{"id":8854,"date":"2020-08-14T07:46:54","date_gmt":"2020-08-14T07:46:54","guid":{"rendered":"http:\/\/oilnewskenya.com\/?p=8854"},"modified":"2020-08-14T07:46:54","modified_gmt":"2020-08-14T07:46:54","slug":"africa-oil-announces-strong-q2-results-fuelled-by-nigerian-assets","status":"publish","type":"post","link":"https:\/\/www.oilnewskenya.com\/index.php\/africa-oil-announces-strong-q2-results-fuelled-by-nigerian-assets\/","title":{"rendered":"Africa Oil Announces Strong Q2 Results Fuelled by Nigerian Assets"},"content":{"rendered":"<p><strong>Operational<\/strong><\/p>\n<ul class=\"list-reset list-disc\" type=\"disc\">\n<li>Production from Prime Oil &amp; Gas B.V.&#8217;s (&#8220;Prime&#8221;) Nigerian assets remained strong in the first half of 2020 despite curtailments at Egina in May and June due to OPEC quota limitations. Second quarter average daily Working Interest (&#8220;W.I.&#8221;) production<sup>2<\/sup>\u00a0was 28,313 barrels of oil equivalent per day (&#8220;boepd&#8221;) and economic entitlement production<sup>3<\/sup>\u00a0was 35,010 boepd (86% oil), net to Africa Oil&#8217;s 50% shareholding in Prime. First half average daily W.I. production was 30,812 boepd and economic entitlement production was 38,980 boepd (87% oil) net to Africa Oil&#8217;s 50% shareholding in Prime.<\/li>\n<li>Second quarter average operating cost of\u00a0<span class=\"xn-money\">$5.1<\/span>\u00a0per boe represents a 12% decrease over first quarter operating cost of\u00a0<span class=\"xn-money\">$5.8<\/span>\u00a0per boe. No leasing costs are payable for Prime&#8217;s Floating Production, Storage and Offloading (&#8220;FPSO&#8221;) platforms because they are owned by the joint venture partners and are not leased.<\/li>\n<li>Crude sales have been unaffected in this difficult environment with all 5 planned sales completed in the second quarter. In the first half of 2020, Prime lifted and sold 10 cargos representing a sales volume of 9.50 million barrels or 4.75 million barrels net to Africa Oil&#8217;s shareholding in Prime at an average price of\u00a0<span class=\"xn-money\">$68.95<\/span>\u00a0per barrel.<\/li>\n<li>Prime has also sold forward all 10 planned cargos in the second half of 2020 with four of these cargoes already lifted and sold in July and\u00a0<span class=\"xn-chron\">August 2020<\/span>. Prime has also sold forward or hedged 7 cargoes out of a planned 10 cargoes in the first half of 2021. This results in 17 out of the next 20 cargoes planned for second half of 2020 and first half of 2021 being hedged at an average price of\u00a0<span class=\"xn-money\">$60.06<\/span>\u00a0per barrel.<\/li>\n<li>Prime&#8217;s total 2020 capital expenditure is expected to be\u00a0<span class=\"xn-money\">$54 million<\/span>\u00a0or 41% lower than the initial budget of\u00a0<span class=\"xn-money\">$91 million<\/span>. The reduction includes deferral of infill drilling and activities related to the Preowei field development project due to COVID-19 and the oil price crash. These activities are expected to resume in 2021 as economic conditions improve.<\/li>\n<\/ul>\n<p><strong>Financial<\/strong><\/p>\n<ul class=\"list-reset list-disc\" type=\"disc\">\n<li>Africa Oil posted a second quarter net operating income of\u00a0<span class=\"xn-money\">$27.0 million<\/span>\u00a0and a net income of\u00a0<span class=\"xn-money\">$19.2 million<\/span>, driven by an operating income of\u00a0<span class=\"xn-money\">$31.7 million<\/span>\u00a0related to its investment in Prime. No impairments were required in the second quarter of 2020 at Africa Oil level.<\/li>\n<li>First half 2020 net income of\u00a0<span class=\"xn-money\">$97.0 million<\/span>, excluding a\u00a0<span class=\"xn-money\">$215.6 million<\/span>\u00a0non-cash impairment of exploration assets in\u00a0<span class=\"xn-location\">Kenya<\/span>\u00a0already posted in the first quarter of 2020.<\/li>\n<li>These results were underpinned by Prime&#8217;s strong sales revenues of\u00a0<span class=\"xn-money\">$159.3 million<\/span>\u00a0in the second quarter (first half 2020 total of\u00a0<span class=\"xn-money\">$338.8 million<\/span>), Adjusted EBITDA<sup>4<\/sup>\u00a0of\u00a0<span class=\"xn-money\">$193.0 million<\/span>\u00a0(first half total of\u00a0<span class=\"xn-money\">$391.3 million<\/span>) and cash flow from operations of\u00a0<span class=\"xn-money\">$134.5 million<\/span>\u00a0(first half total of\u00a0<span class=\"xn-money\">$330.5 million<\/span>), in each case net to Africa Oil&#8217;s 50% shareholding in Prime.