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I'm very impressed with Total Energies (TTE) Their Namibia footprint began in 1964. 60 years ago. They got cred.
Thanks douginil. Hitting home runs now.
Volume is Huge!!!
As an investor, I am thrilled. As a Viet vet, I am scared to death over the possible invasion of Ukraine. Such irony, the price of Brent crude over $95.00 supporting AOIFF.
Fabulous insights by committed investors. Thanks douginil.
Very interesting speculation and ideas about AOIFF. Sure would like a
few more shares before $2.00 becomes a certainty. Stockhouse seems to be engaging a lot of very intelligent investors.
Thanks Tamtam.. I stand corrected.
I am very much interested in how many cargoes have been delivered since 11/30/21? They said 5 cargoes before 12/31/21. Not one word. Why wait to hang fire until the end of February. They got $100,000,000 in bank facility available, $60,000,000 in cash, and God only knows how many cargoes of 1B barrels per ship that have been delivered. A good monster on its way or a Frankenstein???
Agree, but sure don't like the Lonegaurdian idea of a .025Cent divi. AOC can afford a lot more.
Volume precedes price action. Just grabbed another 1000.
Thanks douginil.. Lonegaurdian seems to have his hand on the pulse of this issue (AOIFF and Total).
I agree futrcash. Real good analysis. Keith Hill has got to get hs team to put their money where his mouth is and buy shares of their own company.. We are so vulnerable to an activist investor. That's OK but at least be a buyout at a much higher price.
I would hope we stay independent until we see significant new accretive acquisitions, buybacks and divis. Painful read douginil but pretty accurate. We are so undervalued but weakly held at the corporate level. Does current volume indicate buybacks already taking place? So many questions. That was a great find douginil. Thanks.
That's one hell of a map.
Right on douginil. My favorite:
Keith Hill, Africa Oil's President and CEO, commented, "The amended Corporate Facility provides us with standby credit at attractive costs and supports our 2022 plans, including the acquisition of producing assets. Together with our debt-free balance sheet and our share of dividends from Prime, we are in a very strong position to take advantage of growth opportunities."
AND:
The lenders have also waived certain conditions in support of the Company's plans to implement a shareholder returns program, and have agreed to release their security over the Company's shares in Africa Energy Corp., Eco (Atlantic) Oil & Gas Ltd. and Impact Oil and Gas Limited.
VOLUME today (No Pun Intended) speaks VOLUMES.
Douginil...Not just yet on dumping Kenya asset. Here's why.
African Export-Import Bank to Help Nigerian State Energy Firm Raise $5 Billion
Author of the article:
Bloomberg News
William Clowes
Publishing date:
Jan 27, 2022 • 2 days ago • 1 minute read •
Article content
By William Clowes
The African Export-Import Bank will help Nigeria’s state-owned energy company raise $5 billion to support plans to buy and manage oil and gas assets.
The Cairo-based lender agreed to take on a “financial advisory and fundraising mandated lead arranger role” with Nigerian National Petroleum Co., according to a summary of a meeting Wednesday between Afreximbank President Benedict Oramah and NNPC Group Managing Director Mele Kyari.
Under legislation passed in August, NNPC has been re-incorporated as a commercially oriented limited liability company. Raising $5 billion will enable the new firm to acquire and operate producing oil and gas assets in Nigeria, the summary said. Afreximbank intends to underwrite $1 billion of the planned borrowing, it said.
International oil majors including Shell Plc are trying to find buyers for their remaining onshore and shallow water licenses in Africa’s largest crude producer so that they can focus on deep-water projects.
©2022 Bloomberg L.P.
Anybody know if Prime Oil and gas is a private company or a public held corp. If so, Stock ticker?
DG: I think it (VIX) just did.
Thanks douginil.. Very informative stuff and clarifying.
Thanks douginil. Speculating Venus info due soon...
