By - Mar 29, 2011 4:56 PM GMT+0100
Afren Plc (AFR), a U.K. oil and gas explorer focused on Africa, has a “very rich acquisition pipeline” after exceeding a target for bond sales, Chief Executive Officer Osman Shahenshah said.
The company raised $500 million in a bond sale last month, beating a goal of $450 million, following “very strong demand” from investors, he said.
“It’s helpful to have additional funding,” Shahenshah said in phone interview today. “There are many, many opportunities in Nigeria and elsewhere.”
Afren expects to triple revenue this year to more than $1 billion, Shahenshah said, as the startup of Nigeria’s Ebok field boosts overall production. The company posted a maiden full-year profit of $45.9 million in 2010, according to a statement.
Shahenshah declined to say whether Afren is bidding for fields owned by Royal Dutch Shell Plc (RDSA) in Nigeria. “We see many opportunities that are quite interesting,” he said.
Shell, Europe’s largest oil producer, agreed last year to sell four fields out of a total of 34 blocks it holds in Nigeria. The sale attracted bids from companies including Essar Group, Seven Energy Ltd. and Afren, according to two people with knowledge of the matter at the time.
Afren plans to almost triple production this year to about 40,000 barrels of oil a day after the Ebok startup. It plans to drill “high impact” exploration wells in Ghana, Nigeria, Kenya andTanzania this year.
Keta Sale
Afren agreed to sell 35 percent of its Keta Block in Ghana to Eni SpA (ENI) of Italy. The partners, including Mitsui & Co and Ghana National Petroleum Corp., plan to drill the first well at Keta in the third quarter, at an estimated cost of as much as $80 million, Shahenshah said.
The block’s “independently estimated gross prospective resources” have more than doubled to 1.4 billion barrels of oil equivalent, according to Netherland, Sewell & Associates Inc.
Last week, it said it acquired a 74 percent interest in the Tanga block onshore and offshore Tanzania from Petrodel Resources Ltd. In January, Afren said it was targeting about 900 million barrels of oil and gas resources from Kenya, Madagascar, Seychelles and Ethiopia.
East Africa “is highly prospective and it’s very undrilled,” the CEO said. “We are one of the pioneers and some other larger companies” are entering the area.
Afren plans to invest $450 million this year in exploration, appraisal and development, up from $437.1 million last year.
In Nigeria, production from the Ebok field tested at a rate of about 17,500 barrels of oil a day from four wells, and daily output will rise to 35,000 barrels by the end of the second quarter.
Afren closed unchanged at 164 pence in London, after earlier rising as much as 5.5 percent.
“Ebok was the main disappointment,” said Dougie Youngson, an analyst at Arbuthnot Securities Ltd. in London. “This project is substantially late and the key driver for production and revenue growth this year.”
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