WTI (Oct) $67.31 +$1.56, Brent (Nov) $70.61 +$1.42, Diff -$3.30 -14c
USNG (Oct) $2.27 +3c, UKNG (Oct) 86.05p +0.74p, TTF (Oct) €35.835 +€0.33

Oil price

ECB day today and they cut rates by 25 bp’s as expected. In the US yesterday the CPI numbers were spot on, +2.5% y/y and +0.2% m/m which virtually nails on just a 25 bp drop from the Fed on 18th October.

The inventory stats were poor, crude built by 833/- barrels but both gasoline and distillates added around 2.3m each, the refinery run rate of 92.8% indicates lower product demand. 

And now Francine is a hurricane and has arrived in Louisiana, between 25-40% of GoM production is shut-in and onshore in the state many facilities are off-line.

Afentra

Afentra has announced its half year results for the six months ended 30 June 2024. 

Financial Summary

• Pre-tax revenue of $75.7 million (H1 2023: nil)
• Adjusted EBITDAX of $40.8 million (H1 2023: loss of $0.8 million)
• Profit after tax of $22.2 million (H1 2023: loss of $3.9 million)
• Cash resources as at 30 June 2024 of $13.8 million (30 June 2023: $15.7 million)
• Debt drawdowns at 30 June 2024:

o  Reserve Based Lending Facility: $47.3 million (30 June 2023: $12.8 million)
o  Working Capital Facility: $13.7 million (30 June 2023 $9.1 million)

• Net debt at 30 June 2024 of $46.4 million (30 June 2023: $6.5 million)

Net debt on 30 June 2024 excludes the June crude oil sale of $37.6 million, which is classified as a receivable as of 30 June 2024 due to timing of cash receipt (July) post-period. Cash balance post the June and Q3 2024 liftings estimated to be approximately $40 million, reducing net debt to around zero.

Crude oil sales

• The Company sold in aggregate 900,000 bbls of crude in the first 6 months of 2024 (H1 2023:nil)
• The average sales price realised for H1 2024 sales was $84.3/bbl
• Crude oil entitlement stock at 30 June 2024, post June lifting, ~568,917 bbls

Key Indicators  

1. H1 2023 represents 4% WI for Block 3/05 and 5.33% WI for Block 3/05A. FY 2023  represents 18% WI for Block 3/05 and 5.33% WI for Block 3/05A.
2. Cash received for the June lifting of $37.6m whilst recognised in Pre-tax revenue, is not recognised in 30 June cash resources or net debt due to timing of cash receipt (July) post-period.
3. Includes restricted funds of $8.0 million (H1 2023) and $4.9 million (FY 2023).

Operational Summary

Gross average combined production for the period to the end of June 2024 for both Block 3/05 and 3/05A was 22,701 bopd (Net: B3/05 6,416 bopd; B3/05A 280 bopd).

Field Operations progressed in H1 2024:

• 15 light well interventions (LWI) were completed delivering an overall 2,500 bopd increase to field production, a further campaign of up to 20 LWIs commenced at the end of June.
• Upgrade works on the power systems are ongoing to deliver water injection rates on a consistent basis.
• Planning for future workovers, ESP installations and selection of drilling candidate continues.

Post Period-End

• The Company sold a further 780,000 bbls of crude oil in August 2024 at a sales price of $83.7/bbl resulting in pre-tax revenue of $65.3 million.
• Crude oil entitlement stock at 31 August 2024, post August lifting of approximately 125,000 bbls.
• Cash balance post Q3 2024 lifting estimated to be approximately $40 million, reducing net debt to around zero.
• The Company expects to sell its next cargo of crude (~550,000bbls) in late Q4 2024 / early Q1 2025.
• The planned three-week shutdown on Block 3/05 facilities will start on 13 September. The shutdown is to conduct maintenance work across all platforms and infrastructure to enable improved field performance.

