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Namibia
(Thanks to Malcy's blog)
Jan 11,2024
It’s worth mentioning Namibia today as yesterday there were two interesting stories concerning one of the energy world’s most exciting post codes and Galp announced yesterday the following.
Galp (80%, operator), together with its partners NAMCOR and Custos (10% each), has drilled and logged the first exploration well (Mopane-1X) in block PEL83, offshore Namibia.
Building on the previous announcement dated January 2, Galp now confirms the discovery of a significant column of light oil in reservoir-bearing sands of high quality.
Galp will continue to analyse the acquired data and anticipates performing a Drill Stem Test (DST) in the coming weeks to assess the commerciality of this discovery.
The drilling operations at Mopane-1X will proceed to explore deeper targets. Upon completion, the rig will be relocated to the Mopane-2X location to further evaluate the extent of the Mopane discovery.
My spies tell me that this is a ‘beast’ of a discovery which has truly blown the model, for those in the Orange Basin a bit of ‘nearology’ never did any harm and for the likes of Eco Atlantic must have been music to their ears.
There are two interesting features for investors to bear in mind, one is that Sintana Energy, quoted on the TSX-V is carried by Galp and has a 5% indirect interest in this find. The second is that yesterday saw this from Impact Oil.
Impact Oil announced the signing of a farmout transaction related to its interests in Blocks 2912 and 2913B offshore Namibia with TotalEnergies EP Namibia B.V. The transaction includes a full carry on Impact’s retained interest, for all joint venture costs, with no cap, through to receipt of the first sales proceeds from first oil production.
Impact, through its wholly owned subsidiary, Impact Oil and Gas Namibia (Pty) Ltd, has signed a farmout agreement with TotalEnergies EP Namibia B.V., a wholly-owned subsidiary of TotalEnergies S.E., for the sale of a 9.39% undivided participating interest in Block 2912, Petroleum Exploration Licence 91, and a 10.5% undivided participating interest in Block 2913B, Petroleum Exploration Licence 56. On completion of this transaction, Impact will hold a 9.5% interest in each of Blocks 2912 and 2913B.
Impact will also be reimbursed in cash for its share of the past costs incurred on the Blocks, net to the farmout interests, which is estimated to be approximately USD 99 million.
This Agreement provides Impact with a carry loan for all of Impact’s remaining development, appraisal and exploration costs on the Blocks from January 1st, 2024, until the First Oil Date.
The carry is repayable to TotalEnergies from Impact’s after-tax cash flow and net of all joint venture costs, including capital expenditures, from production on the Blocks post the First Oil Date. During the repayment of the carry, Impact will pool its entitlement barrels with those of TotalEnergies for more regular off-takes and a more stable cashflow profile, and will also benefit from TotalEnergies’ marketing and sales capabilities.
Completion of the transaction will be subject to customary third party approvals from the Namibian authorities and joint venture parties.
Siraj Ahmed, Chief Executive Officer of Impact, commented:
“This is a pivotal transaction for Impact that paves the way for its transition from an exploration company to a hydrocarbon producing company, through its participation in the development of the world class Venus discovery. This transaction also enables Impact to participate in further significant exploration opportunities in the Blocks, offering the potential to significantly grow the existing discovered resource base. We are delighted to be able to continue in this exciting journey with TotalEnergies.
We thank our Shareholders for their steadfast support that has enabled us to reach this position.”
Thanks douginil. Yeah I agree, Venezuela could be a problem. Sure would like to see more aggressive buybacks. Haappy New Year, I hope.
Thanks for considering doing some active DD on this.. The information on Nara and Venus drilling results until Mid-February should do wonders to the share price. Any positive info from ECO Atlantic should also help. A big potential problem with ECO may be if their blocks off Guyana is in the area that Venezuela is also claiming.
Same to you douginil. I decided to re-read the third quarter earnings report. Dr. Tucker and Amini have stated that their partners ( Total and others) will not release any information on Nara and Venus drilling results until Mid-February. Why? I don't know. I will hold until they produce information that is pertinent to us. I think next ER in March 20234 I'm gonna call and ask questions. GL
Sorry I don't have a clue
Happy New Year
Douginil. Do you have any insight into whether or not AOC should or could do a 1 for 5 reverse stock split? It would allow the company to avoid spending its cash on buybacks by synthetically reducing the number of shares available to the public and raise the share price so that institutions and mutual funds that are unable to participate in stocks under $2.00 to get involved.
Yeah... Thanks douginil. Preferably before I take a dirt nap.
Slow and painful is right.
Merry Christmas and happy New Year and may the share price appreciate a litttle faster.
On January 6-9 22023 the share price was $1.70. Now $1.90 Slow and painful.. Only good news will save this company. Still faithfull.