Dougnil; Do I have this right? Is Africa oil hedged only on production from POBJV? As Required by the banking syndicate? Or does hedging involve other potential oil transiting AOC production? I think Keith Hill knows what he's doing. I agree with Splinter, a ten bagger is in the offing should buybacks and a heavy dividend come to fruition. A ten bagger is only $15 bucks a share. Especially with minimal corporate debt.
Yeah looks bad. However, the RSI has barely moved. ???
An irresistable ambition: Most of the AOIFF officers own less than 100,000 shares of AOC. Keith Hill is an obvious exception with, as of 2020, owns approximately 325000 shares. There has been no evidence I can find of insider selling. That would be foolish especially before the Feb report. I;m trying to get up to 150,000. Long way to go.
TD: I guess we just gotta wait and see. I'm hoping for AAPL to make a move after earnings next week. Then sell covered calls to grab more AOIFF. Hopefully we don't hear anything until I get a few more shares. Greedy of me...LOL
3rd quarter earnings report ... revisited.
Gross revenue $69.75 MM
EPS $.12 per share.
Feb. Gonna be interesting.
“To achieve superior investment results, you have to hold nonconsensus views regarding value, and they have to be accurate.” -Howard Marks, The Most Important Thing
Article slightly dated but relevant: Written by "Long Player"
Africa Oil: The Cash Flows In
Dec. 22, 2021 12:34 AM ETAfrica Oil Corp. (AOIFF)ECAOF23 Comments8 Likes
Summary
The debt repayment is happening as expected.
Once the debt is repaid, then the cash flow from Prime will be available to fund other ventures.
The business atmosphere in Kenya is such that the cash flow will not command a high valuation.
Other ventures are in markets that will likely support a higher market valuation (if they are successful) in the future.
The presence as part of the Lundin Group companies helps to reduce the risk of this primarily exploratory company.
This idea was discussed in more depth with members of my private investing community, Oil & Gas Value Research. Learn More »
Africa Oil (OTCPK:AOIFF)(AOI:TSX) is a Canadian company (that reports using United States dollars) with operations in Africa and Guyana (through holdings in another company. The company is part of the Lundin Group of companies. The Lundin Group of companies has a fairly long history in the energy area as a worldwide opportunistic acquirer of profitable projects. The group of companies will also sell the company at the right price. As a member of the group, Africa Oil has access to an unusual amount of management resources for a company of its size.
Africa Oil has to be considered speculative for the areas in which it operates in Africa as well as the number of projects that currently bring in little or no revenue. However, many of these projects do have a lot of potential and there is a cash source of income through the company's interest in Prime. While the company orientation is towards higher risk projects, the depth of the management organization and the diversification among several high-risk projects tends to reduce the risk typically found in a company like this.
Source: Third Quarter 2021, Earnings Conference
The main source of income comes from world-class fields off the coast of Nigeria where operators with a stature on the level of Chevron (CVX) operate the fields. The Nigerian government does depend upon oil revenues and is supportive of the industry. But the overall business climate is also less than stellar to say the least. Since these operations are offshore, it may well be that some of the onshore events are not a risk of the offshore business. Still, there are better (and worse) places to do business in Africa than Nigeria. Readers are advised to read up on the business conditions of Nigeria before making an investment decision.
This business is unlikely to command a very good multiple because of the Nigerian association. However, the debt payment schedule is being adhered to or even paid in advance. When operating in this business environment, low debt to no debt is probably the best way to go "just in case".
For as long as the cash flow lasts, this cash flow can provide a very generous funding of some of the higher risk projects in the portfolio. Other countries such as South Africa and Namibia probably provide a far better operating environment should those ventures succeed (along with a higher business valuation by the market).
As part of the cash flow situation, the company announced that the corporate balance sheet of the company is debt free in a letter to shareholders in December 2021. This company probably needs to operate debt free in the future given the risk of some of the projects undertaken.
The presence of world-class operators has to be a huge plus in a situation like this. Those operators lend a credibility to the project that a country like Nigeria badly needs until the government gets "its act together". Such an operator may also insulate a world-class project like the current one from some of the risks that appear to happen to smaller operators.
