Shares in Afren marched on towards 170p this morning on news of a maiden post-tax profit of US$45.9 million together with a multi-well exploration programme and the promise of more acquisitions in West and East Africa. The share momentum marks a near-return to Afren’s five-year high of 184p, achieved in May 2008 shortly before the economic downturn unsettled oil investors. The company said it was planning a ten-well exploration and appraisal programme in 2011, targeting a total net mean prospective resource base in excess of 630 million barrels, with key wells in Ghana, Nigeria, Kenya and Tanzania.

Among those wells will be the first exploration drilling on the Keta block in Nigeria where Afren has agreed to farm down a 35% interest and operatorship to ENI (NYSE:E). A well could now be drilled there as early as the third quarter. Afren will retain a 35% interest in the block, which lies to the east of the Tweneboa and Jubilee fields on the transition zone into deepwater Nigeria. In return, the company will be carried through its share of costs associated with one exploration well and will receive back costs and an additional carry through the seismic surveying in the next license phase. It will also receive a milestone contribution payment on reaching first production. Independently estimated gross prospective resources for the Keta block have been upgraded to 1,412 million barrels.

Turning to the results, lower production volumes during the year caused revenues to fall back by nearly 5% to US$319.4 million, however surging oil prices together with reduced depreciation, depletion and amortisation and finance charges meant that pre-tax profits jumped from breakeven last year to US$78.8 million. Cashflow from operations declined by 24.7% to US$209.7 million and overall net working interest production fell by 35% to 14,333 barrels of oil equivalent per day. Nevertheless, the company maintained its 2011 production guidance of 40,000 boepd, with production from its Ebok field, offshore Nigeria, now under way.

Declining production during the year will be of little concern to Afren given its focus on building a longer term production base, with Ebok now the focus, together with aggressive efforts to establish a portfolio of resources in the ground. On that front, Afren said that it had significantly increased its reserves and contingent resources base during the year to a net 135.7 million barrels of oil equivalent (mmboe), up…

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