Scarbender307
4月前
Stolen from Long Player
Feb. 02, 2026 11:30 AM ETMeren Energy Inc. (MRNFF) Stock, MER:CA Stock
Long Player
I
Summary
Meren Energy remains undervalued despite strong growth prospects and a significant stock price recovery.
MRNFF offers a high dividend yield. It is also supported by an extremely conservative 0.4 debt ratio.
Management’s renewal of a normal course issuer bid signals confidence in MRNFF’s undervaluation.
The company can repurchase up to 5% of its public float over the next year if valuation remains attractive.
This idea was discussed in more depth with members of my private investing community, Oil & Gas Value Research.
Meren Energy (MRNFF) demonstrates that despite the record highs that the stock market hits, there are stocks that still remain out of favor even though they have solid growth prospects.
Meren Energy Common Stock Price History And Key Valuation Measures
Meren Energy Common Stock Price History And Key Valuation Measures (Seeking Alpha Website February 1, 2026)
Even though the stock price has run up considerably from the low price it hit just a little while back it still has quite a bit to go to get back to where it should be. Note that the dividend yield is still in high-yield territory despite the fact that this company has a generally low debt ratio. The latest corporate presentation has the debt ratio at 0.4, which is extremely conservative. This would indicate that there is no threat to the dividend from a financial perspective.
Obviously, management believes that the stock is cheap because they renewed a normal course issuer bid with the proper authorities. This particular course of action allows the company to repurchase up to 5% of the public float of stock over the next year should the price of the stock remain attractive.
Last Article
As the last article noted, Meren has basically met all of its cash needs one way or another. Now it is in a waiting mode for one of its partners to "do something" other than evaluate whatever needs to be evaluated.
Should, for example, one of the partners decide to drill some more wells in Nigeria, the company has the financial arrangements necessary to participate in those wells. On the other hand, there are projects where the company is carried to first production.
Even though this is a very small offshore player, the risk management here is extraordinarily well handled for such a small player. As a result, the company has decent income to both pay a dividend, repay debt, and participate in the drilling of more wells while having some solid growth prospects that require no cash.
The balance sheet strength that results is one that is seldom found in a company this small that is an offshore player.
The Business
Meren has long focused its business prospects on Africa.
Meren Energy Business Summary (Meren Energy Corporate Presentation January 2026)
The cash flow currently comes from the Nigerian interests. That particular business has a very low value compared to the production.
The reason for this has been covered several times in past articles. Nigeria is very helpful to the industry in general. But the government is not as effective as it could be.
Current Nigerian Business
The current business in Nigeria is operated by Total (TTE) and Chevron (CVX).
Meren Energy Summary Of Current Production (Meren Energy Corporate Presentation January 2026)
Having a partnership with a major oil producer, as shown above, takes a whole lot of the small company risk out of the investment consideration. What is basically left is cash management (which should be straightforward) along with some relatively minor production-related tasks (like selling the production).
On the other hand, this company does not control capital expenditures (especially the big expenditures like drilling new wells). That makes it important to keep some financial flexibility just in case a major capital expenditure "pops up on the agenda out of nowhere."
Growth Prospects
Similarly, the growth prospects all have major integrated companies as the manager. This again takes out of the investment consideration a whole lot of small company risk because this company is not managing its business. What it does manage is the cash flow. But that is a whole lot less than what is typically the case for offshore companies.
Meren Energy Summary Of Nigerian Operating Climate (Meren Energy Corporate Presentation January 2026)
As shown above, the Nigerian situation is improving. But it does have quite a bit of improvement to go. Operating offshore avoids much of what is going on onshore. That alone makes the business prospects better.
But the company stands to improve the valuation of its Nigerian business if the improvement shown above continues.
Meren Summary Of Nigerian Business Growth Opportunities (Meren Energy Corporate Presentation January 2026)
The Nigerian business likely offers the most immediate growth opportunities in the form of new interval "discoveries" and field extensions. There is also the possibility that as technology continues to advance, existing production can recover more oil in place than is currently planned.
South Africa and Namibia
These prospects are operated by Total Energies (TTE). Now the value of this business (if and when it happens) should be higher than the Nigerian business. Both countries are seen as relatively more stable with good solid backing infrastructure, and very effective governments.
Meren Energy Orange Basin Business Summary (Meren Energy Corporate Presentation January 2026)
Production in this area is probably a few years away. As noted above, Total Energies is moving the Venus discovery along about as fast as it can. That is very likely to be the first significant production.
But the big deal here is that the company is funded to first oil on both projects. It retains a smaller interest in the projects as a result. But this is a very small company. Therefore, those small interests will have a significant effect on the company when production starts in the future.
Even though production from both areas is very likely, a final investment decision to move to production has not been made in either case. Even though things look very good, there could be unforeseen challenges in the future that change the outlook.
Speculative
The company has obtained some more acreage, as shown below. But as has been the case in the past, this idea will not move forward until a larger partner is attracted.
Meren Energy Equatorial Guinea Acreage Summary (Meren Energy Corporate Presentation January 2026)
This acreage is in the very early stages of assessment for its potential. As to what the company is willing to spend before it either attracts a "name" partner or gives up on the acreage entirely remains to be seen.
Most likely there will be a series of assessment steps before there is any marketing for an operating partner.
Summary
Meren Energy has a dividend yield that should indicate a problem. That problem is likely doing business in Nigeria. But this management is in the offshore business and so likely escapes a lot of the issues that onshore businesses have to deal with in this country. Having a major integrated company as an operator also helps when navigating more challenging countries. Nigeria does support the industry. But there are definite challenges that I have covered many times over the years to doing business in that country. As a result, paybacks are very short, and profitability is good. But the value of the business overall remains low.
Nonetheless, this strong buy idea has made more than enough money to justify its investment in the Nigerian cash flow. Furthermore, there are good, solid prospects of future business from more stable countries. That future business would diversify the company and likely provide for an enhanced overall company valuation.
In the meantime, that generous high-yield dividend appears to be well protected. The remaining cash flow pays down debt and funds more drilling in Nigeria offshore. The "paid to wait" idea is very attractive here. But the risk of doing business in Nigeria needs to be thoroughly understood.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
Scarbender307
9月前
Summary: From Long Player.
Meren Energy has attracted Total as a partner, setting it apart from peers.
The company holds small interests in potentially large discoveries where it is carried to first production, offering solid if speculative upside.
A pause in partnership expenditures allowed significant cash accumulation and debt repayment.
Management has effectively managed cash flow and debt, a rare feat for such a small offshore firm.
The stock price is best looked at as a growth idea rather than an income idea. The currently high yield means that future prospects are not valued at all by the market.
This idea was discussed in more depth with members of my private investing community, Oil & Gas Value Research. Learn More »
Meren Energy (OTCPK:AOIFF) is a very small player in the offshore market. To make things more interesting, the source of income comes from Nigeria at the current time. That makes this idea a bit specialized with a fairly high degree of risk for an investor. Yet this speculative idea has successfully navigated the offshore industry so far while attracting Total (TTE) as a partner. That separates this company from many in its industry. Furthermore, this company has a small interest in some potentially large discoveries in which it is carried to first production. That likewise does not happen often.
Second Quarter
The second quarter saw a break in some fairly significant partnership expenditures that has allowed some cash accumulation while repaying some debt.
Meren Energy Summary Of Second Quarter 2025, Results (Meren Energy Second Quarter 2025, Earnings Press Release)
Notice that the net debt has declined sharply from the year before. That is mostly due to the accumulation of cash once the partnership expenditures paused. After the quarter was over (in July), the company repaid about $60 million in debt. The likely reason that this happened was that the pause in expenditures was extended while the partnership continues to evaluate results.
