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.
