Wednesday, April 15, 2009
Monday, April 6, 2009
Friday, March 27, 2009
Thursday, March 26, 2009
Thursday, March 19, 2009
GOOD POST - ADVFN - ZENGAS's take on valuation
ZENGAS - 19 Mar'09 - 00:44 - 24525 of 24671
With BLVN and Venture both in the news -
I've had a look over Venture Production.
Currently £7.34/share x 149.8m shares = m/cap of £1.1 billion.They also have £465m in loan notes/bonds on top of that.
That puts the total value at approx £1.565 billion pounds.They have £200m in cash.
Production was 45,000 boepd (predominantly gas).
Net 2P reserves at Dec 31st 2008 = 214 mmboe.
Revenues for 2008 were £495m (this was also helped by high oil prices at the time which have since dropped by 50% minimum).=========================
Over to you Leeson - Whats Afren truly worth on 27,900 boepd for the moment ?.This is generating circa $1m/day or equal to about 50% of Ventures 2008 revenue (and we are at a lower oil/gas price than Venture had for 2008). In fact Afrens revenues are about equal to Venture at the moment due to Afren having a bigger oil production segment anyway.
Using 80 mmboe P2 - not far off 50% of Ventures reserve figure.Afren have a bigger oil reserve to Ventures being mainly gas.
Afren debt circa £275m incl loan notes (correct me anywhere you think i may be out) which is again almost half of Ventures debt). 447m shares X 26p/share currently = £116m.
That puts the value of Afren at just £391m and theyt still are supposed to have a substantial lump of cash (Leeson - cash perhaps £30m+ ?)
On those parameters you have Venture at £1.565b (with £200m cash)Half Venture (to mirror Afren assets/production) leaves £780m less £200m cash = £580m equivalent value that i would expect Afren to be decently valued at.
Afren = £391m less £30m cash = £361m.
Afren should make up at least another 25p/share to give a valuation at £470m (+cash).After all, this is a company with the same revenue stream as Venture when you study it. Venture list their average sales price for 2008 as £33.58/boe (around $60/boe and this will have dropped).
My opinion is Afren should be trending to 70p to have a valuation on a par to just 50% of Venture.
At the least - 50p share should be a very short term fair value and still be way undervalued to what Venture is presently worth at half Ventures current valuation - so in my opinion there is still a lot of mileage in Afrens share price in the very short term as evidenced by the strong buying/days high close. It's simply too cheap and oversold. That's still too low imo because any buyer would see the income stream and debt reduction. It also should be seen that an outright bid for Venture may be 30% higher than todays valuation.
Afren are also sitting on sizeable contingent reserves but more importantly have already a very recently announced partnership with Sojitz the $27b investment conglomerate with annual trading transactions of $55b. This has been underestimated while the focus has been on other things - ie the state of the markets etc and not the real value of the company and what they are about.
The purpose of the Sojitz alliance will see Sojitz invest $500m in securing new assets of material size !!! IMO Conglomerates of this size don't make assets of $500m available to companies like Afren without knowing their true worth.
In the short term Afren should be announcing news on Ebok which if positive would substantially change the above valuation again.
Tuesday, March 17, 2009
Good Post - ADVFN - Leeson's take on NRI production breakdown
Leeson's take on NRI Production breakdown, in my opinion a valued poster who'd been following Afren for a couple of years. Taken from his thread on ADVFN BB.
Leeson31 - 17 Mar'09 - 19:06 - 23916 of 23932
Production:
Okoro/Setu 22,000bopd (afr nri 90% = 19,800bopd until capex recouped circa $230m - then nri reverts to 50% = 11,000bopd)
Cote D'Ivoire 5,200boepd + additional production since gaining the field 700boepd = 5,900boepd (afr entitlement = 3,000boepd + 48% of the 700boepd = 3,336boepd) (circa 1200bopd Oil + 2136boepd=12.8mmcfpd Gas)**************
Gross production = 27,900boepd (O/S + C'D)net Afr nri currently = 23,136boepd (O/S 19,800bopd + C'D 3,336boepd)
Okoro setu nri 19800bopd of which 17% is hedged at $55 (3366bopd = $185,130/day) 83% at market price circa $40/b = (15,687bopd) $627,480/day
Cote d'ivoire all oil hedged at $85 circa 1200bopd nri = $102,000/daycote divoire gas circa 12.8mmcfpd * $4/mcf = $51,200/day
Totals : $185.1k + $627.5k + 102k + 51.2k = $965.8k/day to pay off okoro setu capex costs. no prob.
Reading the email from galib previously on this thread they will pay down usd105m to reduce debt to $325m including the loan notes....
Check the premium thread for correspondence from the company re debt, and ebok etc..and other summaries..hope of use.