Now, development and exploration drilling is expected to resume towards the end of the next fiscal year or maybe later. But this means that production will likely slowly decline as this company really has nothing else for a source of cash to offset the lack of drilling.
The net debt ratio is around 0.6. But given the size of the company, the market will likely be concerned with the debt ratio (without the "net" part), which is still pretty close to an acceptable 1.
The key here seems to be that cash flow is handling the partnership drilling plans (one way or another) without the debt ratio exploding. This is something that this management appears to be very good at. It is rare to find in offshore companies this small. Most offshore companies this small that I follow run into financial challenges or worse during the time I follow them.
Dividend:
The market has long had a concern about the dividend. But given the continuing cash buildup, there is probably very little concern for the time being. However, in the long run, those concerns might prove valid as a discovery may encourage management to spend the cash on the business rather than giving it back to shareholders.
Meren Energy Common Stock Price History And Key Valuation Measures (Seeking Alpha Website August 30, 2025)
Normally that dividend rate would sound all kinds of alarms. But this should really be looked at as a growth opportunity rather than an income situation. With that said, you take the income when you can get it. But be prepared for a discovery that takes some cash and will likely make the investment far more money than any dividend, no matter how outrageous the yield.
Long-time readers know that this company has "name" partners like Total (which is currently carrying the company on two discoveries) and Chevron (CVX) (which operates at least one of the partnership fields in Nigeria that is producing income.
This is another thing that gives this small company a credibility that few offshore companies this size have. It also likely reduces the investment risk to provide a speculative but very positive asymmetric return.
Carried Interests
This company has some partnerships with TotalEnergies, where the expenses are paid for by Total (and sometimes the partnership in general) until first production. That would put the partnership on the same terms as the Nigerian partnership, where the company spends from its cash flow for the current business.
Meren Energy Summary Of Venus Discovery Situation (Meren Energy Corporate Presentation Second Quarter 2025)
This is a discovery that has been significant enough for Total to cover from time to time. It is therefore highly likely that the interest this company holds will prove to be a material growth engine.
Rather than being an "alarm bell" that dividend yield shown before indicates that a major discovery like this has yet to be part of the stock price.
Meren Orange Basin Interest With TotalEnergies (Meren Energy Corporate Presentation Second Quarter 2025)
Understand that with the agreement on the carried interest, this company has no worries about meeting expenses that have plagued some other companies I cover because TotalEnergies is the one that takes care of that until there is first production.
Both South Africa and Namibia are looked at two of the best places on the African continent to do business. Both offer more stability and infrastructure support than much of the continent as well. Both will support the industry.
So, the overall environment is such that this cash flow is likely to be valued higher than the cash flow currently coming from Nigeria. The Nigerian government is both helpful and encouraging. But that government is not all that effective.
Summary
Mr. Market is worried about the current dividend even though this company offers some very solid growth prospects with "name" partners. Therefore, Meren Energy remains a strong buy idea, though the investment risk has to be regarded as elevated with the income coming from offshore projects in Nigerian waters.
Meren Energy Summary Of Growth Catalysts (Meren Energy Corporate Presentation Second Quarter 2025)
The market itself likes to have "smooth" and predictable growth. But that is not going to be possible for this company until it grows quite a bit larger.
In the meantime, investors should consider the current price dirt cheap with the growth projects shown above as the reason for future value increases.
There are definitely political uncertainty worries affecting businesses around the world. But this company has the partners to help sell the product produced during rough times for a decent price while being able to participate in the growth of the interests shown above in the future. This is a small company with a clear pathway to materially increase its size in the near future.
Risks
The last article discussed the merger that doubled the size of the company while doubling production. This was likely done to save some duplicate costs while at the same time providing for future cash needs because this company has a full plate. However, there is no assurance that such a plan will work in the future. The offshore business is just loaded with surprises. So, let us see how this unfolds.
The cash flow comes from Nigeria. That country is more stable than many in Africa. But that government is not all that effective. The offshore business is likely insulated from the worst of periodically exploding pipelines and other guerrilla issues. But that may not always be the case.
Offshore discoveries and lower-risk extensions can disappoint at any time.
All this being said, the association with larger companies that make up these partnerships makes this company more credible than many its size. It also reduces investment risk compared to many companies this size.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
Scarbender307
10月前
WOW!!!
Amilia Stone
July 22, 2025
11:34 am
Meren Energy (TSE:MER) Head of Investor Relations and Communications Shahin Amini caught up with DirectorsTalk to discuss the recent rebranding, transformational asset deal, production strategy and dividend policy.
Q1: Shahin, could you just give us an introduction to the company and explain the reasoning behind the rebrand?
A1: Until about a couple of months ago we went by the name Africa Oil, and the name change to Meren Energy came about following the completion of a transformational deal that doubled our reserves and production.
This deal involved the consolidation of the full ownership of a joint venture company called Prime Oil and Gas that has interests in deep water assets offshore Nigeria. We originally acquired a 50% interest in Prime back in January 2020 through a transaction that turned out to be a great investment for the company and for our shareholders. It was strategically compelling for us to take 100% ownership of Prime in order to take full control of its decision making, take control of its strong balance sheet and cash flows.
The deal completed in March of this year and it felt the right time to mark this transformational milestone by setting a full stop for both Africa Oil and Prime and roll out a new corporate identity.
The beating heart of the company is your Nigerian assets; these account for all of our reserves and production.We had an end of 2024 2P reserves base of 102 million barrels of oil equivalent and our last reported production is 38,000 barrels of oil equivalent per day.
Other than Nigeria, we have a leading independent position in the Orange Basin offshore Namibia and South Africa, with an effective interest in the world-class Venus oil development project and follow-on exploration opportunities with multiple catalysts for the next couple of years.
We are also present in Equatorial Guinea where we operate two exploration blocks with large oil and gas prospects already identified.
At Meren, we remain very much focused on shareholder returns and I’m proud that since our first dividend payments in 2022, we have returned US $220 million through a combination of base dividend distributions and share buybacks.
Notably, following the completion of the Prime deal, we have tripled our annual dividend payout from US $0.05 per share to US $0.15 per share with a current implied dividend yield of 12%.
Q2: Now, all of your reserves and production are from your Nigerian assets. Why invest so much in this country?
A2: Well, first of all, it’s about the quality of the rocks and Nigeria is a very attractive country for its oil and gas resources. Our production is from large-scale, long-life, and high-quality reservoirs with low lifting costs.
Nigeria also offers a very attractive fiscal regime; it’s the only jurisdiction I know of where the government has lowered tax rates for deep-water projects in order to attract investments, and our headline tax has gone down from 50% to 30%.
We’re also seeing a much quicker and more streamlined regulatory process in the country for the approval of new projects and transactions.
I should also add that all of our assets in Nigeria are in deep water, more than 100 kilometres offshore, so we don’t have the challenges that the industry in Nigeria faces with on onshore operations or in shallow water.
Q3: Could you elaborate on your comment regarding your high-netback production?
A3: There are three key components underpinning our high netback productions, two of these I’ve already mentioned.
So, one, attractive fiscal terms; two, low-cost production, our last reported lifting cost was around US $12 per barrel; and three, premium-grade pricing and we have the flexibility to lift and market our entitlement barrels, and we are targeting international markets. So, we’re not at the mercy of just one single market.