Angolan Acquisition

The period saw the successful completion of a 12% non-operating interest in Block 3/05 and a 16% non-operating interest in Block 3/05A offshore Angola from Azule Energy Angola Production B.V. (Azule) for a net consideration of $28.4 million offset by the inherited crude oil stock of 480,000 barrels. This third acquisition increased Afentra's interest in Block 3/05 to 30% and in Block 3/05A to 21.33%.

Kwanza Onshore Licenses

Afentra made its entry into the Kwanza onshore basin with the signing of a 45% non-operated interest in the Production Sharing Contract (PSC) for KON 19. The PSC for KON 15 has been initialled and license award is expected Q4 2024. The full work program for both licenses is being finalised with the respective partnerships, however the basin wide enhanced Full Tensor Gravity Gradient (eFTG) survey to map the geology commenced in August 2024 with early data being available in Q4 2024.

Paul McDade, Chief Executive Officer, Afentra plc commented:
“We are pleased with the progress made during the first half of 2024, which marks a pivotal period for Afentra as we transition into a producing company. The successful completion of our acquisitions in Angola has provided the financial foundation for the company, with our strong balance sheet reflecting not only the robust cash-generating capacity of these assets but also our commitment to disciplined and strategic value driven deal-making. We continue to build out our position in Angola with the entry into the Kwanza onshore basin which we consider to be a further organic value opportunity.  

Our team’s dedication and the strong relationships with our partners and ANPG have been instrumental in achieving these milestones, and we remain committed to driving further value for our shareholders. As we look ahead, we will continue to focus on optimising our current assets while exploring new opportunities that align with our strategy of responsible and sustainable growth in Africa.”

Afentra has really delivered since it came to the market under CEO Paul McDade and team and after a jittery start, must be up with anything in the Bucket list for great share price performance. At the peak in May the shares had more than doubled in less than a year and at today’s 46.5p it is still up some 65% but even that does not do it enough credit.

And when I say delivery I mean that from the days of the team putting the deals together, to the maybe longer than expected transition period, but now comes what CEO Paul McDade calls ‘the pivotal period’ as the company puts out a set of results in which revenue, EBITDAX and net profits all tick the game changing boxes of being in positive territory.

Perhaps what is even more important is that while sales are occasionally lumpy due to sizeable liftings, they generate significant amounts of cash flow and this looking forward brings the company to a net debt situation of zero and with a substantial asset base. This incredibly powerful financial position will keep Afentra at the top of the leaderboard for some time to come.

The company has continued in country but recent acquisitions have been building out the position via buying into the Kwanza onshore basin which I presume signals a slight change of profile but remaining involved in Angola. 

The onshore I am reliably informed is a virtually untouched basin with touches of other, similar basins around the world and with initial lessons learned from the adjacent offshore success story this could be quite an experience both in the pre and post salt plays that they have bought.

In the CEO’s statement he suggests ‘further organic value opportunity’ so given his supreme local knowledge I anticipate this to be a sensible change in risk profile given the huge offshore portfolio. At the top of the table and there to stay, that’s until something even better comes on to Mr McDade’s radar screen…

Borders & Southern Petroleum-CEO Interview

Yesterday I had the opportunity to sit down with Harry Baker, CEO of Borders & Southern Petroleum. This company has been on my radar for what seems an age and at any number of times in that time the company seemed about to break out without actually doing it.

With the appointment of Harry Baker it is clear that the shareholders, through the Chairman, decided to move from being a company with a huge dataset on its potentially sizeable portfolio, to being one to market its obviously fantastic acreage. In our chat Harry talks about the superb quality of the work that has been done and I have had the pleasure of the full presentation.

The full interview is in the link below, I hope that it makes you think about the stock and its undoubted excitement as an investment in the not too distant future.

Core Finance CEO Interview: Harry Baker of Borders & Southern

KeyFacts Energy Industry Directory: Malcy's Blog