AFRICA OIL ANNOUNCES FOURTH QUARTER AND FULL YEAR 2023 RESULTS
Canada NewsWire
VANCOUVER, BC, Feb. 26, 2024
VANCOUVER, BC, Feb. 26, 2024 /CNW/ - (TSX: AOI) (Nasdaq-Stockholm: AOI) -- Africa Oil Corp. ("Africa Oil", "AOC" or the "Company") is pleased to announce its operating and consolidated financial results for the three months and the year ended December 31, 2023, together with its 2024 Management Guidance. View PDF
Highlights
-- Successfully met 2023 Management Guidance on production and cash flow
from operations2,5.
-- The Company received three dividends totaling $175.0 million in 2023 from
its shareholding in Prime, including one dividend of $50.0 million in Q4
2023. AOC's cash and cash equivalents at December 31, 2023, of $232.0
million.
-- 2023 Full year net income of $87.1 million (2022: net loss of $60.3
million) or $0.19 per share (2022: net loss of $0.13 per share).
-- The Company launched a new NCIB share buyback program on December 6,
2023, and post year-end, on January 10, 2024, started share buybacks
under the new NCIB. The Company will pay a dividend of $0.025 per share
on March 28, 2024.
-- OML 130 renewed for 20 years securing AOC's long term production base and
enabling the refinancing of Prime's debt. Prime's OML 130 and OML 127
were converted to operate under Nigeria's new Petroleum Industry Act
("PIA") and are now subject to a 30% Corporate Income Tax regime compared
to the previous 50% Petroleum Profit Tax ("PPT") regime.
-- Commenced the appraisal campaign for the Venus light oil and associated
gas discovery, with the positive results supporting the commercial
development of the field.
-- Subsequent to the year-end, the Company announced a strategic farmout
agreement between its investee company Impact Oil and Gas Limited
("Impact"), and TotalEnergies, that allows the Company to continue its
participation in the world class Venus oil development project, and the
follow-on exploration and appraisal campaign on Blocks 2913B and 2912
with no upfront costs.
-- Selected Prime's results net to Africa Oil's 50% shareholding*:
-- Recorded full-year average daily WI production of approximately
19,800 barrels of oil equivalent per day ("boepd") and average
daily net entitlement production of approximately 22,400 boepd.
These compare with mid-range 2023 Management Guidance figures of
20,000 boepd and 22,000 boepd for WI and net entitlement
production, respectively.
-- Recorded cashflow from operations2,5 of $298.8 million, which
compares with the guidance mid-point of $290.0 million.
-- Prime's cash position of $76.1 million and debt balance of $375.0
million resulting in a Prime net debt position of $298.9 million
at December 31, 2023.
* Important information: Africa Oil's interest in
Prime is accounted for as an investment in joint venture.
Refer to Note 1 on page 5 for further details. Please
also refer to other notes on page 4 for important
information on the material presented.
Africa Oil President and CEO, Roger Tucker commented: "2023 was a very good year for Africa Oil. Two highlights are the renewal of Prime's OML 130 license for a further 20-year period and the successful appraisal of the Venus discovery, which supports the case for its commercial development. The OML 130 renewal not only secured the long-term future of our core producing assets, it also facilitated the refinancing of Prime's debt on competitive terms and allowed a dividend distribution of $175 million to Africa Oil for the year. The renewal also supports further investments including in the Preowei development project.
The appraisal of the Venus field during 2023 was very encouraging and we note the operator's positive public statements regarding the development of this world-class discovery. We are also excited by the wider prospectivity in the area, as evidenced by the recent Mangetti discovery. Post period end we announced the farmout agreement between Impact and TotalEnergies. Under this transformational agreement Africa Oil will retain exposure to the Venus field and associated exploration upside at no upfront cost, and with no further demand on our balance sheet."
Our focus for 2024 is to enhance the value of our core assets, including our operated exploration assets through strategic farm down transactions, and pursuing opportunities to consolidate and streamline our asset ownerships."
