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The global energy transition is being driven by political, corporate and civil society in pursuit of the goals set by the international community to decarbonise globally. The energy industry is seeing Oil & Gas majors recalibrate their strategies and business models to a lower carbon energy system.
With a rising demand for the services that energy provides due to a growing population – many in Africa (600-800 million people) who remain without access to modern cheap reliable energy – the developing world must be able to responsibly create long-term social and economic value by efficiently optimising the potential of their natural resources.
The Africa Oil & Gas industry is in the early stages of the same operator transition that the North Sea and the Gulf of Mexico have gone through with assets being transferred from majors to independents. IOCs are looking to responsibly exit out of assets which are either late life, not material or have a high carbon footprint.
Whilst the developed world is seeking to deploy capital in a manner that actively supports the energy transition and lower carbon economies, developing economies currently lack the large scale capital required to support the industrial roll out of renewable technologies and remain largely reliant on traditional energy sources.
There is a growing recognition that oil and natural gas play critical roles in today’s energy and economic systems; and that affordable, reliable supplies of liquids and gas are integral to the transition to a lower carbon world.
Without a responsible Oil & Gas industry, the transformation of the energy sector will be more difficult and more expensive. If capital markets are engaged correctly, independents can help to accelerate the pace of change and reduce the impact on the environment.
There are cost-effective opportunities to bring down the emissions intensity of delivered Oil & Gas by minimising flaring of associated gas and venting of CO2, tackling methane emissions, and integrating renewables and low-carbon energy where-ever possible.
The best way to protect the climate is for investors to invest in responsible Oil & Gas companies with the imperative to reduce energy-related emissions in line with international climate targets.
The economic contribution from natural resources is fundamental to many developing economies. It is therefore essential that investments in these resources continue as these developing economies navigate their journey through the energy transition.
There is a requirement in the market for responsible, well managed independents to acquire, operate and optimise post-peak assets in Africa. This will ensure the continued socio-economic benefit from these resources as the majors exit.
Independents can leverage the local resources and skills of the industry and ensure that they play a central role in responsibly managing these assets. The continuing transfer of knowledge can play an important role in the reduction of the emissions intensity of delivered Oil & Gas.
Accessing the necessary capital to invest in the continued development of these assets responsibly will only be possible by addressing investors ESG concerns. It is necessary for responsible independents to integrate an ESG agenda into their business model and operating approach in order to effectively manage business and opportunity risk.
Afentra’s strategy is to build a material diverse portfolio of mid-life producing assets that no longer fit the portfolio of major companies. We seek to optimise, redevelop and extend their lives in a safe, responsible manner whilst reducing harmful emissions. These production assets underpin the business with low-risk cash flow. Over time, Afentra aims to build a portfolio of operated positions, levering the extensive technical operating experience possessed by the team. We will also acquire non-operated positions alongside quality operators and credible JV partners with a shared alignment to operational excellence and environmental stewardship.
Afentra’s entry into Angola in May 2023 saw the Company establish a foothold in a key target geography with a wealth of future growth opportunities. Afentra is acquiring interests in quality assets with scope to enhance and extend production alongside improving environmental performance, while positioning itself as a key stakeholder to support state-owned Sonangol with its transition strategy.
Afentra acquired a 4% non-operated interest in Block 3/05 through its transaction with INA that completed in May 2023. The transaction with INA included an up to 5.33% interest in the adjacent Block 3/05A offering additional development potential. Afentra’s interest in Block 3/05 will increase to 24% upon completion of the Sonangol acquisition that awaits completion of associated conditions precedent.
Block 3/05, operated by Sonangol, is a material shallow water production asset with the potential to deliver significant upside value. The long-life asset benefits from existing infrastructure across the portfolio of 8 fields, and holds in excess of 3 billion barrels of light oil in place. As of end 2022 c. 1.35 billion barrels has been produced (~42% recovery factor). Afentra’s 24%* interest in Block 3/05 provides certified 2P reserves of 26 mmbbls and 2C resources of 10 mmbbls net to Afentra (CPR estimates as of 1 January 2023) and net production of c. 4,500 bbl/d based on gross average production of 18,660 bbl/d for the year 2022.
