REG - Afentra PLC - ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021
26/04/2022 07:16
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RNS Number : 2800J Afentra PLC 26 April 2022
26 April 2022
AFENTRA PLC
ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021
Afentra plc ('Afentra' or the 'Company'), is pleased to announce its annual
results for the year ended 31 December 2021.
2021 SUMMARY
Strategic
· Established a new Executive team and Board, introduced new
institutional and high net worth shareholders.
· Rebranded Sterling Energy to Afentra ('African Energy
Transition') with a strategic imperative of capitalising on opportunities
resulting from the accelerating energy transition on the African continent.
· Established key focus areas with a comprehensive strategy to
capture production and development assets in Africa and create value for all
stakeholders.
· Built a small, focused team with a history of identifying and
acquiring high quality assets, to rapidly assess business development
opportunities technically, operationally and commercially.
· Developed a robust Governance and ESG framework to support future
growth ambitions.
Operations
· Submitted a non-binding Expression of Interest to purchase
interests in Block 3/05 and Block 23 in Angola.
· The Company continued to support the Operator of the Odewayne
block, Somaliland, in progressing the technical understanding of the block;
and continued to review its technical assessment and outlook on block
prospectivity.
Financial Highlights
· Cash resources net to the Group at 31 December 2021 of $37.7
million (2020: $42.7 million).
· Adjusted EBITDAX(1): loss for the Group of $2.0 million (2020:
$761k loss).
· The Group remains debt free and fully carried for Odewayne
operations (Third and the Fourth Period).
(1)defined within the definitions and glossary of terms
Post year end highlights
· In April, Afentra named preferred bidder to purchase interests in
Block 3/05 and Block 23.
· Afentra progressing final due diligence ahead of finalising Sales
and Purchase Agreement (SPA) with Sonangol.
Commenting, CEO Paul McDade, said:
"2021 was a year of transformation for Afentra. The Company underwent a
significant change of strategic focus and is now extremely well placed to
execute on our strategy to identify and responsibly develop African
opportunities and create value for all stakeholders. Sonangol's recent
announcement of our preferred bidder status for Block 3/05 and Block 23 in
Angola moved Afentra one step closer to completing its first acquisition and
we look forward to moving ahead with that opportunity as we seek to underpin
the Company with stable cash flow and reserves.
As we look forward to 2022, our focus remains on the implementation of our
growth strategy, building scale and stakeholder value within the Energy
Transition in Africa. With a strong balance sheet and an exceptional team
behind us, the board and management are excited for the journey ahead and look
forward to updating shareholders on our progress. "
For further information contact:
Afentra plc +44 (0)20 7405 4133
Paul McDade, CEO
Ian Cloke, COO
Anastasia Deulina, CFO
Buchanan (Financial PR) +44 (0)20 7466 5000
Ben Romney
Jon Krinks
Chris Judd
Peel Hunt LLP (Nominated Advisor and Joint Broker) +44 (0)20 7418 8900
Richard Crichton
David McKeown
Tennyson Securities (Joint Broker) +44 (0)20 7186 9033
Peter Krens
This announcement contains inside information as defined in Article 7 of the
Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the
Company's obligations under Article 17 of those Regulations.
CHAIRMAN'S STATEMENT
Dear Shareholders
My first year as Chair of Afentra has been a period in which we have seen
significant changes in the industry landscape, and a period where we have
taken large strides to progress the strategic objectives outlined when the
Company was first launched in May 2021.
Starting with the industry macro backdrop, as the impact of Covid abated
during the second half of the year, and economies were able to re-open, we
observed a commensurate rebound in global economic activity. In turn this has
created a surge in global demand for oil and gas, returning to and exceeding
pre-pandemic levels and leading to a considerable improvement in the commodity
price environment and overall confidence in the market. The easing of travel
restrictions has also enabled a better environment for deal-making as
counter-parties are able to meet in person which always supports a better
interaction and process for negotiating and completing deals.
