attracting TotalEnergies and QatarEnergy as our new partners in Block 3B/4B is an endorsement of the exploration potential of the block. These opportunities are on trend with the discoveries in Namibia's Orange Basin, including Venus in Block 2913B. Both companies have deep geological knowledge of the basin with successful nearby discoveries. TotalEnergies, as the new operator, also brings extensive deepwater drilling and development expertise.
Africa Oil has an unrivalled position amongst its Independent E&P peer group in this world-class basin. This includes our indirect interest in the Venus discovery and the on-going appraisal and exploration campaign on Block 2913B."
Go to website to read more.
News
Market Data
Register for real-time alerts, custom portfolio, and market movers
Opus X
1 week ago