Sunday, March 15, 2009
Looks as Afren are keen to raise the profile - Bank of America & merrill Lynch
prmoldoaks - 14 Mar'09 - 15:26 - 23037 of 23098
Looks as Afren are keen to raise the profile :Bank of America & merrill Lynch
Starts next week 16th March 2009, Afren gets seen 17th & 18th March 2009 and Investors will be taking a look at one Oiler in the region thats under valued, may get some buying soon guy's:It's on the RADAR
http://www.mlevents.ml.com/events/ViewsRegistration/pdfFile.pdf?attachmentId=64431
Looks as Afren are keen to raise the profile :Bank of America & merrill Lynch
Starts next week 16th March 2009, Afren gets seen 17th & 18th March 2009 and Investors will be taking a look at one Oiler in the region thats under valued, may get some buying soon guy's:It's on the RADAR
http://www.mlevents.ml.com/events/ViewsRegistration/pdfFile.pdf?attachmentId=64431
Good Post - Davius - ADVFN
Davius - 14 Mar'09 - 13:49 - 23015 of 23097
There's no doubting that anyone watching on the sidelines has made the right decision, thus far. The slide in the share price has been frustrating and dramatic. Forced sellers, high liquidity, shorting, whatever. Steady selling, a weak oil price and terrible market, all have brought us to a market cap below £70m.
But Afren are, frankly, raking it in. Sales are running at around a million dollars a day, much of the oil price hedged and well into profit.
So why the concern? In a nutshell, the only reason that I can see is debt. Lots and lots of debt. In the current world climate, debt is not what investors want to read about. Debt overshaddows everything, cash flow, profits, assets. It's a dirty word.
So on first glance, a debt level of $430 against a market cap well under a quarter of that would send many investors scurrying away. But as previously mentioned, sales are steady, profitable and hedged. And Afren have been quite clear about cash generation and indicate that at current production levels they expect to reduce debt by $105m to $325 during 2009. $105m? That’s £75m at current exchange rates, more than the market cap of the company! That the debt is ring fenced against assets, and current production not only servicing the debt but also providing very healthy profits, debt should no longer be viewed as a reason to avoid the shares.
If the business ticks along with no expansion, no further wells, no production increases and little appreciation in the price of oil, it will be debt free in four years and on a prospective P/E of under 1. That won’t happen of course, the oil price will move, investment will continue (Ebok may require another hefty rise in debt) and production will probably rise.
Personally, I’m disappointed at having bought in already, as the current share price is below my purchase level and I could now buy more shares for the same initial investment. But on any fundamental view I’m very happy with my shareholding, which seems to be offering me a solidly profitable company at an unrealistically low price.
And that's not even touching on the potential from Ebok.
Thursday, March 12, 2009
Afroil - Write-up - Afren sets out step-change
Afren sets out step-change
The AIM-listed company made its start in the marginal fields of Nigeria but is nowlooking at larger projects, as it aims to become a mid-sized playerBy Ed Reed
Hopes are high on Ebok’s prospects, with reserve figures expected in March
Financing could pose problems but Afren has done it before
The drilling on Keta was disappointing but gives an indication of Afren’s likely next moves
Afren has built up a substantial business in a short period of time, focusing on a broad portfolio of interests around West Africa. The Alternative Investment Market (AIM) listed company has, though, suffered alongside many others as a result of the current downturn. The company has strong Nigerian links and it is here that it has focused. Rilwanu Lukman established the company, but has subsequently left in order to pursue his role as Nigerian minister for petroleum.
Ebok
The Okoru Setu project, in shallow water offshore Nigeria, provides the majority of Afren’s production but the company is continuing its development work in the country, with its Ebok field. Afren’s CEO, Osman Shahenshah, told Afroil that the company’s Ebok work would play an important role. Results from drilling on the field are “still being evaluated but it is significant – it could increase the size of the company by a factor of two, so it’s very interesting,” Shahenshah said. The company announced the completion of drilling on the field in early February but revealed little in the way of results, leading to some concern. “We tested two zones and it went very
well,” Shahenshah said. “At a minimum, we met our expectations [of 25-35 million barrels] but it could be substantially larger and we should know [by mid-March].” The development plan for the Ebok field, in which Afren has a 40% stake, would involve “somewhere between 14 and 17 wells over the next couple of years,” Shahenshah said. In order to develop the Ebok field, Afren intends to secure a new banking facility – in addition to its outstanding debts. Shahenshah said the company was in negotiations on a loan for Ebok, “which will be much larger than anything we’ve done.” Richmond Energy Partners’ partner, Keith Myers, told Afroil: “Ebok is clearlythe next big project, though Afren has released few details, and debt financing a development of this size in Nigeria will be a challenge.” Despite the current banking woes, the Afren CEO was upbeat, saying that banks that lend to African oil and gas projects “tend to be somewhat insulated from the global financial crisis.” While talks on the financing and the appraisal programme are still underway on Ebok, the expected size of a loan could be around US$200-300 million, he said. Afren has debt of around US$400 million already, but the company’s CEO appeared confident with these loans for properties in Cote d’Ivoire and Nigeria amortising. “We’ve already started paying them down. [This will continue] over the next two years.”Further drilling on Okoru Setu is unlikely, he said, as it is “producing above expectations.” Afren financed the project and claims the majority of costs – which will go primarily to the banks. When costs have been recovered, the production split will change, leaving the company with 50%. This is dependent on oil prices so the timing is unclear, but is expected to occur in late 2010, at current levels.