The recent shocking events in Ukraine have added further upward pressure on
energy prices as Russian crude is taken offline and shunned by large swathes
of the Western world and its allies. Furthermore, the geopolitical uncertainty
engendered by the crisis has created major volatility in energy prices. This
increase and volatility in commodity prices is, however, a double edged sword.
Whilst the macro factors have resulted in increased interest in the sector
from the investment community it has also emphasised the importance of
continued investment to secure the required supply to stabilise commodity
prices as we progress through the energy transition. The price volatility has
also the potential to make the difference in seller and buyers price
expectations more difficult to bridge. During this time, Afentra will continue
to place high importance on taking a disciplined approach to business
development as we screen our opportunity pipeline to ensure we deliver
long-term value for our shareholders.
Afentra was set up with a clear objective; to capitalise on opportunities
presented by the energy transition on the African continent and in doing so
support a responsible transfer of asset ownership that provides beneficial
outcomes for all stakeholders. This current macro environment continues to
provide an attractive, opportunity-rich landscape for ambitious independents
like Afentra.
In the past year, we have successfully established our new Board and executive
team and continued to build upon the robust governance and ESG frameworks that
underpin our future growth ambitions. With regards to the Governance framework
that we established, we will continue to review and update our policies and
commitments in these areas to ensure that we fully meet, and, where possible,
exceed our obligations, in line with our updated strategic objectives.
Vendors and host governments are increasingly seeking credible and responsible
counterparties for divested assets to ensure best practice, environmental
stewardship, and the highest standards of governance so that local communities
and all stakeholders can continue to realise the socio-economic benefits from
existing, discovered resources. With ESG considerations at the heart of
Afentra's strategy, and the Executive team's significant experience in this
area, the Company is well positioned to be an acquirer of choice.
Taken together, the strengthening of the oil price and the increasing
importance of ESG considerations for both vendors and the capital markets,
provide strong tailwinds for your Company in the longer term. However in the
short term oil price volatility and geopolitical uncertainty may create a
challenging M&A environment so we will ensure we retain a very strong
focus on value creation for you our shareholders and will therefore maintain a
disciplined approach to valuation, especially in this challenging environment.
Afentra's Executive team, led by your CEO Paul McDade, have the necessary
technical and commercial expertise, and industry and government networks
across the African continent to capitalise on opportunities that meet the
Company's criteria, and we are convinced that over the period we have put in
place the necessary foundations to deliver long-term value for all our
stakeholders.
In conclusion, your Company finds itself in a strong position as we enter the
second fiscal year of operation as Afentra. The market drivers that underpin
the global energy transition and support our long-term strategy are gaining
momentum and we are confident that we have the right team and strategy to
capitalise on these opportunities for the benefit of all our stakeholders.
It only remains for me to thank you, our shareholders, for your ongoing
support for the Company, the management team and our strategy. We look forward
to updating you with positive news as we move through the rest of the year.
Jeffrey MacDonald - Chairman
CHIEF EXECUTIVE OFFICER'S STATEMENT
Creating a responsible new industry player
Dear Shareholders,
The year ended 31 December 2021 was a transformative period for the Company
with the inception of Afentra; a new E&P business with a focused strategy
tailored to the long-term structural changes taking place within the global
energy markets.
As set out at our launch in May 2021, Afentra has been established as a
responsible and credible independent E&P company to capitalise on the
opportunities that will result from the accelerating divestment of producing
assets and discoveries from International Oil Companies ('IOCs') and host
Governments in Africa and to support an effective and just energy transition
for the continent.
Our focus since launch has been on developing the appropriate corporate
framework to support Afentra's long-term growth objectives, ensuring Afentra
is recognised in the region and the industry as an attractive counterparty for
divestments and identify and pursue opportunities consistent with our
well-defined strategy. I am pleased to report that the team has made good
progress in all of these areas, as detailed below.
