Afren (LON:AFR), the mainly Nigerian focused African oil and gas production and exploration company has released their half year results, which showed a strong swing into profit despite slightly falling production rates. Production during the period was in line with expectations at 20,397 boepd (1H 2009: 22,964 boepd), reflecting natural reservoir depletion. But thanks to costs falling and the oil price rising, Afren managed to increase turnover by 34% to $215m, cash flow by 28% to $149.1m, and report a maiden after tax profit of $50.7m.
Production
Afren’s main production still comes from the 50% owned Okoro Setu project in Nigeria where production averaged 17,841 bopd, which is in line with expectations. Under the agreement Afren has at Okoro, on a working interest basis they still have an 100% interest, with it not dropping to 50% until they have earned back all costs (development costs for Okoro were over $200m, with these costs now being near made up).
In terms of their plans for Okoro, they state:
‘Continuing sub-surface and reservoir management work identified two attractive infill drilling locations that will access incremental reserves and production, utilising existing well slots available at the Okoro wellhead platform. It is intended that these wells will be drilled during Q4 2010 and will increase gross field production once completed. We continue to evaluate options that will potentially increase ultimate recovery of the oil reserves in the field area and nearby Setu field.’
The disappointing production figures came from the 47% owned CI-11 which saw average production during the period of 1,219 bopd and 26.7 mmcfd, and the 100% owned Lion Gas Plant which saw production of 654 boepd. Afren stated the following as the reasons for this disappointment:
‘Gas production over Q1 2010 was impacted due to maintenance work involving the low pressure compressor on the Gulftide production platform and turbo expander at the Lion Gas Plant. Following completion of necessary work, gas production was restored to a gross rate of approximately 30 mmcfd from April onwards. The Lion Gas Plant has also received significantly reduced third party inlet volumes over the period as a result of work on the gas compression systems at the CNR operated Espoir and Baobab fields.’
In terms of what they plan to do to improve this, they state the following:
‘A wireline workover programme has been undertaken to clear…