Operations
The company intends to drill “one or two wells” in Cote d’Ivoire over the next year or two, to develop the assets it acquired from Devon Energy. Production from this asset – oil, gas and natural gas liquids (NGLs) is around 5,500 barrels of oil equivalent per day. Operational costs are unclear on the asset, although Shahenshah pegged revenue as likely to reach US$30-40 million this year. A well is to be drilled on the La Noumbi block, in the Republic of Congo (Brazzaville), “around the middle of the year” at an expected gross cost of around US$10 million. Afren only has a 14% stake in this area, which is operated by Maurel et Prom. A well is also to be drilled in Gabon, “towards the end of the year.” Afren has stakes in two blocks here, both operated by other companies. Cost-cutting clearly plays an important role in every company’s plans in these tough times. Consequently, Afren is working to reduce costs by about 25% in Nigeria, which is driven by both internal measures – using less equipment, for instance – as well as capitalising on falling service costs. Shahenshah also highlighted the importance of hedging production, saying the company had two such instruments in place, one at US$55 per barrel and the other at US$89 per barrel.
New model
One of the most high-profile plays of the last year has been the discovery of the Jubilee field, offshore Ghana. Afren has also had a shot at tapping Ghanaian acreage but encountered a disappointing result. Results from drilling on its Keta block were announced in late December 2008. The company said the well had encountered high pressure and was forced to stop short of the reservoir. Shahenshah acknowledged this was a blow but said that the prospectivity was still there. The well cost around US$50 million, down from the US$65 million originally budgeted because it stopped short, but still an expensive effort. Mitsui farmed in to the Keta block, taking a 20% stake, in exchange for half the costs associated with the Cuda well. The Afren CEO said the company would drill another commitment well in this area, with an obligation to execute this before the end of 2010. Work is likely to take place next year, rather than in 2009. The cost is likely to be around US$50 million. The Keta model, though, is still appealing to Afren. “We would like more things like Keta – large working interests in high-impact areas” indicating the company’s interest in future projects. This new angle is in contrast to the company’s roots – in Nigeria’s marginal fields. Shahenshah described the marginal fields as a “great starter kit” but said that Afren’s size now made such deals less attractive. “A marginal field that offers the possibility of 3,000-4,000 bpd is not that appealing when there are other opportunities like Ebok … we are going for more mature opportunities rather than marginal fields.” Such opportunities could well occur in Nigeria, but not necessarily. Shahenshah ran through a number of possibilities for expansion beyond West Africa, noting that East Africa was of interest or, in North Africa, Tunisia. He ran through the prospects of Algeria, Libya and Egypt, noting that each of these presented their own difficulties.
Strategic alliance
One of the most interesting facets of Afren is its ability to sign deals with large companies. In October, Afren signed a deal with Sojitz to co-operate on joint acquisitions in Africa. “Sojitz has very particular requirements, so we’ve shown them a few things that they haven’t liked but now we’re actively working on something – two deals actually. I’m pretty confident that we will announce a [West Africa oil and gas] deal with them by the middle of the year,” Shahenshah said. One way in which such a deal might play out could involve Gasol, a minnow with liquefied natural gas (LNG) aims and with which Afren has links. (See: Afroil Issue 276) Afren began its story with an interest in the Nigeria-Sao Tome & Principe Joint Development Zone’s Block 1. Progress here is likely to be slow and Afren is unlikely to follow this work through. “Drilling in the JDZ has gone slowly because it’s a high-cost operation. I do think Addax and the other partners in the other blocks will be drilling this year, which will then give some definition as to what happens with us in the JDZ. Our plan has always been: get us to the point where it’s commercial and then look to swap it with something else,” Shahenshah said. Afren has come this far by capitalizing on its Nigerian roots – building its exploration and production portfolio up through good political ties and local partners. As the company looks to expand beyond that country, though, progress will become harder and the deals will need to be bigger.As has been seen with the Cuda well, disappointment at these larger projects does not come cheap. In the near term, much is resting on the Ebok development, while in the longer term Ghana’s Keta area is still of interest and provides an interesting analogue of how
Afren sees its future.