Source: Africa Oil Third Quarter 2021 Corporate Presentation
One of the uses of any free cash flow has to be to fund the exploration and potential development of a discovery off the coast of South Africa. Now it will take some years and a fair amount of money to develop this discovery. But one successful well puts the project far ahead of the pure exploratory projects in the portfolio. Right now, the value will take some years to determine, and actual production may well be at least 5 years away. But that discovery at this point is a marketable asset should the need arise.
Source: Africa Oil August 2021 Corporate Presentation
The company maintains an exposure to the Guyana emerging oil and gas industry through its shareholdings of Eco Atlantic (OTCPK:ECAOF). This project is in the exploratory stage though it is gaining a fair amount of credibility due to the discoveries made by several partnerships in the area.
The Eco Atlantic Guyana partnership had previously announced two heavy oil discoveries. Unlike the Exxon Mobil announcements, the two discoveries have sulfur and heavy oil is a discounted product. So, the higher production costs combined with the lower potential sales price make this project an "iffy" proposition. Exxon Mobil has in the past plugged and abandoned such projects in favor of the light oil discoveries. These small companies are trying to find a way to make these heavy oil discoveries "a go".
Africa Oil itself has a decent market cap though it is a small player in the offshore exploration part of the industry. The company would definitely have to raise capital or sell part of the ownership to completely finance a major discovery once that discovery is shown to be commercial (and properly de-risked). That makes the cash flow from the Nigerian project very important. The sooner the debt obligations are repaid, the sooner that cash flow is available for these other projects (which decreases the financing needs).
The Future
There are a large number of high impact projects that could make this company much larger in the future. The only cash flow at present was recently purchased using debt. So much of the cash flow will initially go to repay the debt. At that point, the cash flow should become available to fund some projects in other areas that would command a better market valuation.
Source: Africa Oil Third Quarter 2021 Earnings Press Release
Since the above was written, the debt at the corporate level is now zero. However, the partnership probably has some debt to repay as well. The original deal was somewhat complicated. But less the debt, the better. Still the fast repayment of corporate debt is a good sign that this particular project will be profitable for the company while establishing a reliable cash flow with which to conduct business.
The discovery in South Africa and the possibility of some cash flow give this company an advantage over many competitors in the exploratory stage. But there will be a considerable need to generate a lot of cash to develop most of the offshore projects in which the company has a participation interest.
There is a risk of considerable shareholder dilution as a result. As a result, the stock is likely to be very volatile which would offer probably a lot of trading opportunities based upon drilling results should traders be inclined to trade this stock.
It will be a while though before conservative investors would likely consider this stock a suitable investment. Most offshore projects take five to seven years from an initial discovery until oil is actually produced. Until then, such projects need to be funded with cash from somewhere else.
The Lundin organization backing a company like this does reduce some of the risk of a strictly exploratory company. But there is a risk of failure and the loss of investment principal that goes with it. Therefore, this issue is only suited for traders and risk-oriented investors.
douginil..again thanks.
My opinion differs from loneguardian. I take KH at his word. He has been forthright in his explanations of where the company is at any given time. When they said the divy and buybacks must wait until February. That's ok. But that is where the rubber meets the road. All credibility is on the line. So I expect to see a composite response to the current issues. We will see a buyback, a divi, and possible accretive partnership/acquisition. Mind blowing: The Lundin Group of companies have an inspired investment (and control) in creating a huge oil major with Africa Oil.
Their address is the same as AOC
Lundin Group.
CORPORATE OFFICE
Suite 2000 - 885 West Georgia Street,
Vancouver, BC Canada V6C 3E8
Africa Oil Corp.
885 West Georgia Street
Suite 2000
Vancouver, BC V6C 3E8
Canada
Excellent article douginil. Thanks. Building a monster. So many moving parts.
RECAF energy in Namibia and Botswana is prices at $5.10 per share. They are way negative in EPS. Roughly 174 mm shares outstanding. They are exploring near the Kavango delta area abpout 260 kilometers away.