A tailored strategy
The oil market has changed considerably since our launch. The oil price has
rallied from around $60/bbl to well above $100/bbl as a result of recovering
and now growing demand, industry underinvestment and of course the impact of
the terrible events that are ongoing in Ukraine. However, the market drivers
that support Afentra's growth strategy are unchanged. While the strong
commodity pricing environment has impacted the urgency of vendors to divest,
and the value they are seeking, the underlying market drivers for major oil
companies to decarbonise and high-grade their portfolios remains.
At the outset, we adopted a highly disciplined approach to the execution of
our growth strategy to ensure any acquisitions were strategically consistent
with the criteria that we set ourselves. As detailed within this report, those
criteria covered technical, operational and environmental considerations, and
of course the commercial requirement to deliver value accretive deals to our
shareholders. The latter remains a core focus in the current market, and our
disciplined approach dictates that we execute the strategy with patience and
in a manner that supports our longer-term objectives. We are only too aware of
the volatility within our industry, with Brent trading below $30/bbl less than
two years ago and therefore we prioritise cost and value discipline within our
corporate mindset.
During the year there has been a steady evolution of energy market commentary,
and sector dynamics, that supports the central themes upon which Afentra was
built. First, the need for continued and responsible investment into the oil
and gas sector to ensure the necessary supply of oil and gas to meet growing
global demand as the transition to renewable energy gradually progresses
around the world. Increasing commodity prices, which are translating to
growing financial and social concerns about the economic impact to consumers,
is a direct result of industry underinvestment alongside sustained supply and
demand concerns. The growing acceptance that oil and gas will continue to play
an important role in the global energy mix for the coming years and decades
supports Afentra's ambition to be a responsible producer of discovered
resources.
Second, recognition of the social impact that the energy transition will have
on emerging markets, and particularly on Africa, has grown. At launch, Afentra
promoted the need to ensure there is a "Just transition for Africa", a
transition that recognises the need for the social impact to be balanced
against the climate impact. The commentary that certain economies are reliant
on hydrocarbons and should be able to capitalise on the socio-economic
benefits associated with them has become more prominent and more widely
acknowledged. Further strengthening this view is the fact that these emerging
nations represent a small contribution to the global impact of climate change
compared with more developed nations that champion the need for a speedy
transition. The fact that the current gas crisis can have such an impact on
western economies highlights the devastating risks and social impacts that too
rapid a transition could have on the nations and people of Africa.
It is in this context that Afentra's purpose and model is directly aligned to
the creation of shared value for all stakeholders. By committing to strong
environmental stewardship, responsible social impact, and strong governance,
we have placed the objectives of all stakeholders at the core of our business
model. Our ambition to be a credible counterparty for divesting IOCs and host
governments supports our growth strategy. The proven operating track record of
the team we have assembled should provide trust in our ability to safely and
responsibly manage acquired assets, reducing the environmental impact through
operating techniques wherever possible, while maintaining the positive
socio-economic impact that any acquired assets have on the communities and
countries of operation. Our proposition will increasingly meet the specific
targets of the United Nations Sustainable Development Goals as we progress
from acquisition through to operatorship, production and development.
Progress - strong framework to support future growth
As we reflect on our first year of existence, we are pleased with the
considerable progress that we have made. We have successfully assembled a
highly competent and credible team with the full suite of expertise required
to execute the growth strategy. We have established the corporate framework to
support the long-term growth of the Company, underpinned by robust Governance,
policies and values.
Afentra's profile is now established within the industry and our brand is
recognised across our focus region of West Africa as a competent, reputable,
and ambitious counterparty. On the back of this, our team has leveraged
well-established relationships with IOC's, debt providers and host governments
as we seek opportunities consistent with the growth strategy, and we have been
involved in ongoing market sales processes as well as proactively making
approaches to acquire "off-market" assets.
