Africa Oil results for the three and six months ended June 30, 2022.
Africa Oil Corp. (“Africa Oil”, “AOC” or the “Company”) announces its financial and operating results for the three and six months ended June 30, 2022.
- The Company received two dividends from its shareholding in Prime, totaling $62.5 million1 in Q2 2022 ($162.5 million in H1 2022); since its acquisition of a 50% shareholding in Prime in 2020, the Company has received an aggregate dividend amount of $562.5 million, representing 108% of the closing cash payment.
- Cash balance at June 30, 2022, of $191.0 million (at December 31, 2021 – $58.9 million), with no debt outstanding and an undrawn corporate facility of $100 million.
- Prime has made amendments to its hedging strategy to provide greater scope for retaining price upside, while protecting price downside risk for 50%-70% of its oil entitlement over a 12-month rolling period.
- Selected Prime’s results net to Africa Oil’s 50% shareholding*:
- in Q2 2022, record FCF/boe of $52.8 (Q2 2021 – $30.9)6 due to higher oil prices;
- cash position of $330.6 million and gross debt balance of $501.0 million at June 30, 2022 (Prime net debt to Africa Oil of $170.4 million), which combined with the $191 million cash balance at the Africa Oil corporate level results in a net cash position of $20.6 million; this also gives a robust Net Debt to EBITDAX7 ratio for the twelve months ended June 30, 2022, of 0.3x (twelve months ended December 31, 2021 – 0.4x);
- average daily W.I. production of 25,300 boepd and economic entitlement production of 27,350 boepd (82% light and medium crude oil and 18% conventional natural gas) in Q2 2022 (Q2 2021: 28,000 boepd and 30,300 boepd respectively)3,4,5;
- in Q2 2022, EBITDAX7 of $127.1 million (Q2 2021 – $155.6 million);
- in Q2 2022, cash generated from operating activities of $130.0 million (Q2 2021: $92.9 million, excluding $152.5 million relating to the receipt of the Agbami Security deposit); and
- historical payments relating to Gas Sales Purchase Agreement of $112.0 million received in H1 2022, and the payments are now regularized.
Africa Oil President and CEO Keith Hill commented: “I am pleased to announce another robust quarter that has led to further strengthening of our now debt-free balance sheet with a cash balance of $191 million. Our shareholders can look forward to a busy second half of the year of catalysts including the expected license extension in Nigeria and refinancing of Prime’s RBL debt facility; the two-well Venus appraisal program; the Gazania-1 exploration well; and the potential farm-out of Project Oil Kenya.”
|* Important information: Africa Oil’s interest in Prime is accounted for as an investment in joint venture. Refer to Note 2 on page 5 for further details. Please also refer to other notes on page 5 for important information on the material presented.|
2022 Second Quarter Financial Results
(Thousands United States Dollars, except Per Share and Share Amounts)
|June 30, 2022||December 31, 2021|
|Cash and cash equivalents||191,040||58,885|
|Total equity attributable to common|
|June 30, 2022||June 30, 2021||June 30, 2022||June 30, 2021|
|Share of profit from investment in joint|
|Share of (loss)/profit from investment in|
|Total operating income||13,296||47,359||67,034||95,288|
|Net operating income||6,369||44,133||53,158||88,339|
|Net income per share – basic||0.01||0.08||0.11||0.16|
|Net income per share – diluted||0.01||0.08||0.10||0.16|
|Weighted average number of share|
outstanding – basic (‘000s)
|Weighted average number of share|
outstanding – diluted (‘000s)
|Number of shares outstanding (‘000s)||477,281||473,360||477,281||473,360|
|Cash flows used in operations||(5,341)||(3,080)||(10,121)||(6,922)|
|Cash flows provided by investing||56,309||32,525||155,641||30,623|
|Cash flows used in financing||(621)||(23,785)||(13,433)||(29,073)|
|Total change in cash and cash equivalents||50,433||5,655||132,155||(5,384)|
|Total change in equity||5,817||44,504||43,307||72,427|
|The financial information in this table was selected from the Company’s unaudited consolidated financial statements for the three and six months ended June 30, 2022. The Company’s consolidated financial statements, notes to the financial statements, management’s discussion and analysis for the three and six months ended June 30, 2022, and 2021, and the 2021 Report to Shareholders and Annual Information Form have been filed on SEDAR (www.sedar.com) and are available on the Company’s website (www.africaoilcorp.com).|
FINANCIAL POSITION AND EARNINGS
The Company recognized a total operating income of $13.3 million and net income of $5.7 million during the second quarter of 2022. The operating income primarily relates to the Company’s share of profit from its investments in Prime amounting to $14.4 million.
The Company ended first quarter 2022 with cash of $191.0 million in comparison to cash of $58.9 million at the end of 2021. The Company has no outstanding debt. During second quarter 2022, Prime paid two dividends for aggregate distribution of $125.0 million with net payment to Africa Oil of $62.5 million, related to its 50% shareholding interest. Since the acquisition of a 50% shareholding in Prime in January 2020 for $519.5 million, the Company has received 13 dividends from Prime for a total amount of $562.5 million, representing 108% of the closing purchase price.
On January 31, 2022, the Company announced that all lenders to its Corporate Facility had approved increasing the available amount to $100.0 million from the then unutilized amount of $62.0 million, and extending the availability period to December 31, 2022, from May 13, 2022. The Corporate Facility maturity date of May 13, 2024 and interest margins were unchanged.
On February 28, 2022, the Company announced that its Board of Directors had declared an initial aggregate annual dividend of $0.05 per share (approximately $24.0 million) to be paid semi-annually, with the first payment payable on March 31, 2022, to shareholders of record at the close of business on March 17, 2022.
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