Afren’s vital statistics
Total production: 27-28,000 bpd
Okoru Setu: 22,000 bpd
Cote d’Ivoire (gas and oil): 5,500 boepd
Nigeria: seven projects, including Okoru-Setu (Afren 50%) and Ebok (Afren 40%)
Ghana: Keta block (Afren 68%, Mitsui 20%, GNPC 10%, Gulf Atlantic Energy 2%)
Cote d’Ivoire: Block CI-11 (Afren 47.959%), Block CI-01 (Afren 80%), Lion gas plant (Afren 100%)
Congo (Brazzaville): La Noumbi (Afren 14%)
Gabon: Ibekelia (Afren 20%) and Iris Marin (16.67%)
Nigeria-Sao Tome & Principe JDZ: Block 1 (Afren 4.41% via Dangote Equity Energy Resources (DEER))
Gasol: Afren has a 21.3% stake
Financials (for the first half of 2008): Afren posted a post-tax loss of US$26.79 million. Administrative
expenses reached US$
The AIM-listed company made its start in the marginal fields of Nigeria but is nowlooking at larger projects, as it aims to become a mid-sized playerBy Ed Reed
Hopes are high on Ebok’s prospects, with reserve figures expected in March
Financing could pose problems but Afren has done it before
The drilling on Keta was disappointing but gives an indication of Afren’s likely next moves
Afren has built up a substantial business in a short period of time, focusing on a broad portfolio of interests around West Africa. The Alternative Investment Market (AIM) listed company has, though, suffered alongside many others as a result of the current downturn. The company has strong Nigerian links and it is here that it has focused. Rilwanu Lukman established the company, but has subsequently left in order to pursue his role as Nigerian minister for petroleum.
Ebok
The Okoru Setu project, in shallow water offshore Nigeria, provides the majority of Afren’s production but the company is continuing its development work in the country, with its Ebok field. Afren’s CEO, Osman Shahenshah, told Afroil that the company’s Ebok work would play an important role. Results from drilling on the field are “still being evaluated but it is significant – it could increase the size of the company by a factor of two, so it’s very interesting,” Shahenshah said. The company announced the completion of drilling on the field in early February but revealed little in the way of results, leading to some concern. “We tested two zones and it went very
well,” Shahenshah said. “At a minimum, we met our expectations [of 25-35 million barrels] but it could be substantially larger and we should know [by mid-March].” The development plan for the Ebok field, in which Afren has a 40% stake, would involve “somewhere between 14 and 17 wells over the next couple of years,” Shahenshah said. In order to develop the Ebok field, Afren intends to secure a new banking facility – in addition to its outstanding debts. Shahenshah said the company was in negotiations on a loan for Ebok, “which will be much larger than anything we’ve done.” Richmond Energy Partners’ partner, Keith Myers, told Afroil: “Ebok is clearlythe next big project, though Afren has released few details, and debt financing a development of this size in Nigeria will be a challenge.” Despite the current banking woes, the Afren CEO was upbeat, saying that banks that lend to African oil and gas projects “tend to be somewhat insulated from the global financial crisis.” While talks on the financing and the appraisal programme are still underway on Ebok, the expected size of a loan could be around US$200-300 million, he said. Afren has debt of around US$400 million already, but the company’s CEO appeared confident with these loans for properties in Cote d’Ivoire and Nigeria amortising. “We’ve already started paying them down. [This will continue] over the next two years.”Further drilling on Okoru Setu is unlikely, he said, as it is “producing above expectations.” Afren financed the project and claims the majority of costs – which will go primarily to the banks. When costs have been recovered, the production split will change, leaving the company with 50%. This is dependent on oil prices so the timing is unclear, but is expected to occur in late 2010, at current levels.
Operations
The company intends to drill “one or two wells” in Cote d’Ivoire over the next year or two, to develop the assets it acquired from Devon Energy. Production from this asset – oil, gas and natural gas liquids (NGLs) is around 5,500 barrels of oil equivalent per day. Operational costs are unclear on the asset, although Shahenshah pegged revenue as likely to reach US$30-40 million this year. A well is to be drilled on the La Noumbi block, in the Republic of Congo (Brazzaville), “around the middle of the year” at an expected gross cost of around US$10 million. Afren only has a 14% stake in this area, which is operated by Maurel et Prom. A well is also to be drilled in Gabon, “towards the end of the year.” Afren has stakes in two blocks here, both operated by other companies. Cost-cutting clearly plays an important role in every company’s plans in these tough times. Consequently, Afren is working to reduce costs by about 25% in Nigeria, which is driven by both internal measures – using less equipment, for instance – as well as capitalising on falling service costs. Shahenshah also highlighted the importance of hedging production, saying the company had two such instruments in place, one at US$55 per barrel and the other at US$89 per barrel.
