Afren lifted as multi-well exploration programme produces first discovery

Monday, Jan 23 2012 by
Afren lifted as multiwell exploration programme produces first discovery

Afren (LON:AFR), the FTSE 250 oil and gas group, has set its sights on average production levels reaching 42,000 to 46,000 barrels of oil equivalent in 2012 as the flow of oil from its flagship Ebok field in Nigeria continues to ramp up.

With all 14 production wells in the first phase of the Ebok development now completed, the company has started the year with an ambitious exploration and appraisal programme that has already produced a major oil discovery at Okoro East, offshore Nigeria. That well – the first of 15 planned this year – discovered 549ft of net oil pay in excellent quality reservoir sands and a well test programme is under way. The discovery lies close to Afren’s existing producing Okoro field, which means it is well positioned to monetise the discovery because of its detailed understanding of the subsurface and proximity to existing infrastructure.

The news comes as Afren also pushes ahead with its project plans in Kurdistan, where it holds licences at Barda Rash and Ain Sifini. Approval has been received for the Barda Rash Field Development Plan and first oil expected there in August 2012. At Ain Sifni, the Jebel Simrit-2 exploration well was spudded at the end October 2011 and drilling is on schedule.

Afren’s acquisition last July of 60 percent and 20 percent interests in Barda Rash and Ain Sifni PSC's respectively, increased the group’s 2P and 2C resources from 136 mmboe to 1,026 mmboe. The acquisition was followed last December when its 45%-owned subsidiary First Hydrocarbon Nigeria wrapped up the purchase of a 45 percent interest in OML 26, onshore Nigeria. OML 26 includes two producing fields (2P and 2C resources of 184 mmbbls) and three proved undeveloped assets with significant exploration upside.

In 2011, Afren is expecting to have delivered sales of US$600 million, up by 50% on 2010, against a full year capital expenditure on budget of US$550 million. In 2012 the capex budget is expected to come in lower at between US$450 to US$500 million. The next well on the exploration schedule is Nunya-1x (formerly Cuda-2) exploration well in Ghana, which is due to spud imminently.

Osman Shahenshah, the chief executive of Afren, said: “In 2012 we successfully commissioned the initial phases of the Ebok development in Nigeria. We have increased our 2P and 2C resources base by 650 per cent at a cost of US$0.66 per barrel to 1,026 mmboe, with the acquisition of Barda Rash and Ain Sifni in the Kurdistan region of Iraq and saw First Hydrocarbon Nigeria complete its acquisition of OML 26 in Nigeria. We have started our 2012 exploration campaign with a significant discovery offshore Nigeria, through the Okoro East Exploration well. The multi well drilling campaign in Ghana, Nigeria, the Joint Development Zone of Nigeria São Tomé and Príncipe, Tanzania, Kenya and the Kurdistan region of Iraq, has the potential to materially transform and increase our discovered resource base.”

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Afren plc is a United Kingdom-based independent upstream exploration and production company. The Company's segments include Nigeria and other West Africa, East Africa and Kurdistan region of Iraq. The Company's properties in Nigeria and other West and South Africa region include Ebok, Okoro, OML 26, Okwok, OML 113, OML 115 and OPL 310 in Nigeria; Block CI-523 and Block CI-525 in Cote d'Ivoire; Keta Block in Ghana; La Noumbi in Congo, and Block 2B in South Africa. The Company's East Africa Exploration properties include Block 8 in Ethiopia; Block L17 & L18 and Block 1 in Kenya; Tanga Block in Tanzania; Blocks A & B in Seychelles, and Block 1101 in Madagascar. The Company's properties in Kurdistan region of Iraq include Barda Rash and Ain Sifni. more »

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4 Comments on this News show/hide all

A1ex99 10th Nov '12 1 of 4

One of my favourite stocks- and it's going from strength to strength

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MadDutch 11th Nov '12 2 of 4

Afren has produced a very nice profit through long term share price growth so far. The Sharescope graph shows the following annualised results;
- 14.6% per annum over the 7 years since it floated on the stock market in 2005, to now.
- 97% per annum in the 2 years from July 2006 to July 2008, (the banking crisis start).
- Afren’s fall in the following 9 months was from 175p to 14p in May 2009, an almost straight line diagonal fall at an annualized 96%. It that was not a shorting opportunity, I do not know what was!
- 23% per annum rise from May 2009 after the recovery from the market bottom in May 2009 to now, at 137p.
- Profit in 2009 was £300,000; profit 2011 £143 million, forecast 2012 £488 million, forecast 2014 £665 million.

Forecasts are based on IFRS [International Financial Reporting Standard].

To me, this shows Afren is currently undervalued, therefore a buy.

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john powell 12th Nov '12 3 of 4

I spotted Afren some time ago and can see it growing target price £2

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MadDutch 12th Nov '12 4 of 4

Hello John, Most of us will agree with you, because we were into Soco in 1998/9 and some hold shares that were purchased below 8p. My entry was at 30p.

We know Afren's potential, and that is why I posted.

Good luck with your investments.


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About Ben Hobson

Ben Hobson

Strategies Editor at Stockopedia. My goal is to help private investors learn and invest with confidence through the articles, ebooks and other resources we publish on site. I also occasionally bunk off to interview famous investors at expensive restaurants. I studied History at Aberystwyth University, trained as a journalist and covered business news and corporate finance before settling in as one of the first staff members at Stockopedia.  Away from Stockopedia I'm a mountain bike junkie. more »


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