Eco (Atlantic) Oil & Gas
(Thanks to Malcy's blog)
December 12, 2023
Eco has announced that, further to the Company’s announcement on 24 October 2023, it has posted to Shareholders a formal notice of its Annual General Meeting, explanatory circular and form of proxy. The AGM is to be held at 07:00 a.m. (Toronto time) on 29 December 2023 via teleconference. Copies of the formal notice of AGM, form of proxy, the Circular and virtual access details will be made available on the Company’s website at: https://www.ecooilandgas.com/investors/documents-circulars/.
Proposed Appointment of Non-Executive Director
The Company is also pleased to announce the proposed appointment of Mr Oliver Quinn following the AGM to be held in December. Mr Quinn will be appointed, subject to Shareholder approval, as the nominee director of Africa Oil Corp, which holds 14.84% of the Company’s issued share capital. Mr Quinn was appointed as the Chief Commercial Officer of Africa Oil in September 2023 having previously been employed as Senior Vice President, Corporate Development at Kosmos Energy Ltd. Mr Quinn started his career at Shell and has 19 years of experience in the Oil & Gas industry. He is a graduate of the University of Manchester where he studied for a BSc (Hons), Environmental & Resource Geology and a graduate of the University of Edinburgh where he completed a PhD in Petroleum Science. While Mr Quinn replaces Keith Hill as Africa Oil’s board nominee, the Board is pleased that Mr Hill has agreed to remain as a Non-executive Director of the Company.
Mr Quinn’s appointment is subject to the completion of customary due diligence required by the AIM Rules for Companies and AIM Rules for Nominated Advisers (the “AIM Rules”) to be undertaken by the Company’s Nominated Adviser, Strand Hanson Limited. A further announcement, including the requisite Schedule 2(g) disclosures required under the AIM Rules for Companies, will be made in due course.
Shareholder Approval of the Proposed Farm Out of Block 3B/4B to Africa Oil
On 11 July 2023, the Company announced that its wholly owned subsidiary, Azinam Limited, would farm out a 6.25% Participating Interest in Block 3B/4B, offshore South Africa to Oil SA Corp, a wholly owned subsidiary of Africa Oil (the “Farm Out”). The Farm Out remains, inter alia, conditional on regulatory approvals from the government of South Africa and the TSX Venture Exchange (the “TSXV”). As part of the regulatory approval process, the TSXV has now advised the Company that it must obtain shareholder approval for the Farm Out from those shareholders in the Company who are not deemed to be interested in the Farm Out, primarily comprising Africa Oil. Accordingly a resolution to approve the Farm Out is contained within the Notice of AGM.
Full details of all the Resolutions to be voted on at the meeting, as well as the Circular and form of proxy can be found on the Company’s website at: https://www.ecooilandgas.com/investors/documents-circulars/.
Nothing to add to all this but useful shareholder information. The best news of all is that Keith Hill remains on the board…
Thanks for the additional info.
I'm bullish still and sticking to this no matter what wifey says.
Additionally: A commenter said:
puffnstuff
Today, 2:52 PM
Investing Group
Comments (387)
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The biggest risk imho is nationalization, and it doesn’t seem likely. The price of oil could fall to $40, and the stock would still make 15-20% returns per year. They pull oil out of the ground for $7/barrel and pay 35% taxes and royalties. The infill drilling on OML 127 should keep production rising next year, though the company hasn’t guided for this yet.
OML 128(Equinor’s 20.2% stake in Agbami) was sold last year. Prime has the option sometime next year of preempting that sale. This is effectively a cost free call on the price of oil. The company made statements in the Q3 call that make it sound like the RBL will automatically increase with the purchase of this additional stake in Agbami. I expect that this will occur and increase production by 10k barrels/day next year.
Preowei will produce on a 5 year tax holiday once it’s developed and tied in.
Venus should produce at $20/barrel according to Total employees on linked in.
We bought 6.25% of 3B/4B for $5M. It’s not that valuable. ECO Atlantic was talking about 3 majors being interested 6 months ago in their CEO’s presentation on YouTube. EG31 looks like it has a much higher chance of being developed.
The company seems to want to sit on $200M of cash as a baseline(makes sense to me as they are an opportunistic investment company). This seems to be a major point of friction with a lot of investors.
Thanks douginil. Thought I'd add more SA comments here:
The largest discovery here was the Venus-1x wells. The company has a 6% stake in that block. It also has a 26.25% interest in the much larger block 3B/4B off of South Africa, where prospective resources for the block are 4 billion barrels. We'd like to see the development here proceed with FPSOs to get additional production for the company.
