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April 2022
Sonangol´s Farm-down Process Results.
Sonangol informs that, within the scope of the public tender for the partial sale of its participating interests, in Blocks 3/05, 4/05, 5/06, 15/06, 18, 23, 27 and 31, it has performed the evaluation of the received proposals, an act that culminated with the selection of some proposals, whose values are in line with those established by Sonangol’s defined sales conditions.
Following the process, from September 20th, 2021 to January 27th of the current year, due diligence process was carried out to verify the compliance of competitors, which resulted in the certification of a total of 10 companies, among which, under the terms of the said tender, were selected the certified companies that presented the best proposal as per information below:
1. Blocks in Production:
Block 3/05 - Afentra (20%)
Block 15/06 - Namcor, Sequa and Petrolog (10%)
Block 18 - Somoil and Sirius (8,5%)
Block 31 - Somoil and Sirius (10%)
2. Blocks in Exploration:
Block 23 - Namcor, Sequa and Petrolog (Operator 40%); and Afentra (40%)
Block 27 - Namcor, Sequa and Petrolog (35%); and Somoil and Sirius (25%)
The partial farm down of participating interests, of the above-mentioned concessions, is part of Sonangol's strategy of repositioning and sustainability of its investment portfolio.
Bearing in mind the parastatal nature of Sonongal, and its operation on behalf of the government, I see no reason as to why the agreement would not go forward. DYOR of course.
We are not alone.
Sirius Petroleum also signed an SPA with Sonangol with an effective date of April 2022, for a part share of blocks 18 and 31, current production of c120,000 bopd with a net share of c11000 bopd.
They are also awaiting confirmation from the Angolan Ministry of Mineral Resources, Oil and Gas.
For clarity, we have yet to have confirmation of the licence extension, and the Sonangol Acquisitions are conditional upon this, and not that the National Concessionaire has already agreed this!
Apologies if that reads otherwise.
Extending out the licences is key given the expiry date.
If I have read the Admission document correctly, current licence runs out
3/05 Sonangol 4 Production June 2025*
Hence the need for the extennsion 'the National Concessionaire having agreed in writing to extend the term of the Block 3/05 PSA until at least 31 December 2040'.
The same licence end date appears to be with the INA Acquisitions, and this deal seems to be going through as planned, and therefore there seems no reason to doubt the same with the Sonangol deal.
Page 20 onwards of the Admission-Document-and-Notice-of-General-Meeting for the bookworms.
As an investor, the cash build is our opportunity, and the market can be very slow to price this in.
Afentra signed the Sonangol Acquisition Agreement on 28 April 2022 which has an effective date of 20 April 2022.
Production in 2022 through to end of March averaged ~ 19,300
stb/d representing approximately 4,630 stb/d net to Afentra, of which approximately 3,860 stb/d are
attributable to the Sonangol Block 3/05 Acquisition and 770 stb/d are attributable to the INA
Block 3/05 Acquisition.
Average annual free cashflow (net) to the Company is estimated at c. US$36 million at US$75/bbl over the next five years.
Brent currently $86.58 and has averaged $95+ since the effective date.
Brent forecast to return to $100 by the end of the year.
Net cashflow I would guess is closer to $45M p/a in the current price environment, and with the the effective date being nearly a year in play, that knocks off $45M from the purchase price, and offers a great upside going forward.
A research link for those of you that are interested. Demonstrates how hard Sonangol and Angola are working to divest and reinvigorate the countries assets.
https://www.evaluateenergy.com/Universal/View.aspx?type=Report&id=%7B5999AF83-1C84-4C5F-BEFE-171D3456B620%7D¶ms=%3CPARAMS+currencyId%3D%220%22%3E%3CPARAM+linkKind%3D%220%22+compId%3D%22co%22+name%3D%22sonangol%22+itemId%3D%22926%22+%2F%3E%3C%2FPARAMS%3E&more=true
Top draw team in place.
Current field production has had very few interventions, infills in the last 15 years.
Regardless of further opportunities in country.
There is a lot to like here.
GKP not in the firing line by central iraq. So lets put this to bed.
3 most rwcent articles below.
https://shafaq.com/en/Kurdistan/Baghdad-wants-Khurmal-and-Khor-Mor-Erbil-shall-push-for-talks-MP-says
Also given that Iraq needs Masoud Barzani's support to form a government, I cannot see the Khurds losing any o&g income.
https://www.google.com/url?sa=t&source=web&rct=j&url=https://kurdpress.com/en/news/2637/KDP-sets-condition-for-joining-new-government-in-Baghdad/&ved=2ahUKEwiV1K_F2sn4AhWFilwKHcavB2cQFnoECAkQAQ&usg=AOvVaw0goGw94ANx4b0z_u_1ivK4
https://shafaq.com/en/Iraq-News/Iraqi-lawmakers-embrace-Barzani-s-vision-for-the-next-government
Now at 10.5%.
And Brent way north of $100.
Someone please remind me what we are doing down here.
Hopefully an update on cash position tomorrow. Fingers crossed ops update.
An uplift from $182.7M cash( march) and steady at 45.5k production appreciated.