New model
One of the most high-profile plays of the last year has been the discovery of the Jubilee field, offshore Ghana. Afren has also had a shot at tapping Ghanaian acreage but encountered a disappointing result. Results from drilling on its Keta block were announced in late December 2008. The company said the well had encountered high pressure and was forced to stop short of the reservoir. Shahenshah acknowledged this was a blow but said that the prospectivity was still there. The well cost around US$50 million, down from the US$65 million originally budgeted because it stopped short, but still an expensive effort. Mitsui farmed in to the Keta block, taking a 20% stake, in exchange for half the costs associated with the Cuda well. The Afren CEO said the company would drill another commitment well in this area, with an obligation to execute this before the end of 2010. Work is likely to take place next year, rather than in 2009. The cost is likely to be around US$50 million. The Keta model, though, is still appealing to Afren. “We would like more things like Keta – large working interests in high-impact areas” indicating the company’s interest in future projects. This new angle is in contrast to the company’s roots – in Nigeria’s marginal fields. Shahenshah described the marginal fields as a “great starter kit” but said that Afren’s size now made such deals less attractive. “A marginal field that offers the possibility of 3,000-4,000 bpd is not that appealing when there are other opportunities like Ebok … we are going for more mature opportunities rather than marginal fields.” Such opportunities could well occur in Nigeria, but not necessarily. Shahenshah ran through a number of possibilities for expansion beyond West Africa, noting that East Africa was of interest or, in North Africa, Tunisia. He ran through the prospects of Algeria, Libya and Egypt, noting that each of these presented their own difficulties.
Strategic alliance
One of the most interesting facets of Afren is its ability to sign deals with large companies. In October, Afren signed a deal with Sojitz to co-operate on joint acquisitions in Africa. “Sojitz has very particular requirements, so we’ve shown them a few things that they haven’t liked but now we’re actively working on something – two deals actually. I’m pretty confident that we will announce a [West Africa oil and gas] deal with them by the middle of the year,” Shahenshah said. One way in which such a deal might play out could involve Gasol, a minnow with liquefied natural gas (LNG) aims and with which Afren has links. (See: Afroil Issue 276) Afren began its story with an interest in the Nigeria-Sao Tome & Principe Joint Development Zone’s Block 1. Progress here is likely to be slow and Afren is unlikely to follow this work through. “Drilling in the JDZ has gone slowly because it’s a high-cost operation. I do think Addax and the other partners in the other blocks will be drilling this year, which will then give some definition as to what happens with us in the JDZ. Our plan has always been: get us to the point where it’s commercial and then look to swap it with something else,” Shahenshah said. Afren has come this far by capitalizing on its Nigerian roots – building its exploration and production portfolio up through good political ties and local partners. As the company looks to expand beyond that country, though, progress will become harder and the deals will need to be bigger.As has been seen with the Cuda well, disappointment at these larger projects does not come cheap. In the near term, much is resting on the Ebok development, while in the longer term Ghana’s Keta area is still of interest and provides an interesting analogue of how
Afren sees its future.
Afren’s vital statistics
Total production: 27-28,000 bpd
Okoru Setu: 22,000 bpd
Cote d’Ivoire (gas and oil): 5,500 boepd
Nigeria: seven projects, including Okoru-Setu (Afren 50%) and Ebok (Afren 40%)
Ghana: Keta block (Afren 68%, Mitsui 20%, GNPC 10%, Gulf Atlantic Energy 2%)
Cote d’Ivoire: Block CI-11 (Afren 47.959%), Block CI-01 (Afren 80%), Lion gas plant (Afren 100%)
Congo (Brazzaville): La Noumbi (Afren 14%)
Gabon: Ibekelia (Afren 20%) and Iris Marin (16.67%)
Nigeria-Sao Tome & Principe JDZ: Block 1 (Afren 4.41% via Dangote Equity Energy Resources (DEER))
Gasol: Afren has a 21.3% stake
Financials (for the first half of 2008): Afren posted a post-tax loss of US$26.79 million. Administrative
expenses reached US$
Investor Realations - Update
Dear Mr xxx
Thank you for your enquiry submitted through the Afren website.
In order to best respond to your questions I feel that it may bebeneficial to firstly update you on Afren's operations and activitiesand then provide thoughts on the exogenous factors that are impactingnot only Afren but the sector as a whole.
Okoro
We successfully completed development work at Okoro in Q4 2008 and arenow producing profitably at a stable rate of approximately 22,000 bopdfrom all seven wells. This marks a significant out-performance versusthe 15,000 bopd volume we previously guided towards. The project wassuccessfully delivered within two years from announcing the initialagreement with our local partner, an exceptionally short lead time byindustry standards and an achievement of which we are proud.
Cote d'Ivoire
We successfully completed the acquisition of Devon Energy's assets inCote d'Ivoire in September 2008. Production is stable at approximately38 mmcfd of gas and 1,600 bopd gross from upstream operations withapproximately a further 1,200 boepd of natural gas liquids production atthe 100% Afren owned Lion Gas Plant. Since Afren assumed operatorshipof the assets gross production has increased by some 700 boepd. 2009will see the implementation of a low cost wireline workover schedulewhilst work is ongoing in planning a heavy workover/infill campaign inlate 2009.
Ebok
We commenced appraisal drilling at Ebok on 24th November 2008 using theTrident IV jack-up rig. We completed appraisal drilling operations inline with our stated timetable on 1 February 2009. We are pleased toconfirm that we successfully achieved all of our pre-drill objectiveswhich included establishing the areal distribution of the reservoir,reservoir properties and acquiring a full suite of technical data.Interpretation and analysis of the appraisal results is ongoing and weare awaiting the independent analysis and certification of this, afterwhich a further announcement will be made on this very exciting projectand the timing of the development. You will note from the Okorodevelopment that the Company has always maintained a conservativeapproach to releasing robust information to our shareholders.
