Afren (LON:AFR) , the FTSE 250 listed African focused oil and gas production and exploration company, has today released their interim management statement for the period of 1st January till the 14th May 2010. Some highlights:
- Stable production base - 21,000 boepd net production in Q1 2010
- Ebok development on track with first oil expected in October 2010
- Ebok Deep exploration well underway
- Key E&A wells at Okwok and OML 115 scheduled in H2 2010
- Infill drilling at the Okoro field expected to add incremental gross rates of between 3,000 bopd to 5,000 bopd over the second half of the year
- Independently certified net 2P and 2C reserves and resource base of 113 mmboe and net prospective upside of 1,054 mmboe
- Strengthened balance sheet
The above statements are really just a repeat of what is already known, but the strengthened balance sheet comment may seem strange to some. The balance sheet only has a net cash position of $30m now ($24m down over the period). Thus, you may wonder how in their finals they can say that their balance sheet has been strengthened with an improved net cash position, and a new debt facility, and then state again in this statement that it has been strengthened further when in fact it appears worse. But this would be a misunderstanding - in the finals, although the $450m debt facility secured was mentioned, it was not attained in that financial year, it was attained this year thus the balance sheet via this facility is by far stronger now than in 2009 as they are now fully funded. To go through the report itself:
Production
The statements of most interest here seem to be:
‘Production at the Okoro field in Nigeria has continued to exceed pre-development expectations, with better than expected reservoir performance and aquifer support being the main reasons. Crude oil exports continue to run smoothly via the nearby Ima terminal, where the increased storage capacity (in excess of 1 mmbbls) provides a benefit through the sale of increased parcel sizes and improved shipping and sales economics.’
This looks good for two reasons, 1) the fact that the field is continuing to outperform is obviously an excellent result, 2) the fact that the export of their oil is going well is pleasing also, especially considering the…