Importantly, in the next few years, sustaining current production levels relies on re-instating and sustaining the waterfloods in tandem with integrity, maintenance and existing well stock optimisation projects. These activities are all low cost, rapid capital return activities.
Afentra sees significant additional value creation potential in Block 3/05 with a portfolio of projects identified to potentially increase production. This will consist of, but not be limited to, the following:
Integrating near term asset integrity revitalisation and infrastructure upgrades.
Production optimisation and debottlenecking opportunities.
Optimisation of the existing well stock including workovers, access to behind pipe oil pools and optimisation of artificial lift applications.
Longer cycle brownfield development opportunities such as in-fill drilling and the tie-in of undeveloped discoveries.
Further upside not included in ERCE’s resource case have been identified and are under review, including additional infill drilling at the Bufalo, Pacassa and Oombo Fields, alongside potential access to shallower reservoirs.
The asset maintains a strong safety track record and the JV is working to improve ESG characteristics, including decreasing emissions in line with zero flaring by 2030 and gas utilisation opportunities.
*Subject to completion of Sonangol Transaction
Block 3/05A, operated by Sonangol, contains 3 appraised light oil discoveries with a combined STOIIP in excess of 300 mmbbls from which only 2.4 mmbbls has been recovered to date (c. 1% recovery factor). The existing Block 3/05 infrastructure and synergies with the application of fit for purpose technology provides the opportunity for production growth potential via tie backs. Our multi-disciplined team is taking a holistic view of Block 3/05A and Block 3/05 together, working with the operator and contractor group to progress these opportunities towards value generating appraisal and development.
Afentra sees significant further value in the Block 3/05A asset in tandem with the Block 3/05 asset that it surrounds, consisting of but not limited to the following:
An integrated gas management plan across both Blocks 3/05A and 3/05 to develop these resources responsibly given the high gas oil ratio of the Punja field reservoirs.
Long term testing of the Gazela field is underway providing valuable data to inform the next steps for the Caco-Gazela Field development.
Progression of Punja and Caco-Gazela will be carried out in a phased approach to gain appraisal data, reduce uncertainty and generate cash flow through monetising early production.
Screening and ranking multiple development concepts to reach an optimised FID.
Somaliland offers one of the last opportunities to target an undrilled onshore rift basin in Africa. The Odewayne block, with access to the Berbera deepwater port less than a 100km to the north, is ideally located to commercialise any discovered hydrocarbons. This large, under-explored, frontier acreage position covers 22,840 km2, the equivalent of c. 100 UK North Sea blocks.
Afentra inherited its carried interest in Odewayne from its previous form as Sterling Energy, and through its wholly owned subsidiary (Afentra East Africa Limited), holds a 34% working interest in the PSA. Afentra is fully carried by Genel Energy Somaliland Limited for its share of the costs of all exploration activities during the third and fourth periods of the PSA.
Recent activity on the Block includes the re-interpretation of seismic data and seep analysis in order to develop an appropriate forward work program to further evaluate the licence prospectivity.
Africa’s strong economic growth alongside its growing population underpins our belief in the continent’s long-term Oil & Gas demand despite the structural evolution of the global energy system. We see a significant opportunity to drive responsible growth and prosperity for all stakeholders. Our strategy is simple, we only focus on proven hydrocarbon basins where fields have been discovered or are currently producing. The latent potential is therefore clear and Afentra just needs to unleash it, quickly and economically. We pursue operatorship with a large working interest so we have control over the safety, development and investment profile of our assets.
Afentra was created to take advantage of this opportunity in the African market, emulating the successful precedents set in the Gulf of Mexico and North Sea.
See our four-stage model to discover how we implement our strategy.
Our business model is designed to mitigate geological, political and financial risks to enable Afentra to deliver sustainable returns to its shareholders in the form of capital appreciation and dividends when appropriate. We do this by focusing on discovered resources in established operating jurisdictions, alongside credible partners, and by maintaining a stable balance sheet, underpinned by low-risk cash flow.