There are definitely positive proceedings for this block, and Namibia currently sees first oil for the block by 2030. Whether that happens remains to be seen along with the timeline for FPSOs, but a single FPSO could add 15 thousand barrels / day of high profit production for the company. The breakeven for the company there could be $30-40 / barrel.
Africa Oil Corporation Financials
The company's core financial picture, as we discussed above, remains incredibly strong.
Africa Oil Corporation Investor Presentation
It also shows the company's dramatic financial improvement, as a result of higher oil prices. From the start of 2021, the company had more than $500 million in net debt, counting the parent company. At this point, combined net debt is now $50 million, a $500 million improvement in less than 3-years. That's massive for a $850 million market cap company.
That cash flow shows how the company can provide substantial shareholder returns.
Africa Oil Corporation Future
The future for the company is maintaining its existing production and finding new sources of high margin production as it focuses on Africa.
Africa Oil Corporation Investor Presentation
The company's first focus is to retain maximum optionality over Venus. Liza Phase 1 had a capital cost of $3.5 billion, and that's after ExxonMobil's impressive capital reductions. It wouldn't be surprising to see a $3.5-5 billion cost to get an FPSO at Venus. Africa Oil Corporation, with a 6% stake and a 30% stake in Impact, could afford the attributable $250 million.
However, whether the remainder of Impact could afford the remaining $500 - $600 million cost remains to be seen. The company has had a number of private placements, and Africa Oil Corporation has participated in all of them, however, whether it works remains to be seen. On Block 3B/4B, depending on the cost and cash flow, Africa Oil Corporation likely needs a farmout.
At the end of the day, the company will maintain its several % dividend, and we'd like to see additional share buybacks.
Thesis Risk
The largest risk to the thesis here is crude oil prices.
And I might add however, AOC has one of the lowest extraction costs around.
Africa Oil Corporation Is Repurchasing Its Stock, You Should To
Dec. 11, 2023 7:03 AM ETAfrica Oil Corp. (AOIFF) Stock, AOI:CA Stock3 Comments3 Likes
(From Seeking Alpha)
The Value Portfolio
Summary
- Africa Oil Corporation has a strong portfolio of assets and is debt-free with a cash balance of over $200 million.
- The company's core oil assets have a strong outlook, and it is part of the largest oil discovery of 2022.
- The company has the potential for strong cash flow and shareholder returns, but is at risk from weak crude oil prices.
Go to Seeking alpha to read more.
Thanks douginil. PCGOF .008 per share and 8BB shares outstanding +- and huge debt. Will be interested to watch this baby.
Pancontinental Energy
75% owned and Operator of PEL 87 in the bulleye of Namibia's Oange basin
https://pancon.com.au
https://pancon.com.au/investor-centre/asx-releases/
goto the SEPTEMBER 2023 QUARTERLY ACTIVITIES REPORT
Pardon my ignorance, but what is pancon?
Thanks for posting this information. Now if only Pancon would get positive info flowing.
Douginil; From Upstream Magazine. Could not get full article as not a subscriber. But food for thought.
Spare capacity: Marathon Oil’s Equatorial Guinea LNG project on Bioko Island. Photo: BECHTEL
‘Staggering’ industry interest in West Africa exploration block close to LNG plant
Africa Oil extends bid deadline for prime Equatorial Guinea acreage as data room overwhelmed
24 November 2023 12:07 GMT Updated 29 November 2023 14:38 GMT
By Iain Esau in London
Africa Oil has received “staggering” interest from oil companies keen to farm into an offshore exploration block near gas facilities in Equatorial Guinea, according to recently installed chief executive Roger Tucker.
As a result, the Toronto and Stockholm-listed independent has extended the bid submission deadline to give suitors more time in the data room.
Marathon Oil talks up $1 billion earning potential of 'ugly duckling' African gas assets
Read more
Early this year, as part of a delayed licensing round, Africa Oil signed a production sharing contract for Block EG-31, which has generated much excitement.
Well I hope the company defends the share price as well as us shareholders. It's P/E ratio is now like 11.74 and it's book value is still $2.12. Price is back to where my average buy price of $1.78 20. Still many catalysts, $200 MM in the bank Stand by Bank syndicate of another $200 MM and no debt. Guess I'll hold.
Except it drove the price down
Huge volume. Implication is AOC is buying shares. They need to do this everyday till the earnings rep.
AFRICA OIL ANNOUNCES NORMAL COURSE ISSUER BID - LAUNCH OF SHARE BUYBACK PROGRAM
VANCOUVER, BC, Dec. 4, 2023 /CNW/ - (TSX: AOI) (Nasdaq-Stockholm: AOI) – Africa Oil Corp. ("Africa Oil", "AOC" or the "Company") is pleased to announce that the Toronto Stock Exchange (the "TSX") has approved the Company's proposed normal course issuer bid (referred to as a share buy-back program in Europe) (the "NCIB").
