RE: Terry18 May 2023 11:05
18/5/2023
09:56mount teide: The better researched spotted many months ago that for a May/June 2023 completion date for the Angolan acquistions, the structure of the deals would see Afentra only pay a small fraction of the published headline price for the assets.
The Sonangol and INA deal structures and recent oil price weakness(since recovered after OPEC+ cut production to support its preferred $80-$90 oil price range) has created a very material market dislocation investment opportunity at Afentra.
Despite Afentra now paying only a small fraction of the headline price for the assets under the terms of the deals, and with the price of oil averaging in 2023 some $8/bbl above the $75 average price in Q4/2021 when the O&G industry broke it's all time FCF record(set nearly a decade before when oil averaged nearly $150/bbl after adjustment for inflation).......Afentra shares can still be picked up at barely the price they averaged in the 8 months following the announcement of the acquisitions, when the full acquisition headline price was expected to be paid.
ie: Afentra shares are now available at the price when the market expected the company to pay the full headline price for the Angolan acquisitions, rather than the loose change it will now pay for the assets!
Additionally, the total debt required to finance the Sonangol deal should now be reduced to a small fraction of that announced in the Aug 2022 Presentation, as the additional cash accrued since 1st October 2022 through to June, is likely to be worth circa $50m, against an expected debt facility for the asset of $62m.
The Key terms for the $62m debt facility are: 5-year tenor, 8% margin over 3-month SOFR2 - so a massive future debt interest payment saving will be made as a result of the expected June 2023 completion date and high average Brent rate from the previous expected closure date in October 2022.
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