You might also enjoy reading Meren Energy Nigerian Deepwater Assets Fuel 12% Dividend and Growth Pipeline (Video)
I should also add that our fields are operated by super-majors. This underscores the quality of these assets. Not only are these core to our portfolio, they’re also material to our partners, Chevron and TotalEnergies.
Our producing assets are midlife assets with the bulk of capital investment behind us with a cashflow from operations significantly greater than the required ongoing capital investments.
So, we do have the benefit of predicable production, predictable cashflow from high quality assets operated by top tier companies.
Q4: How does your Nigerian production support the company’s ability to fund dividends and your work programme at the same time?
A4: As I’ve already stated, our cash flow from operations is materially greater than our ongoing capital investment requirements for our assets in Nigeria. In addition to our producing assets, we also have attractive short-cycle investment opportunities in our Nigerian portfolio. These include infill wells and the development of discoveries that are candidates to be subsea tiebacks to our existing platforms.
This will support longer term production profiles and these are again, expected to be funded from cash flow from operations. This will support future free cash flow with the scope for us to manage our balance sheet and support our shareholder return plans.
Q5: What’s the outlook for your Orange Basin assets and what can shareholders expect in the next couple of years there?
A5: We have two tracks, offshore in Namibia and South Africa in the Orange Basin. First, we have the Venus development project, and this is progressing towards Final Investment Decision, which is expected during the first half of 2026, with first oil production possible in 2029.
The second track is the ongoing exploration, and we expect the drilling of at least two high-impact exploration wells, that is planned in the next 12–18 months.
The important point here is that all these activities; the development and exploration, are funded through industry deals that we completed last year whereby we’ve captured the undeveloped resources, the tremendous exploration upside without the upfront cost or without straining our balance sheet.
So, this does give us a stable basis to pursue these opportunities in the future.
Q6: You mentioned earlier that you’d tripled the dividend, you’re now paying a side dividend with a yield of circa 12%. Why is that so important?
A6: Very simply, it’s about giving back to our shareholders and also very importantly, it’s about capital discipline as work towards delivering further growth.
We’re confident that we can continue to deliver our base dividend policy and that is currently targeting an annual distribution of US $100 million. Of course, we will seek to go above and beyond this by growing the business.
However, all of business decisions must be focussed on delivering a sustainable total shareholder return business model. I think one of the big attractions of investing in Meren is that you have a very good balance between delivering growth opportunities whilst returning capital to shareholders.
Q7: Could you in one sentence summarise what makes Meren Energy a compelling investment opportunity?
A7: We are working very hard to deliver a differentiated story that is supported by production and cash flows from genuinely world-class assets that are operated by super-majors. We have presented a transparent capital allocation framework that is focused on delivering meaningful shareholder returns, and we have funded growth opportunities with multiple catalysts expected during the next two years.
Scarbender307
1年前
Mar. 01, 2025 10:34 AM ETAfrica Oil Corp. (AOIFF) Stock, AOI:CA StockAOIFF, AOI:CA17 Comments
The Value Portfolio
Investing Group Leader
Africa Oil Corp.'s 4Q 2024 earnings justify its $600 million market cap, with strong 2025 prospects for shareholder returns despite production issues.
The merger with BTG Oil & Gas will double FCF, enabling a $100 million annual dividend and potential share repurchases.
The Venus Oil development offers long-term growth, with TotalEnergies covering costs, and significant future production from South Africa's Orange Basin.
Despite crude oil price risks, Africa Oil Corporation's robust FCF and debt management make it a valuable investment with a double-digit dividend yield.
I am The Value Portfolio, an experienced analyst specializing in stock research and wealth growth. I run the investing group The Retirement Forum where I focus on ideas to prepare you for retirement.
Andy Andrews
Africa Oil Corporation (OTCMKTS: OTCPK:AOIFF) announced its 4Q 2024 earnings. Despite tough oil prices and some production issues in Nigeria, the company managed to more than justify its almost $600 million USD market cap. As we'll see throughout this article, the company will have a more impressive 2025, which will enable strong shareholder returns.
Results
The company managed to achieve respectable results based on its current asset operations.
Africa Oil Corporation Investor Presentation
The company had 17k barrels / day in full-year average daily working interest, slightly in line, but below management guidance. The company recorded 2024 FY CFFO of almost $270 million, just slightly below management guidance. Prime has $175 million in net debt, which will double when the company makes a pro forma merger, but it's more than manageable.
The company had 101% proved reserves with more than $1 billion in 2P NPV reserves. The company has almost 30 million barrels in reserves, and is producing roughly 5 million barrels / day as the asset continues to decline.
Financial Results
The company's financial results show a continued ability to perform.
Africa Oil Corporation Investor Presentation
The company's production declined slightly YoY but EBITDAX for the year went up along with FCF. Earning almost $200 million in attributable FCF, is enough to pay down the company's debt at current prices driving strong returns. The company has more than $60 million in cash, and it managed to pay off a staggering $125 million in debt.
That's with no lifting in Q4 2024 which will help the company in 2025.
BTG Integration
The company is roughly a week from closing its merger with BTG Oil & Gas.
Africa Oil Corporation Investor Presentation
The company will double its immediate FCF with BTG Oil and Gas receiving 35.5% of the outstanding share capital of the outstanding capital. That's enlarged from 35%, due to Africa Oil Corporation's repurchases of its shares. We'd like to see share repurchases continue in the upcoming years, and even ramp up with the company's FCF.
The company is moving to $100 million in annual dividends with a new combined $900 million market cap. The company's pro forma $0.15 annual dividend is a double-digit dividend yield as the base yield that the company can comfortably afford. The company will still have substantial FCF on top of that.
The company earned $68 million to shareholders in 2024, a double-digit return, and it's doubling FCF in 2025 with a much smaller enlarged share count.
Venus Oil
For the long-term the company also has an exciting development opportunity in Venus Oil.
Africa Oil Corporation Investor Presentation
Africa Oil Corporation Investor Presentation
The company has a net 4% interest in Block 2913B through its shareholding in Impact Oil & Gas. The field is expected to see the FID in a year, with 150k barrels / day in production. That's 6k barrels / day in attributable production to the company from the first development. With additional drilling and developments it will be essential for the company's portfolio.
Africa Oil Corporation Investor Presentation
While production is expecting to trend down from 2025-2027, it'll pick up some in 2028, and improve from there. TotalEnergies is covering the development costs, with a fully carry, and the field has billions of barrels of oil. The 4% attributable to Africa Oil Corporation is enough to support 10s of thousands of barrels alone, with Guyana style developments.
The company has even larger stakes in the South Africa Orange Basin, but development is continuing there. The company has the cash flow to run development with long-term potential here.
Future Shareholder Returns
The company has the ability to drive future shareholder returns. The company sits at a $900 million market cap. Simply based on 2024, the company will earn almost $400 million in FCF. Continuing to 2027, even with the planned production decline, the company will still have $250 million in FCF. The company has $350 million in debt through Prime, $275 million counting cash.
The company is committing to $100 million in dividends, which it can comfortably afford, but we'd like to see it match that with share buybacks. Regardless, the company can within a single year, pay its debt down to $0, and pay a double-digit shareholder return. For now, repurchases in 2025 are capped at $14-15 million.
We don't see another company that's as obviously undervalued.
The largest risk to our thesis is crude oil prices. The company is profitable at current levels. However, there's real recession risk in the economy, and there's pressure to increase production. That could push down prices, which could substantially hurt Africa Oil Corporation's ability to drive its future shareholder returns.