Yet their price is $5.0 per share. We've got a lot more capability and potential than RECAF. SO, where are the 5 cargoes that were to be delivered in December??? They are potentially a lot more than $175MM.
Thanks I3.
GUYANA;
Editor OilPrice.com
Wed, January 5, 2022, 11:00 AM
The context for oil in Guyana is looking even more favorable thanks to the passing of a landmark local content law last week. With greater opportunities for exploration in Guyana’s waters, as well as already strong investments by some of the world’s supermajors, the Caribbean is set to be the oil-producing region of the future.
Many companies have started their movement away from traditional oil-producing states, particularly in Europe and North America for several reasons. Firstly, several countries in these regions are currently developing policies for the transition away from fossil fuels to renewable alternatives, leading to unfavorable regulatory frameworks for new exploration projects. Secondly, many companies have been driven to Africa and the Caribbean thanks to new oil discoveries and the prospect of lower-cost operations. And, thirdly, while oil in some regions is drying up, these new oil regions offer the possibility of large untapped resources where oil firms can commence long-term, lower-carbon operations.
And last week, Guyana made it that much easier for international oil firms to gain access to these resources. President Mohamed Irfaan Ali signed a local content bill into law at the end of 2021, which will offer international oil companies the opportunity to bid on several exploration blocks in the second half of 2022.
The Guyanese president hopes this will help the country to benefit from its new oil discoveries, rather than losing out to international players. Ali stated, “This local content bill gives us the opportunity to win. It sets the framework for Guyanese to win and that is what we are interested in.”
The law also makes it compulsory for certain goods and services to be provided by Guyanese companies, including engineering and machinery as well as immigration and environmental services. The government also intends to promote associated social and economic development through the law, such as supporting the tourism and real estate sectors. Since the first sale of its oil by ExxonMobil in 2019, the citizens of the country have been asking the government to ensure the oil revenues are pumped back into the national economy, benefitting the whole country. The new law aims to fulfill this objective.
To date, international oil companies have made discoveries of 10 billion barrels of oil and gas. In a country of just 800,000, this could have a huge economic impact. Its GDP grew over 43 percent last year alone, while most other states were battling Covid-related economic downturns. Much like oil-rich countries like Norway and the UAE, Guyana has set up a Natural Resources Fund to manage oil revenues as high as a projected $130 billion over the next two decades.
While Guyana stands to profit from the new law, greater exploration adds to the already promising outlook for international investors. In December, Exxon moved ahead with new exploration drilling activities in the Stabroek block. The oil major hopes to find more hydrocarbons in the Fangtooth-1 and Lau Lau-1 wells. Exxon is also carrying out appraisal drilling through the Tripletail-2 and Turbot-2 wells in the same block.
ExxonMobil is currently seeing output of around 120,000 barrels per day from its Liza oilfield in the Stabroek block. The firm contracted a second floating production system, the Liza Unity FPSO, to support operations in the field, which set sail from the Keppel shipyard in Singapore in September. With the potential to produce 220,000 barrels of oil per day, this will significantly enhance Exxon’s operations in the region. The facility will also be capable of storing 2 million barrels of crude oil. A third vessel, Prosperity FPSO, currently under construction, will join the others by 2024.
Guyana can expect an oil output as high as 750,000 barrels per day by 2026, according to Exxon. While American oil firm Hess believes production could total 1 million bpd by 2027.
In December, Exxon also announced the construction of a supply depot, which would bring its total investment to $30 billion. It hopes that this supply base will support the creation of local construction and long-term oil-related jobs. The firm has also hinted at other developments in the country, such as a gas-to-energy project, which would decrease the cost of electricity. An Exxon-led consortium, alongside Hess Corp and CNOOC, currently employs 3,200 national workers across its operations.
It seems that Exxon is putting all its eggs in one basket, moving the vast majority of its offshore operations to Guyana from previous projects in the United States, Brazil, and Trinidad and Tobago. This is largely due to the reasons stated earlier, with Guyana offering brighter prospects for the future of low-cost, lower carbon oil operations that will not dry up any time soon.
