Oil and gas company Afentra plc, led by former Tullow CEO Paul McDade, said Wednesday it had completed the acquisition of 4% interest in Block 3/05 and 4% interest in Block 3/05A offshore Angola from Croatia's INA-Industrija.
Afentra also said that subject to final approval of the distribution of the China Sonangol International ('CSI') interest to the remaining joint venture partners, Afentra's working interest in Block 3/05A would increase from 4% to 5.33%
The two companies first announced the sale and purchase agreement in July 2022. Block 3/05 current gross production in April averaged ~19,000 bbl/d (net 760 bbl/d).
"This acquisition marks Afentra's entry into Angola where it is well positioned to build a material production business and contribute to a responsible energy transition for the country," Afentra said.
The transaction effective date of 30 September 2021 results in a net upfront consideration at completion of $17.0m, which is offset by the Afentra inheriting crude oil stock with an approximate value of $16.6m at $80/bbl (207,868 bbls).
Afentra also said it had set aside $10.0m into an escrow deposit ("Escrow") at completion, which will be paid to INA after the Block 3/05 license extension is formally completed.
Afentra said it expected to sell its first cargo of crude oil in Q3 2023, thereby monetizing the inherited crude oil stock and subsequent production
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Sonangol Acquisition
To remind, Afentra, in April 2022, also agreed to buy a 20% non-operated interest in Block 3/05, and 40% non-operating interest and Block 23, offshore Angola, from Sonangol.
Afentra said Wednesday said that the Block 3/05 JV partners and ANPG, the Angolan Oil & Gas regulator, have now agreed the terms of the Block 3/05 licence extension, extending the production sharing agreement ('PSA') from July 1, 2025 to December 31, 2040 with improved fiscal terms that strengthen the economics of the permit. ANPG will now begin the process of obtaining the requisite governmental approvals for the licence extension.
"The agreement between ANPG and the JV partners of the terms for the licence extension, which is a Condition Precedent to the Sonangol acquisition, now allows Sonangol, as seller, to start the process of obtaining the requisite government approvals for the Sonangol transaction where we remain on track to complete by 30 June 2023," Afentra said.
Afentra said that production from Block 3/05 averaged 17,206 bbl/d in Q1 2023 as a result of downtime experienced through planned restoration works on power generation and the distribution network. Recent production levels have improved with April volumes averaging ~19,000 bbl/d.
Furthermore, long-term testing started in Block 3/05A, at the Gazela field, of an additional ~1,100 bbl/d, enabling framing of potential development options, Afentra said.
Also, Afentra said that ERCE had completed its annual update of the Competent Persons Report ('CPR') on the Block 3/05 assets with an effective date of 1 January 2023. The updated 2P gross reserves, at the new effective date, are 108 mmbbls (net 4.3 mmbbls) and the updated 2C gross resources are 43 mmbbls (net 1.7 mmbbls). The outcome is in-line with previous CPR expectations taking into account 2022 production.
Afentra CEO Paul McDade said: "We are very pleased to complete the INA Acquisition and we would like to thank all involved, especially our shareholders, for their continued patience and support. The indicative transaction metrics upon sale of crude inventories speak to the competitiveness with which we have been able to structure this deal and we are pleased to mark the inception of our partnership with Sonangol in Blocks 3/05 and 3/05A.
"It is also highly encouraging that the terms for the Block 3/05 licence extension award have been agreed; this represents a major step towards completion of the Sonangol transaction within our previously guided timeline. We now look forward to working with the partnership to enhance production and reserves to a level that reflects the potential of this very material asset."