Exploration activities
We will be drilling one firm well at the La Noumbi permit (Afren 14%) inCongo Brazaville in Q2. This is a low cost exploration well and isfully funded from existing resources.
General Corporate
We are looking at several opportunities in the context of the strategicalliance with Sojitz. Whilst we cannot provide details on specificopportunities, or offer precise timings, the acquisition alliance is apriority for both partners and we are increasingly seeing attractivelypriced opportunities.
External conditions and their impact on Afren and the sector
The fact remains that on fundamentals Afren has never been stronger ormore robust than it is today. We are currently producing approximately27,000 net working interest boepd profitably and have a strong, visibleproduction growth curve which from our existing asset base alone isexpected to provide organic growth to approximately 40,000 net workinginterest boe/d in 2011. Having reported a cash balance of $269 mm andnet debt of $13 mm mid year we will report a significant cash balance atend 2008 which combined with strong cash generation from our producingasset base ensures that we are fully funded through our budgeted workprogramme.
What is apparent is that the market is currently not valuing the sectoron fundamentals, but instead on external macro factors largely driven bythe onset of the global economic crisis.
First and foremost the oil price collapse has dramatically influencedperformance of the E&P sector (Afren included). Oil has come down byover 70% from record highs of approximately $147/bbl in the middle oflast year. The volatility witnessed in oil price, and the alarming rateat which prices dropped has undoubtedly influenced investor's behaviourand appetite for exposure to the E&P sector.
Afren has in place certain oil price hedges which provide a degree ofprotection against oil price volatility. In Cote d'Ivoire we havehedged all oil production out to the end of 2012 at an average floorprice of approximately $83/bbl. Furthermore we have hedgedapproximately 17% of Okoro production to the end of 2010 at an averagefloor price of approximately $55/bbl.
Like countless other companies we have also suffered from redemptions.Afren is one of the most traded and liquid stocks on AIM, which resultedin high levels of selling simply because our shares could be sold(particularly as funds were facing redemptions and required to close outpositions).
Whilst it is almost impossible to tie the Afren share price performanceback to one specific factor, it is clear that it is due to a combinationof external circumstances that are unfortunately beyond an oil companiescontrol. We remain totally focused and committed to continuing todeliver superior operational performance against our strategy and tomaintain our strict capital discipline whilst selectively pursuing highquality growth opportunities.
We appreciate your enquiry and highly value our shareholder base. Wetrust that this goes some way to answering your question. Should youhave any further questions please do not hesitate to get back in touch.
With best regards,
Afren Investor Relations
Thank you for your enquiry submitted through the Afren website.
In order to best respond to your questions I feel that it may bebeneficial to firstly update you on Afren's operations and activitiesand then provide thoughts on the exogenous factors that are impactingnot only Afren but the sector as a whole.
Okoro
We successfully completed development work at Okoro in Q4 2008 and arenow producing profitably at a stable rate of approximately 22,000 bopdfrom all seven wells. This marks a significant out-performance versusthe 15,000 bopd volume we previously guided towards. The project wassuccessfully delivered within two years from announcing the initialagreement with our local partner, an exceptionally short lead time byindustry standards and an achievement of which we are proud.
Cote d'Ivoire
We successfully completed the acquisition of Devon Energy's assets inCote d'Ivoire in September 2008. Production is stable at approximately38 mmcfd of gas and 1,600 bopd gross from upstream operations withapproximately a further 1,200 boepd of natural gas liquids production atthe 100% Afren owned Lion Gas Plant. Since Afren assumed operatorshipof the assets gross production has increased by some 700 boepd. 2009will see the implementation of a low cost wireline workover schedulewhilst work is ongoing in planning a heavy workover/infill campaign inlate 2009.
Ebok
We commenced appraisal drilling at Ebok on 24th November 2008 using theTrident IV jack-up rig. We completed appraisal drilling operations inline with our stated timetable on 1 February 2009. We are pleased toconfirm that we successfully achieved all of our pre-drill objectiveswhich included establishing the areal distribution of the reservoir,reservoir properties and acquiring a full suite of technical data.Interpretation and analysis of the appraisal results is ongoing and weare awaiting the independent analysis and certification of this, afterwhich a further announcement will be made on this very exciting projectand the timing of the development. You will note from the Okorodevelopment that the Company has always maintained a conservativeapproach to releasing robust information to our shareholders.
Exploration activities
We will be drilling one firm well at the La Noumbi permit (Afren 14%) inCongo Brazaville in Q2. This is a low cost exploration well and isfully funded from existing resources.
General Corporate
We are looking at several opportunities in the context of the strategicalliance with Sojitz. Whilst we cannot provide details on specificopportunities, or offer precise timings, the acquisition alliance is apriority for both partners and we are increasingly seeing attractivelypriced opportunities.