From Upstream magazine
Three majors in last-minute dash to enter race for slice of Orange basin hotspot
Coveted South African exploration tract attracts more big suitors
27 November 2023 13:12 GMT Updated 29 November 2023 11:53 GMT
By Iain Esau in London
A last-minute burst of interest by multiple supermajors in a sought-after exploration block in South Africa’s sector of the prolific Orange basin will delay the conclusion of a farm-out process.
Block 3B/4B — an asset that could host 4 billion barrels of recoverable resources — is operated by Stockholm-listed independent Africa Oil, which together with its two partners are keen to farm out a combined 55% stake in the deep-water acreage.
No further info available.
Thanks for your response douginil. I'm not an analyst either but still here and surviving this downturn in sales price. I feel in two months a lot of new and positive info is coming at us.
I am not really enough of a Oil & Gas analyst to respond to your question. I do think they are holding their cards real close to their vest. I like the drilling in Nigeria and getting out of Kenya. No specific mention of ECO Atlantic. So much is going on off shore Namibia and So. America maybe a cash pile is a good idea gives them great flexability.
Douginil, correct me if I'm wrong. AOC has a cash account of $201 million, a 5 bank credit facility of $200 million, and a 50% net to AOC from Prime of $525 million. Nearly a billion available. AOC book value is $2.12 We are way undervalued at $1.85+-. Dr. Tucker expressed an interest in supporting
the shareholders with Dividends and buybacks. Wouldn't an accretive investment be appropriate now or is AOC holding their cards real close to their vest?
Thanks douginil. I shooulda watched the presentation too. Audio stunk. You're right. A presentation such as this is a skill. (which i don't have, lol) But the team needs a professional presenter. Hope they communicate with us on a more timely basis too.
I watched the presentation, I agree with you comments about " Difficult accents to understand all that was said " interaction between what is being said and the slides was difficult to follow at times. Zoom presentations are a skill that needs to be developed. I also agree "Seems very positive".
Listened to the audio of the conference call today. Poor quality sound system. Difficult accents to understand all that was said. Will wait for the report on company's website. Seems very positive tho.
FYI
Africa Oil GAAP EPS of $0.10; FY23 outlook confirmed
Nov. 15, 2023 8:03 AM ETAfrica Oil Corp. (AOIFF), AOI:CABy:
Meghavi Singh, SA News Editor
Africa Oil press release (OTCPK:AOIFF): Q3 GAAP EPS of $0.10.
Q3 2023 average daily WI production rate of 20,300 boepd was approximately 4% higher than Q2 2023 average of 19,500 boepd.
Achieved an average realized oil sales price of $84.5/bbl compared to the average Bloomberg Dated Brent price of $81.5/bbl for the offtake dates in July and August.
AOC’s cash and cash equivalents at September 30, 2023, of $201.5 million.
Full-Year 2023 Guidance: WI production (boepd) 18,500 – 21,500 Economic entitlement production (boepd) 20,500 – 23,500; Cash flow from operations (million) $250.0 – $330.0; Capital investment (million) $80.0 - $100.0.
Thanks "D"... Key takeaway: 9 months ended 9/30/2023 EPS .38 Cents per share.
This income during a relatively slow period of liftings.
AFRICA OIL ANNOUNCES THIRD QUARTER 2023 RESULTS
VANCOUVER, BC, Nov. 14, 2023 /CNW/ - (TSX: AOI) (Nasdaq-Stockholm: AOI) – Africa Oil Corp. ("Africa Oil", "AOC" or the "Company") is pleased to announce its operating and interim condensed consolidated financial results for the three and nine months ended September 30, 2023. View PDF
Highlights*
Successfully completed Venus-1X drill stem testing ("DST") program after flowing oil at positive rates, supporting the Venus commercial development case, and as confirmed by the operator's public statements that there will be an oil development on Venus.
The Tungsten Explorer drilling rig has spudded the Mangetti-1X exploration well in the northern part of Block 2913B with the results expected by early next year.
AOC participated in a $40.0 million equity placement by Impact after the period end, investing $13.0 million with the proceeds to fund Impact's continuing activities for the remainder of 2023.
Prime distributed a dividend of $125.0 million, $62.5 million net to the Company's 50% shareholding.
In Q3 2023 OML 127 was voluntarily converted to operate under the new Petroleum Industry Act from March 1, 2023, and is now subject to 30% Corporate Income Tax regime compared to the previous 50% Petroleum Profit Tax regime.
OML 130 drilling campaign continues with two water injection wells and one production well on the Egina oil field having been successfully completed and put online.
Q3 2023 average daily WI production rate of 20,300 boepd was approximately 4% higher than Q2 2023 average of 19,500 boepd.