Conclusion
Africa Oil Corporation is about to wrap off its merger with BTG Group and initiate a double-digit dividend yield. That's a base dividend yield that the company can comfortably afford. The company is continuing to generate massive FCF, enough to comfortably handle its debt, pay dividends, and repurchase shares.
Scarbender307
1年前
Summary
Africa Oil Corporation's share repurchase program aims to reduce outstanding shares by 6% annually, enhancing shareholder value alongside a robust dividend policy.
The company is expanding through strategic agreements and increased ownership of promising assets, ensuring future growth and strong cash flow.
With a projected $200 million in capex and $400 million in operating cash flow, Africa Oil expects substantial free cash flow, supporting shareholder returns.
Despite potential oil price risks, Africa Oil's diversified portfolio and aggressive growth plans make it a top oil investment pick for 2025.
I am The Value Portfolio, an experienced analyst specializing in stock research and wealth growth. I run the investing group The Retirement Forum where I focus on ideas to prepare you for retirement.
Lone oil rig in middle of sea
HeliRy
Africa Oil Corp. (OTCPK:AOIFF) is a small-cap oil company worth more than $600 million. The company has done a great job, with its small size, working to diversify itself. We already discussed the company's intelligent acquisition and continuing growth here, and now it's taking advantage of its cash flow and low share price to repurchase shares to the tune of 6% annually. That shrinking share count, combined with strong assets, make it a valuable investment.
Africa Oil Corporation Share Repurchases
The company has instituted a share buyback program, which is what will potentially result in a 6% shrink in 2025.
Africa Oil Corporation Investor Presentation
Africa Oil Corporation Investor Presentation
Last year, the company purchased 23.3 million shares, or roughly 6% of its outstanding shares, with a limit at 10%. The company's new buyback program for 2024-2025 is capped at a similar 6% of shares and in the past 1 month the company has already purchased 0.5%, putting it on target for that 6% reduction in 2025.
Combined with a strong dividend, which we'll discuss below, and the company has strong share repurchases it can comfortably afford. We'd like to see even more aggressive repurchases at its low share price.
Africa Oil Corporation Expansion
At the same time, for a small company, Africa Oil has done an incredible job of pivoting with both Prime Oil and Gas and other opportunities.
Africa Oil Corporation Investor Presentation
Africa Oil Corporation Investor Presentation
The company has signed a number of agreements to chase some of its most exciting assets. In 2024, the company had a farm down of its exciting Namibia and South African assets. It also managed to increase its ownership in Impact, one of its most exciting assets for future development. The company has also announced the consolidation with the remainder of Prime.
That will be incredibly important for the company's cash flow and future return ability. The company has a number of drilling prospects and even additional growth potential going into 2025.
Africa Oil Corporation Investor Presentation
Africa Oil Corporation Investor Presentation
The net results of this is visible above. The company's production in Nigeria will decline in some of the next years, bottoming in 2027. However, in 2028 there will be some recovery and after that, the company expects to see additional opportunities from Namibia. That will enable the company to maintain continued strong production without needing to spend substantial capex.
Capex is expected to sit at roughly $200 million, with operating cash flow at more than $400 million. That means the company should be able to generate more than $200 million in FCF on an annual basis. For 2025, the company should be able to generate closer to $300 million in FCF.
The biggest uncertainty for the company going into the end of the decade is the ability to turn discoveries into tangible production. Majors are selective about what they invest in, and while farm-down transactions are promising, it still requires billions, which Africa Oil Corporation doesn't have. The timing and uncertainty of that can hurt the company's future success.
Africa Oil Corporation Existing Cash Flow
The company has continued to generate strong cash flow.
Africa Oil Corporation Investor Presentation
Africa Oil Corporation Investor Presentation
The company has been impacted by continuing to pay down Prime Oil and Gas debt and net debt is now at -$30 million combined (Africa Oil Corp has positive cash flow but its 50% shareholding of Prime Oil and Gas has attributable debt). Despite the company spending cash on both share buybacks and dividends, and declining its personal cash pile in the chart above, net debt counting Prime Oil and Gas has actually declined by almost $40 million.
That means that on top of $60 million in shareholder returns (10%) the company managed to improve its cash by almost $40 million (another 6-7%). Those are strong double-digit returns by the company. The company's existing cash flow will double next year with less than 2x dilution given the company's merger with BTG Oil & Gas.
Africa Oil Corporation Shareholder Returns
The company overall is committed to strong shareholder returns as a combined entity.
Africa Oil Corporation Investor Presentation
Africa Oil Corporation Investor Presentation
The combined company will be broken down with existing shareholders having 65% and the new shareholders at 35%. At a $630 million USD market cap, that implies a total company value of $970 million. The company plans to maintain a minimum of $150 million of liquidity, which it can comfortably afford, and get net debt to EBITDAX
Scarbender307
2年前
From Seeking Alpha: Dividends and Dividend Yields Relative to Share Structure, Pre- and Post-Prime Oil & Gas Amalgamation
Fig. 2. Dividends and dividend yields relative to share structure, pre- and post-Prime Oil & Gas amalgamation (Laurentian Research, based on Africa Oil financial reports)
Dividend safety
Africa Oil also announced two additional uplifting news last week, concerning the Nigerian oilfields:
The Nigerian Upstream Petroleum Regulatory Commission has given timely regulatory clearance for the combination of two partners in Prime Oil & Gas Coöperatief U.A., i.e., Africa Oil and BTG Pactual Holding S.à r.l. NUPRC has confirmed that the amalgamation does not amount to a change of control in the beneficial ownership of Prime's local subsidiaries, and ministerial consent is not required for the transaction; therefore, the transaction may proceed as proposed. The NUPRC regulatory approval
Africa Oil: A Strong Buy With Positive News Flows And De-Risked 11.6% Dividend Yield
Nov. 06, 2024 4:41 AM ETAfrica Oil Corp. (AOI:CA) Stock, AOIFF StockCVX, GLPEF, GLPEY, TTE, TTFNF7 Comments
Laurentian Research
Investing Group Leader
(13min)
Summary
The completion of the farm-down of Impact's interest in Namibian blocks 2912/2913B cleared the path for Africa Oil to complete its consolidation of Prime Oil & Gas in Nigeria.
Africa Oil: A Strong Buy With Positive News Flows And De-Risked 11.6% Dividend Yield
Nov. 06, 2024 4:41 AM ETAfrica Oil Corp. (AOI:CA) Stock, AOIFF StockCVX, GLPEF, GLPEY, TTE, TTFNF7 Comments
Laurentian Research
Investing Group Leader
(13min)
Summary
The completion of the farm-down of Impact's interest in Namibian blocks 2912/2913B cleared the path for Africa Oil to complete its consolidation of Prime Oil & Gas in Nigeria.
Owning 100% of Prime will double production, enabling 11.63%-yielding dividends. Nigerian regulatory approval of the Prime consolidation and the 20-year PML-52 extension de-risk these dividends for the foreseeable future.
Here, I argue AOIFF's recent pullback has made the stock deeply undervalued. Near-term catalysts and tripling of base dividends may drive the share price significantly higher.
I am Laurentian Research, I have a PhD in geoscience and decades of investment experience. I run the investing group The Natural Resources Hub, where I aim to uncover hidden gems in the mining and energy sectors.
FPSO Oil Rig
Dividends to be tripled
Those following E&P activities in the Orange Basin off southwestern Africa know that I previously recommended Africa Oil Corp. (OTCPK:AOIFF) as the preferred way to gain exposure to this emerging oil province. Judging by the progress of E&P activities since then, the investment thesis has proven correct, though it may take a bit longer for shareholders to reap the rewards.