External conditions and their impact on Afren and the sector
The fact remains that on fundamentals Afren has never been stronger ormore robust than it is today. We are currently producing approximately27,000 net working interest boepd profitably and have a strong, visibleproduction growth curve which from our existing asset base alone isexpected to provide organic growth to approximately 40,000 net workinginterest boe/d in 2011. Having reported a cash balance of $269 mm andnet debt of $13 mm mid year we will report a significant cash balance atend 2008 which combined with strong cash generation from our producingasset base ensures that we are fully funded through our budgeted workprogramme.
What is apparent is that the market is currently not valuing the sectoron fundamentals, but instead on external macro factors largely driven bythe onset of the global economic crisis.
First and foremost the oil price collapse has dramatically influencedperformance of the E&P sector (Afren included). Oil has come down byover 70% from record highs of approximately $147/bbl in the middle oflast year. The volatility witnessed in oil price, and the alarming rateat which prices dropped has undoubtedly influenced investor's behaviourand appetite for exposure to the E&P sector.
Afren has in place certain oil price hedges which provide a degree ofprotection against oil price volatility. In Cote d'Ivoire we havehedged all oil production out to the end of 2012 at an average floorprice of approximately $83/bbl. Furthermore we have hedgedapproximately 17% of Okoro production to the end of 2010 at an averagefloor price of approximately $55/bbl.
Like countless other companies we have also suffered from redemptions.Afren is one of the most traded and liquid stocks on AIM, which resultedin high levels of selling simply because our shares could be sold(particularly as funds were facing redemptions and required to close outpositions).
Whilst it is almost impossible to tie the Afren share price performanceback to one specific factor, it is clear that it is due to a combinationof external circumstances that are unfortunately beyond an oil companiescontrol. We remain totally focused and committed to continuing todeliver superior operational performance against our strategy and tomaintain our strict capital discipline whilst selectively pursuing highquality growth opportunities.
We appreciate your enquiry and highly value our shareholder base. Wetrust that this goes some way to answering your question. Should youhave any further questions please do not hesitate to get back in touch.
With best regards,
Afren Investor Relations
Friday, February 13, 2009
Info - Nigeria Marginal Field Review, Bid Round, for 2009 - 13th Feb 2009
http://www.xomba.com/nigeria_marginal_field_review_bid_round_2009
We will ask the awardees to provide field development status update for all the 24 marginal fields awarded to 30 local companies in 2003”, say sources familiar with the situation. Those who have made inadequate efforts to develop their fields would have them revoked. Those fields will be put-with other fields- in a new bid round coming up later in 2009.
We will ask the awardees to provide field development status update for all the 24 marginal fields awarded to 30 local companies in 2003”, say sources familiar with the situation. Those who have made inadequate efforts to develop their fields would have them revoked. Those fields will be put-with other fields- in a new bid round coming up later in 2009.
Monday, February 9, 2009
Feb 9th - successfully raised over $450 million
The Company has successfully raised over $450 million in attractively priced debt and loan notes since IPO. On the face of it, although this figure appears high in comparison to the Company’s current market capitalisation, the majority of this debt is ringfenced around the assets in a reserves based lending structure.
Of the Company’s current $430 million debt, only a $50 million senior un-secured facility and the $45 million loan notes (at labor + 2%) are non-ringfenced to the assets.
The reserve based lending facilities are amortised over a 5 year term. The facility amounts available (which have been drawn) are calculated based on the fields ability to service the debt under a very conservative banking case (which is typically below the 1P production forecast) and low oil price.
This ensures that the fields will generate sufficient net cashflow to service the debt even in a low case. It is worth noting that both Okoro and Cote d’Ivoire are performing substantially above the forecasts used for the purpose of determining the borrowing base, and are set to continue to do so, thereby ensuring that all debt obligations (reserves based or otherwise) can be comfortably met now and in the future with significant residual free cash remaining for the company to fund further growth and expansion.
As part of its reserve based lending facilities, the Company has strategically hedged a certain amount of production to further ensure that debt service obligations can be met and also to comply with certain debt covenants.
The Company has hedged its oil production in Cote d’Ivoire out to the end of 2012 at an average floor price of $83/bbl, and at Okoro has hedged approximately 17% of production to the end of 2010 at an average floor price of approximately $55/bbl. 2009 will be a year of peak production at Okoro, with the field currently producing profitably at circa 22,000 b/d the field is significantly out-performing pre production start-up estimates of 15,000 b/d (circa +47% out-performance vs guidance).
Coupled with a stable 5,200 boe/d production in Cote d’Ivoire the Company is now producing circa 27,000 boe/d. The Company is therefore strongly cash generative, and 2009 will see Afren pay down a further $105 million in debt principal amounts, thereby reducing the forecast end 2009 debt position to approximately $325 million (including the loan notes), approximately $280 million excluding the loan notes
Of the Company’s current $430 million debt, only a $50 million senior un-secured facility and the $45 million loan notes (at labor + 2%) are non-ringfenced to the assets.
