The Board of Afren plc (“Afren” or “the Group”) announces results for the year ended 31 December 2012
Record financial results driven by strong production growth (+123%); FY 2013E net production expected to average 40,000 to 47,000 boepd (excluding Barda Rash)
Significant exploration success
E&A success ratio of 88%
265% reserves replacement ratio – net working interest 2P reserves addition of 39 mmbbls (gross 76 mmbbls and excluding Ain Sifni) to 210 mmboe
Group pro-forma net 2P reserves expected to increase to approximately 270 mmboe after consolidation of OML 26 reserves following exercise of a put option by a third party over FHN shares (subject to shareholder approval)
Multi-well E&A drilling campaign targeting Pmean resources of 650 mmboe
Okwok appraisal success confirms management view of 52 mmbbls gross recoverable reserves (net working interest 29 mmbbls)
Simrit-3 well confirms eastern extent of anticline
Strong balance sheet
net debt, excluding finance leases US$488 million (31 December 2011: US$548 million)
US$300m senior secured Ebok facility signed (post period end), replacing the existing Ebok RBL facility. Pro-forma net debt unchanged
Repeatable strategy – continue to create significant shareholder value
Commenting today, Osman Shahenshah, Chief Executive, said:
“In 2012 we achieved record financial results driven by strong production growth at our greenfield developments offshore Nigeria. We realised an E&A success ratio of 88% and a 2P reserves replacement ratio of 265%. We have started our 2013 multi-well E&A campaign with success at Okwok, offshore Nigeria, and Simrit-2 and Simrit-3, in the Kurdistan region of Iraq. With a track record of project delivery, exploration success and strategic acquisitions, we are well placed to continue to create significant value for shareholders.”
There will be a presentation to analysts at 09.00 am BST at the Lincoln Centre, 18 Lincoln’s Inn Fields, London, WC2A 3ED.
The presentation will also be broadcast live at www.afren.com where the accompanying slides will be available. The presentation will be available on playback from 12:00 pm.
2012 Full Year Results Summary
Record financial results
Afren delivered record financial results in the period driven by strong production growth from the Ebok and Okoro fields, offshore Nigeria, and the benefits of continued high oil prices. Net working interest production in the year increased to 43,059 boepd (including OML 26) representing a year-on-year increase of 123%. During the period, turnover increased by 151% to US$1,499 million (2011: US$597 million) with profits after tax increasing by 62% to US$203 million. Cash flow from operations during the period increased by 177% to US$935million (2011: US$338 million), equivalent to US$60 per flowing barrel, a level that we believe is sustainable given the pipeline of existing production and appraisal opportunities within our portfolio.
2012 was a year of excellent exploration success with three significant discoveries announced at the Okoro Field Extension and Ebok North Fault Block, both offshore Nigeria, and at the Ain Sifni PSC, Kurdistan region of Iraq, representing an E&A success ratio of 88%. Our discoveries in Nigeria have added 39 mmbbls of net working interest 2P reserves, representing a reserves replacement ratio of 265% and increase in net 2P reserves to 210 mmboe. By leveraging our fast track development skills and utilising existing infrastructure, we have commenced early production from both the Okoro Field Extension and Ebok North Fault Block, both within ten months of discovery.
In addition, on 25 March 2013 and subject to shareholder approval, Afren is seeking to consolidate its holding in First Hydrocarbon Nigeria (FHN) following the exercise by a third party of a put option, which will give Afren a 54.8% beneficial interest in FHN. Post accounting consolidation, pro-forma net 2P reserves of the Group are expected to be approximately 270 mmboe. A separate announcement has been released today.
Multi-well high-impact exploration campaign underway
To date, our 2013 multi-well E&A campaign has delivered successful results on the Okwok appraisal in Nigeria and the Simrit exploration wells on the Ain Sifni PSC in the Kurdistan region of Iraq. Both results are expected to further grow our reserves and resources base in 2013.
Drilling on the Simrit-3 well, exploring the eastern extent of the large scale Simrit anticline is continuing. The well is currently operating at 11,483 ft having drilled and logged hydrocarbon bearing intervals in multiple reservoirs. A multi-zone testing programme is being prepared when drilling operations conclude.
At Simrit-2, having achieved a flow rate of 13,584 bopd on test from the Triassic Kurra Chine Formation in 2012, the Partners on the Ain Sifni PSC, completed three additional DSTs in the Mus, Adiayah and Butmah formations yielding incremental flow rates of 5,368 bopd of 21o API. The Partners have now successfully tested six out of twelve zones which in aggregate have yielded flow rates of 18,952 bopd. The remaining testing operations will focus on Upper Jurassic and Cretaceous reservoirs.
In addition, following the successful completion of the three well appraisal campaign across three separate fault blocks at Okwok, the Partners have encountered total net oil pay of 256 ft in the ‘D’ series reservoirs. At this stage, management estimates gross recoverable reserves of 52 mmbbls (subject to FDP approval). Over the remainder of the year we have further wells planned across the Ebok/Okwok/OML 115 area to de-risk further upside potential that we believe can be rapidly commercialised and developed over the short to medium term.
Capex in line, strong financial position and capital structure
Net debt, excluding finance leases, as at 31 December 2012 was US$488 million (31 December 2011: US$548 million) with cash at bank of US$525 million (31 December 2011: US$292 million). 2012 full year capital expenditure was US$523 million; forecast 2013 capital expenditure is approximately US$620 million.
We are delighted to have signed a US$300 million senior secured Ebok facility, at Libor plus 4-4.8%, with no scheduled repayments until January 2015 (post period end). The facility has been arranged and fully underwritten by BNP Paribas, Citi and Natixis and replaces the existing Ebok RBL facility.
Strategy and outlook
Afren has established leadership positions in each of its three business units, Nigeria and other West Africa, Afren East Africa Exploration and the Kurdistan region of Iraq. With an exciting work programme in 2013 encompassing both established and new basins, we expect to further consolidate our leading position in Nigeria, further demonstrate the quality of our asset base in the Kurdistan region of Iraq and open up new oil and gas basins in East Africa. With numerous opportunities for growth, 2013 promises to be another year of achievement for Afren and we are well placed to continue to deliver superior returns for our shareholders.
Source: Afren plc
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