Our financial strategy continues to be to maintain the flexibility required to support the significant appraisal and development activities in Nigeria and the Kurdistan region of Iraq, and the exploration activities across the portfolio. In addition to the significantly cash generative nature of our growing production base, we have maintained our relationships with the lending banks through our Reserve Based Lending facility on Ebok, while diversifying our sources of capital through access to the Bond market.
The Okoro East and Ebok North Fault Block discoveries in Nigeria and Simrit-2 discovery in the Kurdistan region of Iraq will add significantly to the already material 2P reserves base and further extends our range of development opportunities and will in time add to the growing production base. With a number of high impact exploration wells to be drilled in both West and East Africa and the Kurdistan region of Iraq, and the growing production base, Afren is well placed for continued success.
Commenting today, Osman Shahenshah, Chief Executive of Afren plc, said:
"The first half of 2012 has been a period of notable success for Afren across all fronts. The strong financial results, with over seven hundred million dollars of revenue and half a billion dollars of net operating cash flow, all from Afren's greenfield developments, is testimony to our strong and established operating track record. The Okoro East and Ebok North Fault Block discoveries in Nigeria and Simrit-2 discovery in the Kurdistan region of Iraq will add significantly to the already material 2P reserves base of 185 million barrels and 2P/2C base of 995 million barrels of oil equivalent. In East Africa, the on-going maturing of the portfolio has resulted in a mean prospective resources upgrade to 5,838 million barrels of oil equivalent (from 2,113 million barrels of oil equivalent). With a number of high impact exploration wells to be drilled in both West and East Africa and the Kurdistan region of Iraq, and the growing production base, Afren is well placed for continued success".
-- Record sales revenue of US$771.7 million and operating cash flow before movements in working capital of US$558.3 million, driven by 218% year-on-year increase in net production
-- Strong financial position: - Cash at bank US$443.7 million (1H 2011: US$320.9 million) - Net debt US$582.5 million (1H 2011: US$343.0 million) with majority long dated (2016-2019) -- Production in line with expectations; firmly on track for 2012 production guidance of 42,000 to 46,000 boepd
- Ebok performing in line with prognosis - BR-1 well at Barda Rash successfully tested 6,000 bopd of 28deg to 32deg API oil - Early development drilling underway at Okoro East -- Excellent exploration success - Significant reserves additions from Okoro East and Ebok North Fault Block discoveries - World class discovery at the Simrit-2 well in Kurdistan region of Iraq - first three out of a planned 12 DSTs completed have flowed at 13,584 bopd
- Ongoing active exploration programme -- Significant resource upgrade in East Africa from net mean prospective resources of 2,113 mmboe to 5,838 mmboe, following portfolio maturation since Black Marlin acquisition
- New plays identified offshore Kenya and Tanzania
These rumours will probably come to nothing. The big boys do not need to buy AFR, GKP or any of the other operators in Kurdistan right now. They can always enter into a JV and use that as a less risky vehicle. Remember that these small players only entered JV's themselves and do not own any of the Kurdistan blocks 100%. In Shell's case, I doubt they would contemplate a bid having recently sold a well to AFR. It is all small beer to them. Instead, I suggest you look at the fundamentals...that is where the value lies. On most ratios, AFR's SP is underweight - whether this is NAV, Liq, gearing, etc. The fundamentals suggest a trading price of over £2. This is what you need to look at - not speculate on or expect a bid. The fundamentals alone suggest it is good enough to hold this stock - unless you are a speculator - which is a different ball game altogether due to volatility of stock markets at the mo...
Red hot whispers of of ENI and Exxon-Mobil AND Shell circling Afren...Expect strong results on 21st Aug and further positive news flow from this very undervalued and excellent company....Shares are too cheap...2.30+ bid on its way. STRONG BUY !!
Just read the wording. Afren had been removed from Goldman's buy list because it has had too good results !!
Similarly, Afren is removed from Goldman's 'buy' list due to its good recent performance and positive exploration results in Kurdistan leading analysts to believe better upside is offered by other firms.
In July, Afren unveiled positive results from the Simrit-2 well in Kurdistan after testing produced oil at a rate of 13,584 barrels per day.
"Recent drilling in Kurdistan along with the entrance into the region of other major companies (ie, Total) has also highlighted the potential of this asset in our view," said Goldman.
RE: Premier Oil - Analyst Jamie Maddock dropped the oil and gas firm from ‘overweight’ to ‘equal-weight’ on near-term risks to deliverability and a limited ability to substantially boost exploration investment.
Although he likes the company’s potential to grow production and to provide upside with development projects, Maddock sees better value and risk-reward elsewhere.
“With only eight per cent upside to our revised 420 pence price target we think Overweight rated Afren and Tullow Oil offer a more attractive combination of valuation, financial strength and drilling related catalysts,” he said.
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