To that end, Africa Oil said last week that its investee company Impact Oil & Gas Limited has completed the farm-down of its interests in Blocks 2912 and 2913B offshore Namibia to TotalEnergies (TTE), with US$99 million in cash payments received as reimbursement for the net costs incurred on the blocks prior to January 1, 2024. Impact has retained a 9.5% interest in each of the blocks, which in accordance with industry farm-down customs are carried until the first sales proceeds from the Venus field, as shown in Figure 1.
The completion of the farm-down is expected to trigger a chain reaction of events:
It "satisfies a condition precedent to the amalgamation to effect the consolidation of all of Prime Oil & Gas Coöperatief U.A. in Africa Oil," which holds interests in two oil complexes in deepwater Nigeria that collectively produce approximately 36,000 boe/d.
The completion of the Prime consolidation will officially double the reserves and production of Africa Oil, leading to a 2X increase in corporate FCF.
The doubling of corporate FCF will enable Africa Oil to significantly expand its shareholder return program. Indeed, the company is committed to paying out US$100 million (or US$0.15 per share) in base dividends after the Prime amalgamation, a 3X increase over the current dividends (US$23 million or US$0.05 per share) that existing shareholders have been receiving, and distributing 50% of the excess FCF in the form of supplementary dividends and/or share buybacks.
At US$0.15 per share, the base dividends will have a forward yield of 11.63%. Africa Oil now expects to close the Prime amalgamation by the end of the first quarter of 2025, implying that the 11.63%-yielding base dividends may start to be paid out as soon as the second quarter of 2025, as illustrated in Figure 2.
Dividends and Dividend Yields Relative to Share Structure, Pre- and Post-Prime Oil & Gas Amalgamation
Fig. 2. Dividends and dividend yields relative to share structure, pre- and post-Prime Oil & Gas amalgamation (Laurentian Research, based on Africa Oil financial reports)
Dividend safety
Africa Oil also announced two additional uplifting news last week, concerning the Nigerian oilfields:
The Nigerian Upstream Petroleum Regulatory Commission has given timely regulatory clearance for the combination of two partners in Prime Oil & Gas Coöperatief U.A., i.e., Africa Oil and BTG Pactual Holding S.à r.l. NUPRC has confirmed that the amalgamation does not amount to a change of control in the beneficial ownership of Prime's local subsidiaries, and ministerial consent is not required for the transaction; therefore, the transaction may proceed as proposed. The NUPRC regulatory approval was originally expected in mid-2025 or later.
NUPRC has also renewed Petroleum Mining Lease 52 (PML 52), containing the Chevron (CVX)-operated Agbami field, for 20 years effective from November 24, 2024. This follows last year's renewal of the licenses for the TotalEnergies-operated Akpo, Egina, and Preowei fields. Production at Agbami averaged 98,000 bo/d in 2023 from 30 producers, 5 gas injectors, and 10 water injectors, or 7,840 bo/d net to the 8% working interest of Prime Oil & Gas Coöperatief U.A.
The 20-year renewal of these leases secures the long-term production outlook from these high-quality assets. Infill drilling programs at Egina, Akpo, and Agbami and the development of the Preowei field will further derisk the cash flow outlook of Africa Oil. The Africa Oil board of directors considers the above-described base dividends to be sustainable in a range of through-cycle oil price scenarios, as shown in Figure 3.
Estimated Operating Cash Flow, Free Cash Flow, and Base Dividends (in US$100 million) for 2024-2033. Free cash flow is derived from operating cash flow, based on a 2-year forward curve and US$70 long-term oil prices (inflated at 2% per year), and nominal CapEx
Fig. 3. Estimated operating cash flow, free cash flow, and base dividends (in US$100 million) for 2024-2033. Free cash flow is derived from operating cash flow, based on a 2-year forward curve and US$70 long-term oil prices (inflated at 2% per year), and nominal CapEx (modified by Laurentian Research based on Africa Oil presentations and financial reports)
In summary, the 11.63%-yielding dividends are believed to be safe because:
The Nigerian deepwater oilfields have been granted a 20-year lease extension, are of extremely low costs (US$15/boe in OpEx), and are being further developed by leading E&P operators (TotalEnergies and Chevron) for production stability;
With the farm-down in Blocks 2912/2913B and 3B/4B in the Orange Basin and Prime amalgamation in Nigeria, Africa Oil will become leaner and incur lower G&A;
Being carried until first oil production in Namibia, Africa Oil no longer has any significant capital commitment, enabling it to return FCF to shareholders.
Why the recent selloff then?
The stock of Africa Oil has been in a serious pullback since September 2023, as shown in Figure 4. First, it was sell the news of a successful drill-stem test in the discovery well Venus-1X and the drilling of the Venus-1A appraisal well. Next, Africa Oil CEO Roger Tucker negotiated the farm-down of the working interest of investee company Impact in blocks 2912/2913B as well as Africa Oil's stake in South Africa block 3B/4B, which many shareholders hated to see, perhaps due to loss aversion. Then, Africa Oil agreed with BTG Pactual Holding S.à r.l. to merge their respective 50% stakes in Prime Oil & Gas Coöperatief U.A., which some shareholders thought was done at an inopportune time when Africa Oil's share price had undergone a recent selloff. Amidst the uncertainty resulting from the series of transactions, the pause of share buybacks in the aftermath of the announcement of the Prime consolidation certainly did not help.Considering that Africa Oil trades at US$8.2 per barrel of low-cost, high-margin, producing 2P reserves, or 0.49X its NAV (pro forma the Prime consolidation and excluding exploration upside in blocks 2912, 2913B, 3B/4B, and Equatorial Guinea) as shown in Figure 5, I believe Africa Oil stock has been grossly oversold and is now deeply undervalued—especially as it currently trades at the same level as when news of the giant Venus discovery first broke (Figure 4).
NAV build-out of Africa Oil, shown with its market cap as of November 1, 2024. The NAV of the Nigerian producing assets is estimated from Africa Oil’s NI 51-101 statement of reserves for year-end 2023, with the gross asset value at 13% discount rate being US$1,065 million, adjusted for 50% of Prime’s net debt and Nigerian dividend withholding tax. The value of the Namibian assets is calculated from Africa Oil’s offer to Impact’s minority shareholders
Fig. 5. NAV build-out of Africa Oil, shown with its market cap as of November 1, 2024. The NAV of the Nigerian producing assets is estimated from Africa Oil’s NI 51-101 statement of reserves for year-end 2023, with the gross asset value at 13% discount rate being US$1,065 million, adjusted for 50% of Prime’s net debt and Nigerian dividend withholding tax. The value of the Namibian assets is calculated from Africa Oil’s offer to Impact’s minority shareholders (modified by Laurentian Research based on Africa Oil presentation and Seeking Alpha)
As Venus is being considered for accelerated development, it is prudent for Tucker to farm down Impact's (and Africa Oil's) exposure in blocks 2912/2913B to lower the financing risk. The forgone upside (10.5% farmed out), in my opinion, cannot compare with the benefit of eliminating all of the risks associated with having to come up with potentially billions of dollars of capital to develop Venus and conduct further exploration; it spares shareholders from severe equity dilution that would inevitably result from project participation. Farm-outs are a standard oil industry practice for project participants—especially small-cap companies like Africa Oil—to lower risks, and energy equity investors must learn to accept this. We cannot eat our cake and have it too. As for the temporary halt of share Fig. 5. NAV build-out of Africa Oil, shown with its market cap as of November 1, 2024. The NAV of the Nigerian producing assets is estimated from Africa Oil’s NI 51-101 statement of reserves for year-end 2023, with the gross asset value at 13% discount rate being US$1,065 million, adjusted for 50% of Prime’s net debt and Nigerian dividend withholding tax. The value of the Namibian assets is calculated from Africa Oil’s offer to Impact’s minority shareholders (modified by Laurentian Research based on Africa Oil presentation and Seeking Alpha)
As Venus is being considered for accelerated development, it is prudent for Tucker to farm down Impact's (and Africa Oil's) exposure in blocks 2912/2913B to lower the financing risk. The forgone upside (10.5% farmed out), in my opinion, cannot compare with the benefit of eliminating all of the risks associated with having to come up with potentially billions of dollars of capital to develop Venus and conduct further exploration; it spares shareholders from severe equity dilution that would inevitably result from project participation. Farm-outs are a standard oil industry practice for project participants—especially small-cap companies like Africa Oil—to lower risks, and energy equity investors must learn to accept this. We cannot eat our cake and have it too. As for the temporary halt of share repurchases, it was a smart move on the part of Africa Oil management because continued share buybacks using Africa Oil's cash before the completion of the Prime consolidation mostly benefit BTG. I believe those investors who have sold will likely come around once the 11.63%-yielding dividends begin to be paid out. At least the high yield will cause much pain to the short sellers. That takes us to what near-term catalysts there are for Africa Oil.
