Afentra has signed a sale and purchase agreement with Sonangol for two blocks offshore Angola, with an up-front cash commitment of $80 million.
The total sum may rise to $130mn. It will gain a 20% stake in Block 3/05 and a 40% stake in Block 23, both non-operated.
The deal has an effective date of April 20, 2022.
Afentra CEO Paul McDade said this, the company’s first deal, provided “significant opportunities ahead to build a material business and positively impact the energy transition in Africa”.
The deal provides net production to Afentra of around 4,000 barrels per day and net 2P reserves of around 20 million barrels. However, the oil in place figure is more than 3 billion barrels, providing room for growth. The cost is around $4 per barrel of 2P reserves.
“The next steps will be to complete our due diligence process and to conclude our discussions on the debt facility to fund the acquisition, with a view to completing the transaction in the third quarter of 2022,” McDade said.
It expects to be re-admitted to AIM in mid-year.
Drilling in
Production under the deal comes from Block 3/05. The licence in the Lower Congo Basin covers eight producing fields. It began producing oil in 1985 and no infill drilling has taken place for the last 15 years.
It has around 40 producing wells, with 17 well head platforms, with oil exported via the Palanca floating storage and offloading (FSO) vessel. Decommissioning costs have been pre funded.
The licence expires in 2025. An extension is a condition of the acquisition, with Afentra expecting this to be pushed out to 2040.
Afentra, in its opening pitch on launch, made much of how it intended to help reduce the environmental impact of operations. The company said it would work with Sonangol on an action plan to further reduce emissions.
After completion, Sonangol will continue as operator with a 30% stake. Maurel et Prom will have 20%, Eni 12%, Somoil 10%, NIS-Naftagas and INA 4% each. Maurel bought into the block in 2018, paying $80mn for its stake, with net production then of 4,600 bpd.
Block 23 is in the Kwanza Basin, covering 5,000 square km. There is seismic on the area but little previous exploration. It does hold the Azul discovery, though, which was the first pre-salt find in the Kwanza.
Maersk Oil drilled the Azul find in 2012.
Assuming the deal goes ahead, Afentra will have 40% and Sonangol 20%. The remaining 40%, and role of operator, goes to Namcor, Sequa and Petrolog.