<\/li>\n<li>Africa Oil received an additional\u00a0<span class=\"xn-money\">$25.0 million<\/span>\u00a0of dividends<sup>5<\/sup>\u00a0from Prime in the second quarter bringing the year to date dividends to\u00a0<span class=\"xn-money\">$112.5 million<\/span>. Africa Oil applied these dividends in part to repay its acquisition loan from\u00a0<span class=\"xn-money\">$250.0 million<\/span>\u00a0down to\u00a0<span class=\"xn-money\">$194.6 million<\/span>, including a\u00a0<span class=\"xn-money\">$10.2 million<\/span>\u00a0repayment in the second quarter. Africa Oil will continue to apply any future dividends in priority towards the repayment of its acquisition facility to accelerate the repayment of the loan principal amount.<\/li>\n<li>In the second quarter, Prime started to repay its Reserve Based Lending (&#8220;RBL&#8221;) facility by\u00a0<span class=\"xn-money\">$149 million<\/span>\u00a0and repaid and canceled another\u00a0<span class=\"xn-money\">$76 million<\/span>\u00a0on 31 July, reducing the total outstanding from\u00a0<span class=\"xn-money\">$1,825 million<\/span>\u00a0down to\u00a0<span class=\"xn-money\">$1,600 million<\/span>. The next redetermination of borrowing base of the Prime RBL facility is due by\u00a0<span class=\"xn-chron\">30 September 2020<\/span>.<\/li>\n<li>Africa Oil ended the period with\u00a0<span class=\"xn-money\">$39.4 million<\/span>\u00a0in cash and net debt of\u00a0<span class=\"xn-money\">$155.2 million<\/span>.<\/li>\n<\/ul>\n<p><strong>Business Continuity<\/strong><\/p>\n<ul class=\"list-reset list-disc\" type=\"disc\">\n<li>Subsequent to end of the second quarter, the operator of Prime&#8217;s OML 130 assets (Akpo and Egina) identified a number of workers who tested positive for COVID-19 onboard the offshore facilities (i.e. FPSOs); however, with the prompt execution of the contingency plans by the operator these were managed proactively with no impact on these facilities or production operations.<\/li>\n<li>The operating partner on Blocks 10BB and 13T in\u00a0<span class=\"xn-location\">Kenya<\/span>\u00a0submitted notices of Force Majeure to the Kenyan Ministry of Petroleum and Mining on behalf of the joint venture partners in these blocks. These declarations are the result of impact of the COVID-19 on the operations, including Kenyan government&#8217;s restrictions on domestic and international travel, and recently introduced tax changes that adversely impact the project economics. Discussions are ongoing between the joint venture partners and the Government of\u00a0<span class=\"xn-location\">Kenya<\/span>\u00a0on the best path forward to resume operations.<\/li>\n<\/ul>\n<p><b>Africa Oil President and CEO\u00a0<span class=\"xn-person\">Keith Hill<\/span>\u00a0commented<\/b>: &#8220;Despite the immense challenges faced during the second quarter, I am pleased to report that our Prime investment continues to perform very well, with crude sales, revenues and debt reduction well on track. Based on Prime&#8217;s income contribution, Africa Oil was able to post a quarterly profit of\u00a0<span class=\"xn-money\">$19.2 million<\/span>. With our strong cash flows underpinned by our admirable hedging position, we believe we are well positioned to take advantage of the recovery in oil demand and price once the COVID-19 situation stabilizes. The outlook for remainder of 2020 is promising with number of potentially high-impact exploration wells offshore\u00a0<span class=\"xn-location\">South Africa<\/span>\u00a0and\u00a0<span class=\"xn-location\">Namibia<\/span>\u00a0and we continue to look for value accretive acquisitions, with a focus on\u00a0<span class=\"xn-location\">West Africa<\/span>\u00a0producing properties. On behalf of the board I thank our shareholders for their continuing support in these difficult times.&#8221;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Operational Production from Prime Oil &amp; Gas B.V.