Near-term catalysts
Besides the threefold increase of dividends likely starting in the 2Q2025, the following catalysts may drive the Africa Oil stock toward its intrinsic value.
Near-term catalysts
Besides the threefold increase of dividends likely starting in the 2Q2025, the following catalysts may drive the Africa Oil stock toward its intrinsic value.
Firstly, Africa Oil currently has an indirect interest of approximately 3.078% in Venus-containing blocks 2912/2913B through its 32.4% shareholding in Impact. Africa Oil is poised to increase its shareholding in Impact to approximately 39.5% via a call and put option agreement before February 27, 2025, which represents an effective economic interest of approximately 3.8% in the blocks.
Secondly, by drilling four wells (Venus-1X, Venus-1A, Venus-2A, and Mangetti-1X) in Block 2913B, the operator TotalEnergies has shown that Venus is a world-class field, possibly containing over 5 billion boe of in-place resources or 2 billion boe of recoverable light oil and associated gas.
Venus is projected to come on stream by 2029 or 2030, initially producing 150,000-160,000 boe/d with one FPSO at a low cost of US$20/boe. Africa Oil is expected to be entitled to 5,890 boe/d of that initial production before carry repayment to TotalEnergies from Impact’s after-tax cash flow. The final investment decision (or FID) for Venus development is expected to be reached by the end of 2025. Although indications are that the Venus FID will be positive, investors should be aware of the risk that Venus development may be delayed.
Thirdly, further exploration in blocks 2912/2913B on the Namibia side and 3B/4B on the South Africa side of the Orange Basin may lead to additional discoveries, although exploration drilling always carries extremely high risks.
The Mangetti discovery may have an additional 1.5 billion boe of in-place oil. On October 20, 2024, TotalEnergies spudded exploration well Tamboti-1X in the far northern part of Block 2913B using the Odfjell DeepSea Mira semisubmersible rig, targeting approximately 2 billion boe of in-place resources in one objective similar to the reservoir penetrated in the nearby Mopane discovery of Galp Energia (OTCPK:GLPEY) and another objective already encountered in the Mangetti-1X well.
Two additional 3D seismic surveys were completed in 2024. The seismic data is currently being processed and interpreted, which is expected to lead to the identification of additional drilling targets in the far northern and southern parts of blocks 2912/2913B.
In South Africa's Block 3B/4B (Figure 6), where Africa Oil has a carried 18% interest and which has multiple exploration prospects on trend with the Venus and Graff discoveries, with an estimated 4 billion boe in unrisked gross P50 prospective resources, TotalEnergies is poised to drill one firm and one contingent well likely in Q1 to Q2 2025.
Investor takeaways
Last week's completion of the farm-down of Impact’s interest in Namibian blocks 2912/2913B paved the way for Africa Oil to finalize its consolidation of Prime Oil & Gas Coöperatief U.A. Owning 100% of Prime will double its production and facilitate the initiation of 11.63%-yielding dividends. The approval of the Prime consolidation and the 20-year extension of PML 52 by the Nigerian regulator substantially de-risk these dividends for the foreseeable future.
The recent pullback in Africa Oil’s share price has left the stock deeply undervalued relative to its NAV, creating an opportunity with approximately 100% upside. A series of near-term operational catalysts, combined with an expected tripling of base dividends likely starting in Q2 2025, is anticipated to drive the share price substantially higher despite the high risks associated with deepwater exploration drilling.
Scarbender307
2年前
Africa Oil Announces Completion of the Strategic Farm Down of Impact's Namibian Interests and Provides an Operational Update on Namibia
VANCOUVER, BC, Nov. 1, 2024 /CNW/ – (AOI–TSX, AOI–Nasdaq-Stockholm) – Africa Oil Corp. ("Africa Oil", "AOC" or the "Company") is pleased to announce that its investee company Impact Oil & Gas Limited (“Impact”) has completed the farm down (“Farm Down”) of its interests in Blocks 2912 and 2913B offshore Namibia (“Blocks”) to TotalEnergies EP Namibia B.V. Impact has also received a cash payment of approximately USD 99 million, as reimbursement for its share of costs incurred on the Blocks net to the Farm Down interests, prior to January 1, 2024 (“Effective Date”).
Impact has retained a 9.5% interest in each of the Blocks and will benefit from a carry loan for all its remaining development, appraisal and exploration costs on the Blocks from the Effective Date, until the date on which Impact receives the first sales proceeds from oil production on the Blocks (“First Oil Date”). The carry loan is repayable from a share of Impact’s after-tax cash flows, and net of all joint venture costs, including capital expenditures, from production on the Blocks.
Africa Oil President and CEO, Roger Tucker commented: “The Farm Down allows Africa Oil to retain a funded interest in the Venus development project that is expected to add significant reserves and production to our portfolio. We also believe there is tremendous exploration upside on the Blocks starting with the recently spud Tamboti-1X well.
The Farm Down completion also satisfies a condition precedent to the amalgamation to effect the consolidation of all of Prime Oil & Gas Coöperatief U.A. in Africa Oil. We expect to close the amalgamation during the first quarter of 2025 which will then allow us, subject to customary Board approvals, to implement the enlarged shareholder returns program, as previously communicated in our Prime consolidation press release of June 24, 2024”.
Africa Oil currently has a shareholding of approximately 32.4% in Impact. On the closing of the call and put option agreement with three Impact shareholders that was announced on August 27, 2024, the Company will increase its shareholding in Impact to approximately 39.5%, which represents an effective economic interest of approximately 3.8% in the Blocks.
Namibia Operational Update
Following the 2022 Venus-1X discovery well, four further exploration and appraisal wells have been drilled on the Blocks to date. Of the five wells drilled, four have, successfully penetrated and tested the Venus field. As a result, planning is currently progressing for the first development area, with a development scheme expected to be finalized by the end of 2025.
During 2024, two additional 3D seismic acquisition programs were completed to facilitate further exploration over the southern and northern parts of the combined blocks. This has resulted in most of the licensed area now being covered by 3D seismic. This data is currently being processed and interpreted and will help further evaluate prospects and leads in the far northern and southern parts of the Blocks.
