Afren (LON:AFR), the ambitious African based oil and gas production and exploration company whose current main prospect is the Nigerian Ebok acreage, have released their 2009 final results. These results are quite impressive and ahead of expectations, and though they actually only earned a net pre-tax profit for the year of $0.5m, considering that they suffered from a pre-tax loss of $37m for the first six months of the year, it is quite a turnaround. But the latter do not tell the full story and the the most impressive figures to come from their accounts is the cash generated from operations, which stands at $278.3m for the year, and the fact that they more than doubled proven reserves for the year to 90mmboe net.
So how did they manage this and what did their accounts show?
Production
To start, the main revenue for the year came from the fact that they increased boepd to 22,100 for the year from 3,900 in 2008 (this is less than the guidance figure given of 22,238 boepd, but they can be forgiven for being 138 out). This very sharp increase in boepd came from the fact that the 50% owned Nigerian Okoro field came online earlier in the year and contributed 18,800 bopd to production for the year yielding a turnover of near $300m for Afren. The other contributors to production came from their natural gas and natural liquefied gas operations in the Côte d'Ivoire, with the 47% owned CI-11 field producing gross 6,360 boepd (3,000 boepd net) for the year contributing $27.7m in revenue, and the 100% owned tax exempt Lion Gas Plant producing 1,140 boepd for the year contributing the remaining $16m in revenue. One important note that needs to be highlighted at this point in regards to their Okoro field is that currently though they only own 50% of the field, they get to keep all of the revenue and earnings. The below excerpt from their website explains why:
‘In June 2006, Afren signed a Financing and Production Sharing and Technical Services Agreement with Amni for participation in the development of Okoro and Setu. Under the terms of the agreement, Afren will finance the development programme. Afren will recover these…