Achieved an average realized oil sales price of $84.5/bbl compared to the average Bloomberg Dated Brent price of $81.5/bbl for the offtake dates in July and August.
Prime's cash position of $118.9 million and debt balance of $375.0 million resulting in a Prime net debt position of $256.1 million, in each case net to the Company's 50% shareholding at September 30, 2023.
AOC's cash and cash equivalents at September 30, 2023, of $201.5 million.
Africa Oil President and CEO, Roger Tucker commented: "Third quarter 2023 was a positive period for the Company with notable achievements for our two main assets offshore Namibia and Nigeria. The Venus-1X testing program achieved positive flow rates for the world-class Venus light oil discovery offshore Namibia, and I am encouraged to note the public statements by the operator, TotalEnergies, that there will be a development on the Venus field.
I am pleased to confirm the conversion of OML 127 to Nigeria's new Petroleum Industry Act regime, that reduces the effective tax rate for the Agbami field. Our Nigerian assets continue to perform well and we received a dividend for $62.5 million during the period. We also saw the first quarterly increase in the average daily production since the second quarter 2021, as the Egina infill drilling program offset the field's production decline.
We have a strong balance sheet and liquidity position, high netback production and unique transformational catalysts in our portfolio. We are focused on optimizing our business structure and delivering on our  organic growth opportunities. I look forward to updating you in due course as we make progress on several fronts towards delivering the next phase of value creation."
* Important information: Africa Oil's interest in Prime is accounted for as an investment in joint venture. Refer to Note 1 on page 4 for further details. Please also refer to other notes on page 4 for important information on the material presented.Â
Management Conference Call
Senior management will hold a conference call to discuss the results on Thursday, November 16, 2023 at 09:00 (ET) / 14:00 (GMT) / 15:00 (CET). Participants should use the following link to register for the live webcast:
Participants should use the following link to register for the live webcast:
https://onlinexperiences.com/Launch/QReg/ShowUUID=A1806FF6-C426-4F69-B753-724D32CE5198
Please note that for optimal viewing, it is best not to connect to a Virtual Private Network (VPN) but instead to connect directly to the Internet.
Please test your connection prior to joining to ensure a successful user experience. Connection Test: Click Here. For system requirements, visit the FAQ page.Â
Participants can also join via telephone with the instructions available on the following link:
https://register.vevent.com/register/BI141f840ff99443cdbab7d323626c0f0f
Click on the call link and complete the online registration form.
Upon registering you will receive the dial-in info and a unique PIN to join the call as well as an email confirmation with the details.
Select a method for joining the call;
Dial-In: A dial in number and unique PIN are displayed to connect directly from your phone.
Call Me: Enter your phone number and click "Call Me" for an immediate callback from the system. The call will come from a US number.Â
Africa Oil: Invest In The 8th Largest Discovery Of The 21st Century
Jeremy Poland
Introduction to Africa Oil
Africa Oil Corp (TSX:AOI:CA) (OTCPK:AOIFF) is an upstream oil corporation that was founded in 1988 and headquartered in Vancouver, Canada. Its core lies in exploration assets located in the nascent and under-explored terrains
Market Cap
$1.23B
PE (FWD)
4.66
Yield (TTM)
2.56%
-
Prev. Close
$2.71
Africa Oil Corp.'s Promising Future
The Value Portfolio
Africa Oil: Doubling Down
1.97
© 2023 Seeking Alpha
From Seeking Alpha;
Now the future is one of growth. Clearly this company has above average risks due to the source of cash flow being in Nigeria. However, the debt free balance sheet and overall negative net debt (when consolidating Prime) appear to somewhat minimize that risk. The diversification into South Africa brings a much more supportive atmosphere for a cash flow source. That makes this company a strong buy consideration for those investors willing to accept the risks.
AFRICA OIL TO RELEASE THIRD QUARTER 2023 FINANCIAL RESULTS ON TUESDAY, NOVEMBER 14, 2023
VANCOUVER, BC, Nov. 6, 2023 /CNW/ - (TSX: AOI) (Nasdaq-Stockholm: AOI) – Africa Oil Corp. ("Africa Oil", "AOC" or the "Company") will publish its financial and operating results and related management's discussion and analysis for the three months and nine months ended September 30, 2023, after Toronto market close on Tuesday, November 14, 2023.
Senior management will hold a conference call to discuss the results on Thursday, November 16, 2023 at 09:00Â (ET)Â / 14:00Â (GMT)Â / 15:00Â (CET). The conference call may be accessed by dial in or via webcast.
Participants should use the following link to register for the live webcast:
https://onlinexperiences.com/Launch/QReg/ShowUUID=A1806FF6-C426-4F69-B753-724D32CE5198
Please note that for optimal viewing, it is best not to connect to a Virtual Private Network (VPN) but instead to connect directly to the Internet.
