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Company Afren PLC
TIDM AFR
Headline

Trading statement and operations update

Released 07:00 28-Jan-2014
Number 6280Y07

RNS Number : 6280Y
Afren PLC
28 January 2014
 



                              

Afren plc: Trading statement and operations update

·     774 mmboe discovery on Ogo - one of the largest global discoveries in 2013; moving forward with appraisal programme

·     2013 Production of 47,112 boepd, at the upper end of guidance (40,000 - 47,000 boepd)

·     2013 Revenue of US$1.65 billion; Operating Cash Flow in excess of US$1.1 billion; Capex US$685 million; Net Debt US$739 million

·     2014 capital allocated to highest cash return projects (US$845 million); double digit production growth to fund high impact exploration programme over the next five years

London, 28 January 2014 - Afren plc ("Afren" or the "Group"),  (LSE: AFR, FTSE 250 index), issues the following trading statement and operations update, in advance of the Company's 2013 full year results which are scheduled for release on 27 March 2014. Information contained within this release is un-audited and is subject to further review.

Record financial results, production at the upper end of guidance and continued exploration success.

Afren is expected to deliver record financial results for 2013, with sales revenue of circa US$1.65 billion and operating cash flow in excess of US$1.1 billion. This is driven by a year-on-year 14% increase in like-for-like net production, principally from the Ebok and Okoro fields, offshore Nigeria. Afren recorded total gross production of 59,926 boepd in 2013, with net production of 47,112 boepd.  Following exploration success in Nigeria during 2012 and 2013, Afren and its partners will commence development of the Okoro Further Field Development, Ebok North Fault Block and Okwok in 2014, all of which will generate high margin cash flow for the Company. These new developments will ensure that Afren delivers double digit production growth over the next five years. Afren is expecting gross production of approximately 62,000 bopd in 2014 (approximately 40,000 bopd net to Afren), which factors in the shut-down associated with the additional platform installation on Ebok, cost recovery on Ebok, the ongoing regional developments in Kurdistan and the timing of rig arrival on OML 26 onshore Nigeria.

Afren continued its industry-leading exploration success in 2013 with the play opening Ogo discovery at OPL 310, offshore Nigeria, with P50 gross recoverable resources of 774 mmboe. The Company will now acquire 3D seismic ahead of appraisal and further exploration drilling.  OPL 310 is located in the Upper Cretaceous fairway that runs along the West African Transform Margin and Afren has similar exposure on the adjacent OML 113 block, in Côte d'Ivoire and Ghana.  The syn-rift play which encountered a 280 ft gross hydrocarbon column in the Ogo well also exists on OML 113 and could deliver significant upside to the Aje project, which will be tested in 2014. In addition, during 2013 the Company successfully divested its interests in Block CI-11 and the Lion Gas Plant in Côte d'Ivoire, while negotiating additional acreage in two new blocks, CI-523 and CI-525, thereby increasing its exposure to the West African Transform Margin.

On the Ain Sifni block in Kurdistan, following the world class discovery with the Simrit-2 exploration well (1,509 feet of net oil pay and an aggregate flow rate of 19,641 bopd achieved), drilling was concluded on the Simrit-3 well, confirming the eastern extent of the Simrit anticline and achieving a cumulative test rate of 6,293 bopd. A declaration of commerciality has been submitted to the authorities and a resource upgrade is expected shortly. The Maqlub-1 exploration well, testing the high potential Maqlub structure is drilling ahead, with hydrocarbons encountered in the Cretaceous and Jurassic reservoirs. In East Africa, Afren has acquired over 11,000 km of 2D, 3,000 km2 of 3D and 19,700 km of gravity-magnetic data across the portfolio and has matured ready-to-drill prospects on the Tanga block in Tanzania and L17/18 and Block 1 in Kenya. The Company is currently participating on the El Kuran-3 well.  Following hydrocarbon shows, the well has been extended to below the planned target depth to evaluate the deeper Gumboro zone.

The balance sheet is strong, with net debt of US$739 million at the end of 2013 and the Company has successfully extended the maturity of its liabilities and lowered the cost of its debt. The capital budget for 2014 is circa US$845 million and focusses on both high cash return projects and further exploration drilling. 