2023 Full Year and Fourth Quarter Results Summary
(Millions United States Dollars, except Per Share and Share Amounts)
Three months ended Year ended
Unit December31, December31, December31, December31,
2023 2022 2023 2022
AOC highlights
Net income/ (loss) $'m (88.8) (182.1) 87.1 (60.3)
Net income/ (loss) $/
per share - basic share (0.19) (0.39) 0.19 (0.13)
Cash position $'m 232.0 199.7 232.0 199.7
Prime highlights,
net to AOC's 50%
shareholding(1)
WI production(3) boepd 18,500 21,300 19,800 23,500
Economic entitlement
production(4) boepd 21,700 23,500 22,400 25,600
Cash flow from
operations(2,5) $'m 62.5 65.6 298.8 279.4
EBITDAX(2) $'m 110.7 140.7 458.7 617.4
Free Cash Flow(2) $'m 16.7 (16.9) 149.1 299.8
Net debt $'m 298.9 225.3 298.9 225.3
The financial information in this table was selected
from the Company's audited consolidated financial
statements for the year ended December 31, 2023. The
Company's consolidated financial statements, notes
to the financial statements, management's discussion
and analysis for the year ended December 31, 2023
and 2022 have been filed on SEDAR (www.sedar.com)
and are available on the Company's website (www.africaoilcorp.com).
In 2023, the Company recorded a net income attributable to common shareholders of $87.1 million. This is primarily made up of income from the Company's investment in Prime of $228.0 million offset against losses from the Company's investment in associates of $47.0 million and impairment recognized to its Kenyan intangible exploration assets of $62.2 million writing these assets down to nil. The net income attributable to common shareholders in 2023 of $87.1 million has increased from a loss of $60.3 million in 2022 as the income from Prime has increased by $81.4 million and the impairment recognized in relation to the Company's intangible exploration assets in Kenya has decreased by $108.4 million. This is offset by an increase in the share of loss from investments in associates of $38.8 million.
The share of profit from the Company's 50% investment in Prime in Q4 2023 was impacted by a non-cash impairment of $131.7 million recorded by Prime, mainly due to Prime applying a higher discount rate in its valuation, and from changes in the technical assumptions in OML 130..
The figures used in the explanations for movements period on period below are based on Prime's gross balances per the financial statements.
Prime revenues decreased by $284.1 million in 2023 compared to 2022, mainly driven by lower liftings. Prime also recorded an increase in cost of sales of $41.7 million, primarily driven by an increase in DD&A of $99.0 million as Prime has changed the method of depletion on its facilities including FPSO from straight line to unit of production, to better reflect the consumption of the reserves' economic benefits. This resulted in gross profit in 2023 to be $325.8 million lower than 2022. In addition, there was a decrease of $88.1 million in other operating income, primarily consisting of investment tax credits which can be offset against PPT, an increase of $181.0 million in impairment charges, and a tax income in 2023 of $248.6 million compared to a tax charge of $519.4 million in 2022. Prime renewed OML 130 resulting in OML 130 operating under the terms of the new PIA as from June 1, 2023, and Prime voluntary converted OML 127 to operate under the new Petroleum Industry Act from March 1, 2023, with all key conditions precedent fulfilled during 2023. Under these terms, OML 127 and OML 130 are subject to a 30% Corporate Income Tax regime compared to the previous 50% PPT regime which resulted in the release of $62.0 million and $346.0 million of deferred income tax liabilities during the year for OML 127 and OML 130 respectively. This has resulted in Prime's profit for 2023 increasing by $156.6 million compared to 2022.
Outlook
2024 Priorities and Business Plan
The Company's focus for 2024 is to advance its main opportunity set comprised of its core assets in deepwater Nigeria, Orange Basin offshore Namibia and South Africa, and Equatorial Guinea. Management will also evaluate the options for consolidating the ownership of its core assets and streamlining of the Company's business structure.
Africa Oil has made a strong start in the delivery of its 2024 business plan with the strategic farm-out agreement between its investee company, Impact, and TotalEnergies for the interests in Blocks 2912 (PEL 91) and 2913B (PEL 56), offshore Namibia, which was announced on January 10, 2024. This transaction gives the Company the opportunity to continue its participation in the world-class Venus light oil development project, and the follow-on exploration and appraisal program on the Blocks at no upfront cost. This frees up the Company's balance sheet for the pursuit of other growth opportunities and shareholder capital returns.
Namibia Orange Basin Appraisal and Exploration Campaign
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