Please test your connection prior to joining to ensure a successful user experience. Connection Test: Click Here. For system requirements, visit the FAQ page.Â
Participants can also join via telephone with the instructions available on the following link:
https://register.vevent.com/register/BI141f840ff99443cdbab7d323626c0f0f
Click on the call link and complete the online registration form.
Upon registering you will receive the dial-in info and a unique PIN to join the call as well as an email confirmation with the details.
Select a method for joining the call;Â Â Â Â Â Â Â Â Â Â Â
i.   Dial-In: A dial in number and unique PIN are displayed to connect directly from your phone.
ii.   Call Me: Enter your phone number and click "Call Me" for an immediate callback from the system. The call will come from a US number. Â
You're welcome douginil...It is getting interesting... Now if I can live long enough to pick the fruit...
Thanks for posting
Certainly -
FYI
Africa Oil Other ownership interests.
Africa Energy. Shares outstanding 1,407,812,249.
AOC as of Jan 1/2023: 276,982,414 (19,67%)
Eco Atlantic: Shares outstanding 3567,348,680
AOC as of 6/30/2023: 54,941,744 (14.96%)
Impact (private) 991,132,898
AOC 12 of 6/30/20223: 306,358,936 (30.91%)
Thanks for posting
From Seeking Alpha: August 20, 2023/ O;d but useful reminder
A drilling campaign should increase production in Nigeria.
Africa Oil has already received more cash than it borrowed to obtain the interest in Nigerian production.
The company holds interests in three development-stage companies that have speculative upside potential.
AOIFF purchased interests from Eco Atlantic to increase its exposure to a South African discovery.
The evaluation of the Venus discovery is underway.
I am Long Player. I focus on Oil and Gas stocks. I’m a retired CPA, and have a MBA and MA. I lead the investing group Oil & Gas Value Research.
Africa Oil (OTCPK:AOIFF) recently announced a purchase from Eco Atlantic (OTCPK:ECAOF) of a material interest in some awarded blocks located in South Africa. This gives Eco Atlantic some badly needed cash because Eco Atlantic has no source of income otherwise. It also allows Africa Oil to concentrate in an area where the subsidiary Africa Energy (OTCPK:HPMCF) also has a considerable interest as well.
Equity Investments
The company has additional growth opportunities through other companies owned as shown below
Africa Oil Investments In Other Companies (Africa Oil Second Quarter 2023, Filed Earnings Report)
It needs to be noted that Africa Oil has a significant investment in the companies with which it has contracted (at one time or another) for either additional interests or to purchase more shares.
There are other companies within the Lundin Group of companies that have interests in these companies as well. Therefore, it is probably valid to consider that the Lundin Group of companies controls these companies that Africa Oil has invested in.
Africa Oil itself began as part of the Lundin Group of companies. Several key officers have held other positions within this group of companies. That close association is likely to continue well into the future. This relationship gives the company access to a lot more resources than would be typical for a company of this size.
This association also makes the transition to a new CEO far less risky than would be the case with a typical small company. Most new senior officers come from elsewhere in the Lundin Group of companies.
Africa Oil further announced its intention to withdraw from the Kenya projects. This further focuses the company on established production as well as the discovery in South Africa. The withdrawal focuses the company on the projects with the best cash flow chances while eliminating some more speculative prospects.
Africa Oil is a relatively small player in some offshore projects that tend to be very large. So far, management has proven to be very adept at right sizing the risk. This has allowed the company to grow considerably since it obtained a material income source. Now it appears that the company will expand into South Africa in the future to diversify into another revenue source.
Cash Flow Growth
Cash flow should grow at a material pace from the operator led program to drill more wells.
Africa Oil Nigerian Production Enhancements Planned (Africa Oil First Quarter 2023, Earnings Conference Call Slides)
The established production in Nigeria that provides all of the company cash flow should see considerable growth from the proposed campaign shown above. Free cash flow will be either non-existent or negative due to the investment required for this drilling plan. However, cash flow should climb as the program proceeds to enhance free cash flow significantly in the future.
Drilling already began for two water injection wells. The third well, a potential oil producer, has now begun drilling also.
The overall risk of this plan is considered less than is the case with pure exploration plays. There is still a reduced risk of dry wells or unexpected complications. But overall, the chances of a successful production increase are pretty high.
Finances
The company itself is debt free. Now the company it has an interest in (which is called Prime) does have some debt and also has just announced a refinancing of that debt.