On October 20, 2024, the DeepSea Mira spud the Tamboti-1X well, targeting significant additional resource in the north of Block 2913B. Beyond Tambotti-1X, there are a number of prospects in the southern part of the Blocks that are currently being matured by the recent 3D seismic data and create an opportunity for follow-on potential high impact exploration wells.
Block 2913B (PEL 56) and the Venus Discovery
Petroleum Exploration License 56, Block 2913B, is located offshore southern Namibia and covers approximately 8,215 km² in water depths between 2,450m and 3,250m. Following the completion of the Farm Down, Impact now holds a 9.5% interest in this Block. TotalEnergies, the operator, holds a 50.5% interest, QatarEnergy holds a 30.0% interest and NAMCOR, the Namibian state oil company, holds a 10.0% interest.
Block 2913B contains the world class Venus light oil and associated gas field that was discovered by the Venus-1X well drilled in 2022, which encountered high-quality light oil-bearing sandstone reservoir of Lower Cretaceous age. The field has been appraised with the testing of the Venus-1X side-track well plus three additional appraisal wells that have also been flow tested. These wells are: Venus-1A; Venus-2A; and Mangetti-1X.
Block 2912 (PEL 91)
Petroleum Exploration License 91, Block 2912 is adjacent and to the west of Block 2913B. It covers an area of approximately 7,884 km2 in water depths between 3,000m and 3,950m. Following the completion of the Farm Down Impact now holds a 9.5% interest in this Block. TotalEnergies, the operator, holds a 47.2% interest, QatarEnergy holds a 28.3% interest and NAMCOR holds a 15.0% interest.
Additional Information
This information is information that Africa Oil is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 3:15 pm EDT on November 1, 2024.
farrell90
2年前
Total may drill South African oil block 3B4B where Aoiff is a partner after planned Namibian well in block 2913b drill. At end below:
https://www.thevillager.com.na/national/2024/totalenergies-targets-billion-barrel-resource-at-next-deepwater-well/
TotalEnergies is aiming for a potential billion-barrel resource with its upcoming deepwater well offshore Namibia, according to the company’s CEO, Patrick Pouyanne.
"Speaking at TotalEnergies’ strategy and outlook event in New York last week, Pouyanne revealed plans for the Tamboti-1X well, which is set to spud soon in the northeast of Block 2913B, home to the company’s major Venus discovery.
When asked by an analyst for a pre-drill resource estimate for Tamboti, Pouyanne described it as “big,” later clarifying that Tamboti is an “elephant” with a potential billion-barrel resource. However, it remains unclear whether this refers to recoverable oil or oil-in-place (OIP).
TotalEnergies’ upstream head, Nicolas Terraz, also spoke at the event, stating that Tamboti had been “de-risked” by the Mangetti-1X well drilled last year.
Mangetti hit two reservoirs with an estimated 1.5 billion barrels of OIP and drilled deeper to appraise the northern extent of the Venus discovery.
Venus-1, discovered in 2022, is Africa’s largest Sub-Saharan oil find, with an estimated 1.5 to 2 billion barrels of oil.
It marked TotalEnergies’ largest discovery in two decades, with phase one expected to exploit around 920 million barrels of oil.
Tamboti-1X is believed to target a prospect separate from Mangetti and Venus. It is not expected to aim for Venus-age reservoir sands but rather the shallower plays encountered at Mangetti.
A drilling rig is en route to Namibia to begin work on the well.
Terraz added that, following Tamboti-1X, TotalEnergies could drill newly identified prospects in the southern part of Block 2913B and explore “large” structures in the company’s two South African blocks — DWOB and 3B/4B — in the untested deepwater Orange basin.
GLTA Farell
0
[# Views - Click to view] 1
Comment
Report IconAbuse
Be the first to comment on this post
Sintana Energy Inc
https://www.thevillager.com.na/national/2024/totalenergies-targets-billion-barrel-resource-at-next-deepwater-well/
TotalEnergies is aiming for a potential billion-barrel resource with its upcoming deepwater well offshore Namibia, according to the company’s CEO, Patrick Pouyanne.
"Speaking at TotalEnergies’ strategy and outlook event in New York last week, Pouyanne revealed plans for the Tamboti-1X well, which is set to spud soon in the northeast of Block 2913B, home to the company’s major Venus discovery.
When asked by an analyst for a pre-drill resource estimate for Tamboti, Pouyanne described it as “big,” later clarifying that Tamboti is an “elephant” with a potential billion-barrel resource. However, it remains unclear whether this refers to recoverable oil or oil-in-place (OIP).
TotalEnergies’ upstream head, Nicolas Terraz, also spoke at the event, stating that Tamboti had been “de-risked” by the Mangetti-1X well drilled last year.
Mangetti hit two reservoirs with an estimated 1.5 billion barrels of OIP and drilled deeper to appraise the northern extent of the Venus discovery.
Venus-1, discovered in 2022, is Africa’s largest Sub-Saharan oil find, with an estimated 1.5 to 2 billion barrels of oil.
It marked TotalEnergies’ largest discovery in two decades, with phase one expected to exploit around 920 million barrels of oil.
Tamboti-1X is believed to target a prospect separate from Mangetti and Venus. It is not expected to aim for Venus-age reservoir sands but rather the shallower plays encountered at Mangetti.
A drilling rig is en route to Namibia to begin work on the well.
"Terraz added that, following Tamboti-1X, TotalEnergies could drill newly identified prospects in the southern part of Block 2913B and explore “large” structures in the company’s two South African blocks — DWOB and 3B/4B — in the untested deepwater Orange b
TotalEnergies is aiming for a potential billion-barrel resource with its upcoming deepwater well offshore Namibia, according to the company’s CEO, Patrick Pouyanne.
"Speaking at TotalEnergies’ strategy and outlook event in New York last week, Pouyanne revealed plans for the Tamboti-1X well, which is set to spud soon in the northeast of Block 2913B, home to the company’s major Venus discovery.
When asked by an analyst for a pre-drill resource estimate for Tamboti, Pouyanne described it as “big,” later clarifying that Tamboti is an “elephant” with a potential billion-barrel resource. However, it remains unclear whether this refers to recoverable oil or oil-in-place (OIP).
TotalEnergies’ upstream head, Nicolas Terraz, also spoke at the event, stating that Tamboti had been “de-risked” by the Mangetti-1X well drilled last year.
Mangetti hit two reservoirs with an estimated 1.5 billion barrels of OIP and drilled deeper to appraise the northern extent of the Venus discovery.
Venus-1, discovered in 2022, is Africa’s largest Sub-Saharan oil find, with an estimated 1.5 to 2 billion barrels of oil.
It marked TotalEnergies’ largest discovery in two decades, with phase one expected to exploit around 920 million barrels of oil.
Tamboti-1X is believed to target a prospect separate from Mangetti and Venus. It is not expected to aim for Venus-age reservoir sands but rather the shallower plays encountered at Mangetti.
A drilling rig is en route to Namibia to begin work on the well.
Terraz added that, following https://www.thevillager.com.na/national/2024/totalenergies-targets-billion-barrel-resource-at-next-deepwater-well/
TotalEnergies is aiming for a potential billion-barrel resource with its upcoming deepwater well offshore Namibia, according to the company’s CEO, Patrick Pouyanne.
"Speaking at TotalEnergies’ strategy and outlook event in New York last week, Pouyanne revealed plans for the Tamboti-1X well, which is set to spud soon in the northeast of Block 2913B, home to the company’s major Venus discovery.
When asked by an analyst for a pre-drill resource estimate for Tamboti, Pouyanne described it as “big,” later clarifying that Tamboti is an “elephant” with a potential billion-barrel resource. However, it remains unclear whether this refers to recoverable oil or oil-in-place (OIP).
