Africa Oil paid down $45.2 million of its debt during the first quarter, after receiving $87.5mn from its stake in three major Nigerian oilfields.
Despite this, the company took a $215.6mn non-cash impairment on exploration assets in Kenya, leading it to post a loss for the period of $137.9mn. The loss in Kenya is related to the reduced value of the development project and specifically on Block 10BA.
Africa Oil acquired a 50% stake in Prime Oil and Gas, which owns stakes in Agbami, Akpo and Egina, which produced around 530,000 barrels of oil equivalent per day in the quarter. The economic entitlement production net to Africa Oil was 43,000 boepd, of which 88% was oil. The average operating cost was $5.8 per boe.
Africa Oil’s CEO Keith Hill said operations at its three Nigerian fields had been excellent. “I take great comfort in Prime’s industry leading oil hedging position that provide for stable cash flows. More than 90% of Prime’s production is hedged at an average price of $66 per barrel and most of its production for first quarter 2021 is hedged at an average price of $60 per barrel.”
The company took “immediate steps” to cut costs and defer capital expenditure, he said. “I am confident that we are in a robust position to ride out these turbulent markets and to emerge in a strong position to benefit from future business development opportunities.”
During the first quarter, Africa Oil completed its acquisition of a 20% stake in South Africa’s Block 3B/4B from Azinam. It also invested $12mn in a private placing in Impact Oil & Gas and $5mn to buy shares in Africa Energy.
The company has invested in small explorers as a means of diversifying its portfolio.
Africa Energy said on May 6 that it expected a well to be drilled in South Africa’s Block 11B/12B in the third quarter of this year. This Luiperd well will be the first in the area since the large Brulpadda discovery in February 2019.