However, the cash position has deteriorated somewhat from the first quarter. But it is still strong. Management does have a conservative note that the company may need financing in the future depending upon how things go. Management made the decision to advance some cash to Impact so that Impact has the money needed to fund some commitments. But this came at the same time as the drilling campaign in Nigeria got underway. Therefore, cash flow is at best tight until that drilling campaign completes.
The key is that this is a small company that is participating in some very large projects. That often means some creativity until the company gets larger. Fortunately, this company has the resources of the Lundin Group of companies to help out if the need arises.
The risk of course would be that other partners to Prime fail and the company would have more than expected liability. Right now, that does not appear to be a consideration as Prime does generate a fair amount of cash.
South AfricaOperators Of Nigerian Interests
The operators of the producing properties in Nigeria are Chevron (CVX) and TotalEnergies (TTE). Operators of this stature add credence to the project in an area that is probably considered riskier than most.
Since the production is offshore, this production is insulated from the onshore issues of Nigeria and therefore reduces the perceived risk of operating in Nigeria.
The government of Nigeria does support the industry. But it is also considered somewhat ineffective.
Management has noted several times that they have already received the purchase price of the interest back (and more). This is an important consideration when operating in an area with above average risk.
South Africa
The company does have an interest in a discovery and it has interests in some nearby prospects through its ownership of Africa Energy. The company has additional interests as well through its ownership of Eco Atlantic shares. The managing operator of the discovery is Total. The operator of the discovery has applied for an operating permit. That process will likely take about a year. Then it likely would take another several years before initial production is established.
Total is also drilling some extension wells and will proceed to test them.
Fortunately, Africa Oil has established production from its Nigeria interests that can be used to finance the discovery in South Africa to production. The debt free balance sheet would also allow for some debt as well should that be needed.
The risk is of course large cash needs in South Africa combined with large cash needs in Nigeria. While that currently appears to be unlikely to happen. The chance is definitely not zero.
South Africa is probably the country (along with Namibia next door) with the best infrastructure to support an oil industry on the African continent. The government is stable and comparable to European governments. An income source from this area would be more highly valued than the income from Nigeria.
Key Takeaways
Africa Oil has transitioned from a development stage company to one with substantial production through its interest in Prime. That interest will likely allow it to fully participate in the development of the South Africa discovery as well as potentially develop some other interests there should that prove to be a favorable way to go.
The current income source in Nigeria has repaid the debt incurred to obtain that interest (and more). Now there is a good possibility of more income through a drilling campaign by one of the operators. All this is important once the approval to bring the South African discovery to production happens. The South Africa project would of course then need considerable cash.
The extension of a lease in Nigeria has resulted in a reduction of future taxes owed. That amount turned out to be relatively larger. In fact it was far larger than any costs associated with the exit from Kenya.
Since Africa Oil does have a considerable income source, the risk to shareholders of dilution in the future is not great. Currently, there are several projects that have demanded cash. So far, that need has been met with cash on hand. There is a conservative warning in the financial statements that a possibility exists for the need for outside financing at some point in the future. The company can also choose to maintain its interest in the invested companies. Those companies have periodic financing needs as none of them have an income source.
Now the future is one of growth. Clearly this company has above average risks due to the source of cash flow being in Nigeria. However, the debt free balance sheet and overall negative net debt (when consolidating Prime) appear to somewhat minimize that risk. The diversification into South Africa brings a much more supportive atmosphere for a cash flow source. That makes this company a strong buy consideration for those investors willing to accept the risks.
Lots of talk on yahoo finance (conversations) regarding buy out or merger with other oil companies.They suggest: Kosmos energy. but debt $2.37B, BW Debt $415 MM, Tullow Debt 3.08BB abandoned in Kenya. AOC no debt. Would love to see them take over Impact Energy.
WELL!!! I guess there's no cure for insanity. Just grabbed 1,000 more shares.
Thankyou douginil. I missed this. The news could not be more timely.
AFRICA OIL ANNOUNCES STRATEGIC HIRES TO STRENGTHEN ITS EXECUTIVE TEAM
VANCOUVER, BC, Oct. 4, 2023 /CNW/ - (TSX: AOI) (Nasdaq-Stockholm: AOI) – Africa Oil Corp. ("Africa Oil", "AOC" or the "Company") is pleased to announce the strategic recruitment of two highly-experienced energy executives to strengthen its leadership team.
Dr Oliver Quinn has been appointed Senior Vice President of Corporate Development and joins the Company from Kosmos Energy. Ms. Joanna Kay has been appointed General Counsel and Corporate Secretary and joins the Company from BW Energy.