Commenting today, Osman Shahenshah, Chief Executive of Afren plc, said:

"2013 has been another exceptional year for Afren, with a combination of record financial results, production ahead of guidance and industry leading exploration success. The play opening Ogo discovery in Nigeria was one of the largest global discoveries in 2013, and will be followed by further appraisal and exploration drilling. At the same time we will continue to allocate capital to the highest cash return projects. This will provide the necessary funding to continue to de-risk our material exploration opportunity set. With industry leading positions in three key global oil and gas regions, Nigeria, the Kurdistan region of Iraq and East Africa, we remain focused on maximising value for our shareholders."

 

Trading Statement

Production

FY 2013 (boepd)

Working interest

Average gross production

Average net production

Okoro

50%

18,041

9,020

Ebok

100%/50%(1)

34,910

34,481

OML 26

45%

3,472

1,562

CI-11 & LGP(2)

47.96% &100%

2,864

1,665

Barda Rash

60%

639

384

Total


59,926

47,112

(1)      Pre/post cost recovery

(2)      Includes production volumes to 27 August 2013, the last business day before the completion of the sale of CI-11 & LGP to Petroci

Note: All production data remains subject to reconciliation

Revenue, Realised Commodity Prices and Oil Inventory


2013

2012


1,650

1,570

 

106

108

 

Oil and gas inventory (US$m)

30

52

 

Barrels of oil inventory (bbls net)

486,000

706,000

 

Note: during the final quarter of 2013, the Group clarified the tax position of its Ebok asset in Nigeria and we expect to benefit from a significant improvement in terms covering historical liabilities and those arising through to mid-2016.

Hedging


1 Jan 2014

- 30 June 2015

Volumes hedged (bbl)

5,200,000

Average floor price ($/bbl)

90 - 95

 

Capital Expenditure


2014E

2013

Production & Development (US$m)

640

444

Exploration & Appraisal (US$m)

205

240

Total (US$m)

845

685

 

 

 

Financing and net debt

 

 

End 2013 (US$m)

End 2012 (US$m)

Coupon

Repayment due

2016 senior secured notes

253

500

11.50%

2016

2019 senior secured notes

250

300

10.25%

2019

2020 senior secured notes

360

-

6.625%

2020

Ebok RBL

210

186

LIBOR +4.25%

From 2015 (1)

Unsecured corporate facility

-

50

LIBOR + 4.5%

Repaid in 2013

OML 26 facility

80

101

LIBOR +7%

From 2015

FHN convertible loan

-

53


Repaid in 2013

Capitalised borrowing costs

(24)

(30)



Total debt at end period

1,129

1,160



Cash at bank

390

599



Net debt at end period

739

561



(1)No repayments in 2014. Repayments commencing January 2015 at US$50 million per quarter

 

2014 exploration and appraisal drilling schedule

Country

Asset

Effective Working Interest

E&A wells /activity

Timing

Wells operating

Ethiopia

Block 8

30%

El Kuran-3 well drilling

Current

Kurdistan
region of Iraq

Ain Sifni

20%

Maqlub-1 well drilling ahead at 6,995 ft.  Maqlub-2 to spud shortly

Current

New well spuds

Nigeria

Ebok

100%/50%1

1 exploration well on Ebok deep

Q2 2014

Tanzania

Tanga

74%

2 exploration wells

Q2 2014

Nigeria

OML 115

100%/50%1

1 exploration well

Q3  2014

Kenya

Block 1

80%

1 exploration well

Q3 2014

Nigeria

OPL 310

40%

1 exploration / appraisal well

Q4 2014

Nigeria

OML 113

16.9%

1 exploration / appraisal well

Q4 2014

Non drilling activity

Ghana

Keta

35%

Interpretation of 1,582 km2 3D seismic

Ongoing

Kenya

Block L17/L18

100%

Interpretation of 200 km 2D Seismic and 1,006 km2 3D Seismic

Ongoing

Nigeria

OPL 310

40%

1,500 km2 3D Seismic programme

Q1 2014

Kenya

Block 1

80%

150-250 km 2D Seismic acquisition

Q1 2014

Seychelles

Areas A & B

75%

Interpretation of  3D Seismic

Ongoing

Madagascar

Block 1101

90%

2D seismic acquisition and a shallow borehole coring programme

Q2 2014

Côte d'Ivoire

CI-523/ CI-525

20%/51.75%2

1, 800 km3 3D seismic acquisition

Q1 2014

(1) 100% pre cost recovery effective working interest; 50% post cost recovery effective working interest

(2) Afren's working interest in the Eland and Kudu fields within CI-525 is 61.875%

 

For further information contact:

Bell Pottinger (+44 20 7861 3232)

James Henderson

Mark Antelme

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Trading statement and operations update - RNS