By Felicity Bradstock for Oilprice.com
Great post DG: "Margins are on fire", says everything.
FROM BLOOMBERG:
Sheela Tobben
Mon, January 3, 2022, 10:23 AM·2 min read
Oil Rallies Ahead of OPEC+ Meeting to Discuss Output Policy
In this article:
(Bloomberg) -- Oil jumped more than 1% on the first trading day of the new year ahead of an OPEC+ meeting on Tuesday to discuss production policy.
Futures in New York topped $76 a barrel after toggling between gains and losses earlier. The Organization of Petroleum Exporting Countries cut its estimate of the surplus in global oil markets this quarter, a day before the group and its allies consider another output boost. The 23-nation alliance is on track to ratify another modest output revival of 400,000 barrels a day in February, delegates said.
Libya’s crude output is expected to fall to the lowest in more than a year as workers try to fix a damaged pipeline. The outage comes less than two weeks after militia shuttered Sharara, the country’s biggest oil field. At the same time, petroleum consumption is holding up well despite the spread of the omicron variant of Covid-19.
“Oil demand is widely expected to set new all-time highs above the 100 million barrel a day mark in 2022,” said Ryan Fitzmaurice, a commodities strategist at Rabobank. “The global supply-demand balance is expected to remain tight,” given that there have been production issues recently, he said.
Libya expects its oil production to drop by another 200,000 barrels a day over the next week. Combined with supply lost from the shutdown of its Sharara field, that will trim the nation’s overall output to about 700,000 barrels a day.
“I think OPEC+’s decision is a foregone conclusion and omicron news and data will remain the major influence on oil sentiment,” said Vandana Hari, founder of consultant Vanda Insights in Singapore. “We’re likely seeing some bargain-hunting today after a rush to sell at the end of last week.”
Last year, oil posted its biggest annual gain since 2009 as the rollout of Covid-19 vaccines helped economies reopen, boosting energy demand. While OPEC+ is poised to add another 400,000 barrels a day to global supply, there are still concerns about longer-term consumption as China tackles a virus flare-up and the omicron variant leads to flight cancellations worldwide.
Although oil demand is expected to recover to pre-pandemic levels around mid-2022, steady OPEC+ supply increases, a recent uptick in U.S. crude output and a softer seasonal demand period ahead will lift global stockpiles, said Peter McNally, global sector lead at Third Bridge.
Interesting from stockhouse. Thanks douginil. Are we a member of OPEC by default 50% ownership of PBGOV?
Carbide says:
"Yet excess cash is being retained at Prime, $600 million on last announcement, less $100 million dividend, plus large cash flow from another 5 "cargoes" for the balance of Q4. Why hold so much cash at the JV? I know the reason. Do you?"
The mind boggles at the potential prospects. Acquisitions, Cash flow, dividends, buybacks.
Thanks TD. Can't wait. Happy New Year!
A long one but worth it: From Seeking Alpha: Please read the RED highlighted area; That suggests a dividend of about 15 Cents per quarter. IF so.....
Africa Oil: Our Top 2021 Small-Cap Oil Pick Tripled The S&P 500, We Expect That To Continue
Dec. 05, 2021 5:08 AM ETAfrica Oil Corp. (AOIFF)17 Comments19 Likes
Summary
Africa Oil Corporation significantly outperformed in 2021, not surprising to us given the company's valuation.
We expect its outperformance to continue, if not increase, as the company shifts from debt payback to shareholder returns.
The company's small cap higher risk nature gives it one of the highest margins/FCFs in the industry.
I do much more than just articles at The Energy Forum: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »
Dunes of sand in the desert
kyletperry/iStock via Getty Images
Africa Oil Corporation (OTCPK:AOIFF) is a small cap energy company with a $700 million market capitalization. The company has generated roughly 65% returns YTD versus just over 20% for the S&P 500 (NYSEARCA:SPY) as our top small-cap pick. That thesis was based on the company's FCF improvement and debt paydown.