They will report directly to Africa Oil's President and CEO, Dr Roger Tucker, who commented:Â "I am delighted that our company can attract such high-calibre talent as Oliver and Joanna. They bring a wealth of experience and knowledge to our organization, with specific experience which will be central to the development of our business going forward. They will be key members of our leadership team and, as part of that team, will lead on the planning and delivery of our strategic objectives. We have an excellent business supported by four pillars of: debt-free balance sheet and significant liquidity; high netback production; attractive organic development opportunities offshore Nigeria; and the world-class Venus oil discovery offshore Namibia. These present us with tremendous strategic optionality and we are well positioned to deliver the next phase of value creation."
Dr Quinn brings 20 years' experience in the oil and gas industry across technical, commercial and executive leadership roles. He began his career as a geologist for Shell before moving to the independent sector in a variety of private equity startup, mid-size and large E&P companies. Dr Quinn has worked extensively across Africa, Americas, Asia and Europe in business development and asset leadership building and managing significant oil and gas portfolios through exploration, development and production. Most recently he was a member of the Senior Leadership Team at Kosmos Energy with a focus on strategy and M&A across Africa and the US. Prior to that he was a member of the Executive and Investment committees at Ophir Energy responsible for the Africa business unit and global organic growth. Dr Quinn holds a BSc in Geology from the University of Manchester, a PhD in Geoscience from the University of Edinburgh and executive leadership qualifications from London Business School and Harvard Business School.
Ms. Joanna Kay will join the company in late Q4 2023. Ms. Kay is a senior lawyer with over 15 years' experience in the oil and gas industry across a wide range of international jurisdictions. She will join from BW Energy where she is VP, Associate General Counsel and Company Secretary. She also has considerable experience both in private practice with Orrick, Herrington & Sutcliffe, Andrews Kurth and Ashurst and as a lawyer with Tullow Oil plc. Her background includes advising on all aspects of the hydrocarbons industry and she has worked across Africa, South America, Europe and the Middle East with a particular focus on transactions and M&A, joint ventures, financing, commercial and contract law. Ms. Kay holds an MA in History from the University of Cambridge and is a qualified Solicitor in England and Wales.
A reminder: AOC's cash and cash equivalents at June 30, 2023, of $175.7 million.
Net income to AOC in Q2 2023 of $106.9 million...or .23 cents per share for the June quarter.
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The company holds two blocks in Puntland, Somalia: the Nugaal Block and the Dharoor Block. Block Summaries
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Country | Concession | Acreage | WI |
---|---|---|---|
Kenya | 10A | 14,748 km² | 30% |
10BA | 16,205 km² | 50% | |
10BB | 12,675 km² | 50% | |
9 | 23,700 km² | 100% | |
12A | 15,389 km² | 50% | |
13T | 8,429 km² | 50% |
2014 - Stock Market Holidays All Major US Stock Exchanges | Date |
New Year's Day | January 1, 2014 |
Martin Luther King, Jr. Day | January 20, 2014 |
Washington's Birthday (Presidents' Day) | February 17, 2014 |
Good Friday | April 18, 2014 |
Memorial Day | May 26, 2014 |
Independence Day * | July 4, 2014 * |
Labor Day | September 1, 2014 |
Thanksgiving Day * | November 27, 2014 * |
Christmas Day * | December 25, 2014 * |
* The NYSE, NYSE AMEX and NASDAQ will close trading early (at 1:00 PM ET) on Thursday, July 3, 2014, Friday, November 28, 2014 (the day after Thanksgiving) and Wednesday, December 24, 2014. Stock Market Holiday Calendar 2014 Holiday Market Stock - US |
Authorized Share Capital | Unlimited number of common shares without par value |
Issued and Outstanding | 309,470,323 |
No. of Optioned Shares | Expiry Date | Exercise Price (Cdn) | |
---|---|---|---|
1,562,333 | Jan. 26, 2014 | $2.10 | |
399,889 | Mar. 14, 2014 | $1.85 | |
100,000 | Mar. 31, 2014 | $1.94 | |
33,334 | Apr 20, 2014 | $1.88 | |
100,000 | Dec 17, 2014 | $1.13 | |
16,666 | July 4, 2014 | $1.70 | |
16,667 | Aug. 29, 2014 | $1.27 | |
3,740,333 | Nov 24, 2014 | $1.49 | |
50,000 | Dec 5, 2014 | $1.56 | |
100,000 | Dec 19, 2014 | $1.49 | |
17,500 | Mar. 2, 2015 | $2.09 | |
315,000 | July 6, 2015 | $8.32 | |
100,000 | Sept. 4 2015 | $8.90 | |
750,000 | Sept. 10 2015 | $9.90 | |
25,000 | Nov. 29, 2015 | $8.10 | |
5,666,000 | Apr. 16, 2016 | $5.94 | |
400,000 | Aug. 1, 2016 | $7.86 | |
2,500 | Nov. 30, 2013 | $7.59 | |
Total | 13,395,222 |
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