&#8217;s (&#8220;Prime&#8221;) Nigerian assets remained strong in the first half of 2020 despite curtailments at Egina in May and June due to OPEC &hellip; <a href=\"https:\/\/www.oilnewskenya.com\/index.php\/africa-oil-announces-strong-q2-results-fuelled-by-nigerian-assets\/\" class=\"more-link\">Read More<\/a><\/p>\n","protected":false},"author":24,"featured_media":8855,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[7442,7443,7445,11,7444],"tags":[70,8186,259,266,8184,1252,6715,1675,1749,8118,8185,8183,2371],"class_list":["post-8854","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-countries","category-eastern-africa","category-southern-africa","category-top-news","category-west-africa","tag-africa-oil","tag-akpo","tag-block-10bb","tag-block-13t","tag-egina","tag-kenya","tag-ministry-of-petroleum-and-mining","tag-namibia","tag-nigeria","tag-oml-130","tag-preowei","tag-prime-oil-gas-b-v","tag-south-africa","entry"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/08\/egina-fpso-small_1_0.jpg?fit=1280%2C720&ssl=1","jetpack_shortlink":"https:\/\/wp.me\/p5JWkQ-2iO","jetpack-related-posts":[{"id":10735,"url":"https:\/\/www.oilnewskenya.com\/index.php\/africa-oil-announces-q2-2021-financial-results\/","url_meta":{"origin":8854,"position":0},"title":"Africa Oil Announces Q2 2021 Financial Results","author":"","date":"August 13, 2021","format":false,"excerpt":"Highlights Net income of\u00a0$38.4 million\u00a0(first half 2021 total of\u00a0$77.3 million) and end of quarter cash balance of\u00a0$35.1 million. Received a dividend for\u00a0$37.5 million\u00a0from Prime during the quarter and a further\u00a0$37.5 million\u00a0dividend in July. On\u00a0August 2, 2021, Africa Oil announced the closing of its corporate debt facility with\u00a0$160 million\u00a0committed. The Company\u2026","rel":"","context":"In &quot;Countries&quot;","block_context":{"text":"Countries","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/08\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/08\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/08\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/08\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=700%2C400 2x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/08\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=1050%2C600 3x"},"classes":[]},{"id":10001,"url":"https:\/\/www.oilnewskenya.com\/index.php\/africa-oil-announces-2020-fourth-quarter-results\/","url_meta":{"origin":8854,"position":1},"title":"Africa Oil Announces 2020 Fourth Quarter Results","author":"","date":"March 1, 2021","format":false,"excerpt":"Highlights Africa Oil fourth quarter net income of\u00a0$79.8 million\u00a0and full-year net income of\u00a0$198.0 million, excluding a\u00a0$215.6 million\u00a0non-cash impairment of\u00a0Kenya\u00a0exploration assets posted in the first quarter 2020. Strong quarterly profit contribution by Prime to AOC's net income amounting to\u00a0$59.2 million. During 2020, Africa Oil repaid\u00a0$109 million\u00a0of its\u00a0$250 million\u00a0corporate term loan facility\u2026","rel":"","context":"In &quot;Countries&quot;","block_context":{"text":"Countries","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/11\/Africa-Oil-S.A-Portfolio.jpg?fit=400%2C275&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":13158,"url":"https:\/\/www.oilnewskenya.com\/index.php\/africa-oil-provides-its-full-year-2022-production-results\/","url_meta":{"origin":8854,"position":2},"title":"Africa Oil Provides its Full-year 2022 Production Results","author":"","date":"January 18, 2023","format":false,"excerpt":"Full-year 2022 production rates are in line with the mid-point of 2022 Management Guidance range. Prime recorded an average daily working interest production of approximately 23,500 barrels of oil equivalent per day (boepd and net entitlement production of 25,600 boepd, in each case net to Africa Oil's 50% shareholding. These\u2026","rel":"","context":"In &quot;Countries&quot;","block_context":{"text":"Countries","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2021\/03\/Africa-Oil-S.A-Portfolio.jpg?fit=400%2C275&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":12822,"url":"https:\/\/www.oilnewskenya.com\/index.php\/africa-oil-reports-q3-2022-financial-results-with-record-realised-oil-price\/","url_meta":{"origin":8854,"position":3},"title":"Africa