The reserve based lending facilities are amortised over a 5 year term. The facility amounts available (which have been drawn) are calculated based on the fields ability to service the debt under a very conservative banking case (which is typically below the 1P production forecast) and low oil price.
This ensures that the fields will generate sufficient net cashflow to service the debt even in a low case. It is worth noting that both Okoro and Cote d’Ivoire are performing substantially above the forecasts used for the purpose of determining the borrowing base, and are set to continue to do so, thereby ensuring that all debt obligations (reserves based or otherwise) can be comfortably met now and in the future with significant residual free cash remaining for the company to fund further growth and expansion.
As part of its reserve based lending facilities, the Company has strategically hedged a certain amount of production to further ensure that debt service obligations can be met and also to comply with certain debt covenants.
The Company has hedged its oil production in Cote d’Ivoire out to the end of 2012 at an average floor price of $83/bbl, and at Okoro has hedged approximately 17% of production to the end of 2010 at an average floor price of approximately $55/bbl. 2009 will be a year of peak production at Okoro, with the field currently producing profitably at circa 22,000 b/d the field is significantly out-performing pre production start-up estimates of 15,000 b/d (circa +47% out-performance vs guidance).
Coupled with a stable 5,200 boe/d production in Cote d’Ivoire the Company is now producing circa 27,000 boe/d. The Company is therefore strongly cash generative, and 2009 will see Afren pay down a further $105 million in debt principal amounts, thereby reducing the forecast end 2009 debt position to approximately $325 million (including the loan notes), approximately $280 million excluding the loan notes
Wednesday, February 4, 2009
My Investor Relations Update - 4th Feb
Thank you for your recent enquiry submitted through the Afren website.
In response to your question we commenced appraisal drilling at Ebok on 24th November 2008 using the Trident IV jack-up rig.
We completed appraisal drilling operations in line with our stated timetable on 1 February 2009.
We are pleased to confirm that we successfully achieved all of our pre-drill objectives which included establishing the areal distribution of the reservoir, reservoir properties and acquiring a full suite of technical data. Interpretation and analysis of the appraisal results is ongoing and we are awaiting the independent analysis and certification of this, after which a further announcement will be made on this very exciting project and the timing of the development.
You will note from the Okoro development that the Company has always maintained a conservative approach to releasing robust information to our shareholders.
Furthermore we are pleased to provide you with an update on operations and performance across the rest of the portfolio:
Ø The group is producing profitably at a total rate of approximately 27,000 working interest boepd of oil, gas and natural gas liquids.
Ø Okoro is now producing at rates of 22,000 bopd, marking a significant (+47%) out-performance versus pre-development guidance of 15,000 bopd.
Ø Production in Cote d'Ivoire remains stable at approximately 5,200 working interest boepd. Since Afren assumed control of the assets gross production has increased by circa 700 boe/d.
Ø The company remains fully funded through its budgeted work programme and has a robust financial platform and strong capital discipline.
Ø Afren will participate in one firm exploration well, at the La Noumbi permit in Congo, during H1 2009 and is continuing to aggressively pursue several highly attractive acquisition opportunities.
On fundamentals the company has never been stronger or better positioned to capitalise on and deliver materially value accretive portfolio growth.
Should you have any further questions please do not hesitate to contact us.
In response to your question we commenced appraisal drilling at Ebok on 24th November 2008 using the Trident IV jack-up rig.
We completed appraisal drilling operations in line with our stated timetable on 1 February 2009.
We are pleased to confirm that we successfully achieved all of our pre-drill objectives which included establishing the areal distribution of the reservoir, reservoir properties and acquiring a full suite of technical data. Interpretation and analysis of the appraisal results is ongoing and we are awaiting the independent analysis and certification of this, after which a further announcement will be made on this very exciting project and the timing of the development.
You will note from the Okoro development that the Company has always maintained a conservative approach to releasing robust information to our shareholders.
Furthermore we are pleased to provide you with an update on operations and performance across the rest of the portfolio:
Ø The group is producing profitably at a total rate of approximately 27,000 working interest boepd of oil, gas and natural gas liquids.
Ø Okoro is now producing at rates of 22,000 bopd, marking a significant (+47%) out-performance versus pre-development guidance of 15,000 bopd.
Ø Production in Cote d'Ivoire remains stable at approximately 5,200 working interest boepd. Since Afren assumed control of the assets gross production has increased by circa 700 boe/d.
Ø The company remains fully funded through its budgeted work programme and has a robust financial platform and strong capital discipline.
Ø Afren will participate in one firm exploration well, at the La Noumbi permit in Congo, during H1 2009 and is continuing to aggressively pursue several highly attractive acquisition opportunities.
On fundamentals the company has never been stronger or better positioned to capitalise on and deliver materially value accretive portfolio growth.
Should you have any further questions please do not hesitate to contact us.
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