As we'll see throughout this article, we expect Africa Oil Corporation, to continue driving market beating solutions based on its financial strength.
Africa Oil Corporation Strength
Africa Oil Corporation's businesses have continued to remain incredibly strong.
Africa Oil Overview
Africa Oil Corporation Strength - Africa Oil Corporation Investor Presentation
Africa Oil Corporation received 3 dividends from Prime for a total of $150 million in 2021. Since the acquisition, the company has received 67% of the closing cash payment, showing its strength. That's a more than 20% FCF yield from Prime alone and that doesn't count the debt improvement that the company has been doing outside of the cash.
Since Jan. 20, the company has paid down 91% of corporate debt and 44% of Prime debt, which is what we expected. The core company now has an incredibly impressive net cash position of $15.9 million, one that we expect it to increase. The company has worked on sustainably increasing its debt with $150-300 million in new 7-year debt.
Africa Oil Corporation Cash Flow
Financially, Africa Oil Corporation is focused on consistent production and cash flow.
Africa Oil Cashflow
Africa Oil Corporation Entitlement Production - Africa Oil Corporation Investor Presentation
The company is focused on maintaining relatively strong entitlement production of roughly 30 thousand barrels / day with incredibly low lifting costs in the single-digit $ / barrel. Including the Agbami security deposit, ($152 million net) FY'21 CFFO guidance is expected to range from $310 million to $440 million, and primarily be profits.
That's a massive amount of CFFO, $160-290 million without the security deposit, for a company with a $700 million market capitalization. The company has cargoes hedged until Apr. 2022 at roughly $69 / barrel and capital expenditures attributable to the company are fairly low at roughly $20 million annually.
Africa Oil Corporation Financial Positioning
Financially, Africa Oil Corporation has an incredibly strong financial positioning that we expect it'll be able to utilize to drive shareholder rewards.
Africa Oil Financials
Africa Oil Corporation Financial Positioning - Africa Oil Corporation Investor Presentation
Africa Oil Corporation's profits have been substantial since the POGBV acquisition, a "company making" acquisition in our view. The company has a net cash position at the corporate level, as already discussed, and Prime has also paid off 44% of its net debt. That means in the next 2 years the company could get Prime's net debt comfortably to 0 as well.
Prime's debt attributable to Africa Oil is currently roughly $500 million, which is around 1.0x annual attributable EBITDA. Debt paydowns would also help save ~$20-30 million in annual interest expenditures, meaning the lower debt gets, the more of a massive cash machine this company becomes. Lastly, attributable cash is ~$250 million (with the security deposit).
Africa Oil Corporation Shareholder Returns
Africa Oil Corporation, with its existing portfolio, has a number of catalysts that we believe will enable the company to drive massive upcoming shareholder returns.
Africa Oil Shareholder Returns
Africa Oil Corporation Catalysts - Africa Oil Corporation Investor Presentation
In our view, Africa Oil Corporation has two-major catalysts that will continue to propel strong 2022 rewards. The first is its deleveraged portfolio and the second is a distaste for polluting oil assets, especially in regions of the world that have higher risks outside of those assets, such as a variety of geopolitical risks.
For the first, the company took on a massive amount of debt (attributable debt = ~3x market capitalization) when it initially made the POGBV acquisition. That overshadowed the asset's cash flow, and the company has since been deleveraging. It's managed to get that down to ~0.6x market capitalization and 1.0x EBITDA.
There is a path, should Africa Oil Corporation choose, to hit net zero debt within the next year. However, the company seems to be shifting instead to maintaining a responsible low-interest debt position, which we believe is something the company can comfortably afford. That will free up significant cash into 2022 (supported by hedged production).
The second is that other companies are looking to get rid of oil producing assets, especially major oil companies. For large oil companies, Africa has sufficient geopolitical risk, such that, when looking for locations to develop assets, its simply less popular anyway. Nigeria also has to deal with OPEC+ production mandates.