Oil Reports Q3 2022 Financial Results with Record Realised Oil Price","author":"","date":"November 16, 2022","format":false,"excerpt":"The Company received one dividend from its shareholding in Prime for $50.0 million(1) in Q3 2022 (first nine-month 2022 total of $212.5 million). Total amount of the dividends received so far in 2022 is $250.0 million, including $37.5 million received in October 2022. Cash balance at September 30, 2022, of\u2026","rel":"","context":"In &quot;Countries&quot;","block_context":{"text":"Countries","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/08\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/08\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/08\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/08\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=700%2C400 2x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/08\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=1050%2C600 3x"},"classes":[]},{"id":9421,"url":"https:\/\/www.oilnewskenya.com\/index.php\/africa-oil-2020-net-income-hits-118m\/","url_meta":{"origin":8854,"position":4},"title":"Africa Oil 2020 Net Income Hits $118M","author":"","date":"November 16, 2020","format":false,"excerpt":"Africa Oil has received an additional $50 million in dividends from Prime subsequent to the previous reporting period. This brings the total dividends amount to $162.5 million since Africa Oil closed the Prime acquisition on\u00a0January 14, 2020. Significant progress on deleveraging, including a 34% reduction in the corporate term loan\u2026","rel":"","context":"In &quot;Countries&quot;","block_context":{"text":"Countries","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/10\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/10\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/10\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/10\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=700%2C400 2x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/10\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=1050%2C600 3x"},"classes":[]},{"id":11939,"url":"https:\/\/www.oilnewskenya.com\/index.php\/africa-oil-announces-record-financial-results-and-2022-management-guidance\/","url_meta":{"origin":8854,"position":5},"title":"Africa Oil Announces Record Financial Results and 2022 Management Guidance","author":"","date":"March 1, 2022","format":false,"excerpt":"Highlights Record full-year net income of\u00a0$190.7 million\u00a0or\u00a0$0.40\u00a0per share. Cash balance at\u00a0December 31, 2021\u00a0of\u00a0$58.9 million. Our corporate facility has been fully repaid and\u00a0$100m\u00a0of the facility remains available for general corporate purposes until\u00a0December 2022. The Company will institute a shareholder dividend policy with an initial 2022 aggregate annual distribution of\u00a0$0.05\u00a0per share (approximately\u00a0$25\u2026","rel":"","context":"In &quot;Countries&quot;","block_context":{"text":"Countries","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/08\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/08\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/08\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/08\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=700%2C400 2x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2020\/08\/Africa-Oil-nigeria-assets.png?fit=1115%2C452&ssl=1&resize=1050%2C600 3x"},"classes":[]}],"jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts\/8854","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/users\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/comments?post=8854"}],"version-history":[{"count":1,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts\/8854\/revisions"}],"predecessor-version":[{"id":8856,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/posts\/8854\/revisions\/8856"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/media\/8855"}],"wp:attachment":[{"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/media?parent=8854"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/categories?post=8854"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.oilnewskenya.com\/index.php\/wp-json\/wp\/v2\/tags?post=8854"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}