TotalEnergies’ upstream head, Nicolas Terraz, also spoke at the event, stating that Tamboti had been “de-risked” by the Mangetti-1X well drilled last year.
Mangetti hit two reservoirs with an estimated 1.5 billion barrels of OIP and drilled deeper to appraise the northern extent of the Venus discovery.
Venus-1, discovered in 2022, is Africa’s largest Sub-Saharan oil find, with an estimated 1.5 to 2 billion barrels of oil.
It marked TotalEnergies’ largest discovery in two decades, with phase one expected to exploit around 920 million barrels of oil.
Tamboti-1X is believed to target a prospect separate from Mangetti and Venus. It is not expected to aim for Venus-age reservoir sands but rather the shallower plays encountered at Mangetti.
A drilling rig is en route to Namibia to begin work on the well.
Terraz added that, following Tamboti-1X, TotalEnergies could drill newly identified prospects in the southern part of Block 2913B and explore “large” structures in the company’s two South African blocks — DWOB and 3B/4B — in the untested deepwater Orange basin.
GLTA Farell
Scarbender307
2年前
Stolen from Seeking Alpha:
Africa Oil: Simplifying The Balance Sheet While Reducing Cash Needs
Sep. 13, 2024 7:22 PM ETAfrica Oil Corp. (AOI:CA) Stock, AOIFF
Long Player
Investing Group Leader
(9min)
Summary
Africa Oil should grow tremendously over the coming 10 years.
Africa Oil consolidates Prime Oil & Gas ownership.
The second quarter results show an interruption in production due to the drilling campaign.
Africa Oil is debt-free, but Prime's debt is being paid down.
Africa Oil has a number of simplification proposals underway.
The last article on Africa Oil Corp. (OTCPK:AOIFF) discussed the consolidation of prime ownership under the company umbrella in exchange for company stock. Since that time, management has continued to streamline its investments while also reducing future cash needs. The result of this is carried interests in key areas while the company's financials will be a bit easier to understand in the future. There's also a focus on areas that will be growth areas while maybe some more speculative (or uncertain) projects go by the wayside as this process continues. Africa Oil was, for a long time, a story company that's one of the rare companies transitioning to an actual operating entity with a very bright future and some impressive partners.
What made the transition possible was the association at the time with the Lundin Energy Group of companies. That sizable organization is well respected for its record with investors. But that association has now ended. The proposed combination not only simplifies the whole structure, but also places another major (well-respected) shareholder behind the company to help this company continue to grow. It's hard to understate the necessity of that kind of relationship when it comes to growing a small company in the offshore business.
Second Quarter
Another announcement made previously was a drilling campaign to add to production for the company's major producing asset off the coast of Nigeria. That was going to interrupt ongoing production to a certain extent and the current results show that. However, the breakeven results were overshadowed by a distribution from Prime and a reduction in the net debt.
A combination of a different tax structure and the key transactions shown below have affected both comparisons and reported results. The details are shown in the quarterly report. A combination of issues may continue to affect quarterly results until all of this completed, which makes quarterly comparisons a real challenge.
Africa Oil itself is debt-free. However, Prime does have debt that's being paid down and therefore shows on the consolidated balance sheet of Africa Oil.
Probably the most important consideration is the structure and health of the company after all the anticipated transactions are complete. The same goes for the drilling campaign.
Key Transactions
This is a summary of what was announced during the fiscal quarter. After the quarter ended, the company announced an offer to minority shareholders of the subsidiary Impact to buy out their shares.
All of this activity sort of makes the second quarter earnings announcement largely irrelevant. Once the drilling campaign is completed, production interruptions are no longer a concern and the steps shown above are likewise complete, this will be a very different company going forward.
Management also announced an agreement to trade its nearly 15% interest in Eco (Atlantic) Oil & Gas Ltd. (OTCPK:ECAOF) for a 1% interest that Eco held in 3B/4B. This was part of the earnings announcement and further rationalizes the company holdings. As a result, this company now only has interests in the African Continent.
Throughout all of this Africa Oil itself will remain debt-free. The only issue would be the drilling campaign and how production issues as a result of that campaign affect cash flow and debt repayments in the future.
The Business Going Forward
The transaction with Eco Atlantic will, in effect, end the business relationship with that company.
Any relatively small player in the offshore business will have down years and up years rather than a smooth "straight-line" up.
Africa Oil Pro-Forma Future Guidance:In this case, the latest drilling campaign will provide an immediate production (and cash flow) boost until the next campaign. Later, another project will come online and provide another source of cash flow. That diversification will provide the start of the company's effort to smooth earnings.
It's harder to tell the effects on the stock price because the industry has been in the doghouse for some time. As a result, it may well be worth the wait for the better years ahead because the industry could return to more normal historical valuations that would provide some upside potential even if production declines between drilling campaigns. There's also some potential for another accretive acquisition using some cash flow.
The key part of the slide is the low capex required to get to that second production source shown on the lower right-hand corner of the slide. (Couldn't copy and paste it)
Summary Of The Future Business
Africa Oil is a Canadian company that reports in United States dollars.
One of the things that gives this company credibility over many of its size is the partners shown above. Both Chevron Corporation (CVX) and TotalEnergies SE (TTE) are well-regarded operators that very much elevate this offshore operator considerably above many offshore operators of the same size.
This could well make the search for a "name" partner for the Equatorial Guinea project much easier than it otherwise would be.
The end of the strategy of minimizing cash out in exchange for some working interest in a project is finally within the view of the future.
The coming online of projects in South Africa and Namibia is bringing income located in two of the most advanced countries in Africa. They're also two of the most stable countries on the continent. This represents a higher valuation location than the location of the source of the current cash flow.
It is going to take some time for that future to arrive and begin to diversify cash flow. Therefore, this stock may be appreciated when the latest drilling campaign is completed. But there's a lot more appreciation potential that's a few years away.
Valuation of the stock will depend upon market conditions at the time another project begins to contribute to total company production and profits. Overall, though, this is a small player with decent-sized interests in some relatively large projects.
Summary
Between the drilling campaign that is affecting the cash flow from the one cash source, and all the announced simplification strategies, the company's financial statements are very likely to undergo a major (positive) transition that will end with the consolidation of Prime within the company. Overall, every step appears to be a major plus for the company.
Africa Oil, as a smaller offshore operator, naturally has an elevated risk to the point it's considered speculative at this point. However, for those who can handle the risk of an issue like this, it's probably a strong buy idea. This company is likely to be a materially different and far more valuable company by the end of a decade (and likely before that). This is that rare company that's making the transition from a "story company" to an operating model.
Africa Oil itself is debt-free. However, Prime does have debt that it's paying down and is consolidated on the balance sheet. That debt is at conservative levels. The low requirements of cash needed to bring the next projects online (because a carry has been negotiated) means that the company will continue to have a strong balance sheet.
Risks
Any upstream company is exposed to the volatility and low visibility of future oil prices. A sustained and severe downturn in commodity prices could change the outlook for this company and some of its promising projects.
The drilling campaign underway has so far been successful. But success for the rest of the campaign is not assured.
Similarly, all the simplification steps have necessary approvals and administrative steps that need to be successful. A review of all of this could find some unforeseen challenges to get all the anticipated steps done. It's unlikely. But it's a risk.
A loss of key personnel could materially set back the company's future prospects.
Hot Features
プレミアム
登録してリアルタイムのアラート、カスタムポートフォリオ、市場の動きを入手してください。
Renee
8月前
メールアドレスで登録