That means more acquisition opportunities such as POGBV.
Africa Oil Corporation has continued to develop its Kenyan oil assets, however, with consistent delays and large pipeline capital requirements, we see production from the assets as 3-5 years away. While impressive, the assets do represent a reliable source of cash flow going into the 2030s and 2040s as they're developed.
In the meantime the company is looking for accretive, West African producing assets, which we believe it'll do well with. It's also looking at dividends or share buybacks pending approvals. While it's been tight lipped here so far, we feel buybacks are the way to go. The company could comfortably start a ~$250 million 1-2 year buyback program.
That would be covered from upcoming POGBV cash, even as it preserves some of its cash for debt paydowns. We see ~$300 million in 2022 dividends, and think looking for new opportunities while buying back 10-20% of the stock during open market oil price volatility, can provide significant shareholder returns.
Africa Oil Corporation Risk
Africa Oil Corporation has an outstandingly small amount of risk compared to a traditional small-cap oil corporation. It's been incredibly proactive about managing its debt, hedging production, and looking for opportunity. In our view its largest risk, like any oil company's, is a drawn out period of lower prices. However, even then we expect it to outperform peers.
Conclusion
Africa Oil Corporation has outperformed heavily in 2021, supported by proactive financial management of its massive cash flows. That's exactly what we expected when we made the company our top small-cap investment recommendation for the year. We expect that substantial outperformance to continue given the company's financial metrics.
Specifically, we see the potential for a massive shareholder return program in 2022-2023, supported by POGBV cash flow, as debt gets lower and lower. We would like to see the company aim to repurchase $250 million of shares, or ~1/3 of its float, during that time period, taking advantage of oil market volatility from COVID-19, etc.
Additionally, we think a trend of large oil companies to move away from Africa oil assets represents a unique opportunity for Africa Oil Corporation.
Stolen from WCSG122 in Yahoo.
Great commentary.
3 days ago:
From the Chairman’s recent letter to shareholders, the Board has approved a shareholder return program, the details of which are to be announced with the full year result in February. Because external approvals are being sought, I believe a share repurchase program has been authorized by the Board. Further, due to the delayed delivery of the details with the February full year results versus “upon receiving approval”, I speculate the Board also wishes to announce the initiation of a quarterly dividend as a part of the return program. A normal course issuer bid limits the share buyback program to 10% of the public float annually. This would be a touch over 40 million shares. Although the issuer can do more via a Substantial issuer bid, this size would offer the ability to buy back about 3.3 million shares/mo. on average, or roughly 150k/per trading day. That is substantial relative to the historic average daily trading volume. If in the range of $2 to $2.50/share range, this would be an expenditure of $80 - $100 million, or $20 to $25 million/quarter. If declare a 5 cent/quarter div, they are looking at just under $24MM/quarter decreasing over time with share purchases. So probably looking at expenditures of about $45MM/quarter, or roughly 60 percent of anticipate cash flow from Prime in 2022 at a Brent price of $70/barrel.
This appears consistent with the Chairman’s letter of striking a balance for an appropriate cash buffer, stable balance sheet, and allocating capital for shareholder returns and acquisitions. If my assumptions prove out, one can reasonably expect a nice percentage move over the next 60 days from the current $1.40 SP. Remember that Prime’s production is hedged at about $70 through April, Brent is over $75/barrel currently, and I expect the Covid fears to be well in the rearview mirror by May in light of the continual therapeutic & vaccine progress. GL
I am backing up the crazy truck as I write this. PCGOF also has some interest in Namibia I believe. The are at 2 cents a share for a reason tho. Might they be bot out. Capitalized to 7B shares or $14,000,000. Interesting times coming up.
Thank you douginil. Looks like no actual dividend for at least 3 months. Just in time for Christmas...next year. Your opinion,?? For me, I think that gives us a greater chance for a very serious dividend as more cargoes will be sold and more wells brought (on line?) and more debt paid down.