Afentra will pay an initial US$9 million for the 4% stake in Block 3/05 and US$3 million for a 5.33% stake in Block 3/05A.
Afentra will owe another US$10 million on the extension of the Block 3/05 licence, with up to US$6 million due over three years based on oil prices.
Another payment of up to US$5 million on Block 3/05A will come due on the successful development of some discoveries and oil prices. The deal has an effective date of September 30, 2021.
CEO Paul McDade said the deal was strategically attractive given that it adds more exposure to proven assets with significant upside.
Adding another 4% to its Block 3/05 stake “demonstrates our commitment to both the asset and our plan to work with the operator, Sonangol, to maximise the production and recovery from this material asset for the benefit of all stakeholders”.
It marked the entry of the UK independent into the southern African country and the deal comprised of an US$80 million upfront payment for stakes in Block 3/05 and Block 23, offshore Angola.
After closing both deals, Afentra will have a 24% stake in Block 3/05. The cost works out to around US$4 per barrel of 2P reserves, with breakeven costs of US$35 per barrel. Total 2P reserves to Afentra will be around 24mn barrels with production of 4,680 bpd.
Block 3/05A has around 300mn barrels of oil in place, with one partially developed discovery and two undeveloped. The company said it could tie these finds back into existing infrastructure on Block 3/05, with the potential for around 10,000 bpd gross production.
Block 3/05 has around 3 billion barrels of oil in place, with eight fields and more than 100 wells.
Afentra expects to fund the INA deal from the same source as the Sonangol deal. Talks are “well advanced”, it said, and will be finalised before readmission. With oil at US$75 per barrel, Afentra expects the deal to payback within three years.
The company expects to publish its AIM re-admission document, and resume trading, in the coming weeks. It plans to complete both the INA and Sonangol deals in the second half of this year.
With a corporate mission to become the trusted partner of both international oil companies and host government in the divestment of legacy assets, Afentra has centered its corporate strategy on managing and turning fields into profitable assets.
With the SPA completion expected during Q3, 2022, the next steps in the process include the conclusion of Afentra’s due diligence exercise, the provision of a bank guarantee in respect of the 10% transaction deposit and the completion of the right of first offer process by Sonangol.