In October 2021, we submitted an Expression of Interest to purchase interests
in Block 3/05 and Block 23 in Angola from Sonangol, and updated in February
2022 that negotiations are ongoing as we seek to reach agreement on the
detailed terms of the transaction. In April 2022 Sonangol announced that
Afentra is the preferred bidder to purchase these interests. These are high
quality assets, in a jurisdiction that we know well, which meet our
acquisition criteria in terms of the scale of Oil in Place providing
significant upside, with the potential to invest to increase reserves and
production.
Afentra's involvement in this process unfortunately resulted in the suspension
of shares, in accordance with Rule 14 of the AIM Rules for Companies, however
we hope to progress this process to a conclusion as soon as possible, ideally
with a satisfactory outcome that sees Afentra complete its first acquisition.
Afentra has been active in the pursuit of other production assets in West
Africa. The Company continues to appraise multiple acquisition opportunities
that support its growth strategy in terms of acquiring assets in the region
with solid low-cost production, proven reserves and significant upside.
In parallel to the above, we will continue to appraise our existing asset in
Somaliland with a view to establishing additional value on behalf of
shareholders. Given the asset profile is early stage exploration which
benefits from a full carry by our partner, we need to carefully consider its
positioning within our strategy and ensure that we maximise the value of this
asset.
Outlook - building a platform for long-term growth
It has been an active period for your Company and we expect momentum to
accelerate through 2022 as we strive to deliver our first value accretive
transaction for our shareholders. Afentra's strategy to build a material
portfolio of operated and non-operated assets requires a patient approach,
especially as we seek to navigate the challenges of transacting in a volatile
and high oil price environment.
The market drivers that underpin the energy transition and our strategic
intent continue to gather momentum and will undoubtedly evolve over the coming
years, as they did in more mature operating regions such as the UK North Sea
and the Gulf of Mexico. The current high oil price may have slowed down
ongoing processes and deterred certain sellers to divest, given the inflated
cash flows being generated by the assets, but conversely it also creates a
window of opportunity to sell.
It is our responsibility to remain highly disciplined in our approach to
ensure any deals delivered today stand-up to retrospective scrutiny in the
years ahead. We are proactively seeking opportunities and feel confident that
we have the right team and strategy to deliver our objectives. It is certainly
our expectation to deliver transactions this year that provide a platform for
long-term growth and value creation.
I'd like to thank all our shareholders for their support since we began this
exciting journey and I look forward to updating you all with our progress
through this year.
Paul McDade - Chief Executive Officer
ASSET SUMMARY
SOMALILAND
Somaliland offers one of the last opportunities to target an undrilled onshore
rift basin in Africa. The Odewayne block, with access to Berbera deepwater
port less than a 100km to the north, is ideally located to commercialise any
discovered hydrocarbons. A 2D geophysical survey acquired in 2017 and
reprocessed in 2019, along with gravity modelling and legacy geological field
studies, was the focus of the Company's 2021 work programme to determine if a
Mesozoic age sedimentary basin is present in the block and its prospectivity.
Odewayne (W.I. 34%) Exploration block
Overview
This large, unexplored, frontier acreage position covers 22,840km(2), the
equivalent of c.100 UK North Sea blocks. Exploration activity prior to the
2017 regional 2D seismic acquisition program has been limited to the
acquisition of airborne gravity and magnetic data and surface fieldwork
studies, with no wells drilled on block.
The Company's wholly owned subsidiary, Afentra (East Africa) Limited
('A(EA)L'), holds a 34% working interest in the PSA (fully carried by Genel
Energy Somaliland Limited for its share of the costs of all exploration
activities during the Third and Fourth Periods of the PSA).
The Odewayne production sharing agreement was awarded in 2005. It is in the
Third Period, with a 1,000km, 10km by 10km 2D seismic grid acquired in 2017 by
BGP. The Third Period has been further extended, through the 8th deed of
amendment (as mentioned in the Licence Status, below).
In 2021 the operator carried out 2D & 3D gravity modelling and a
re-interpretation of the 2D seismic grid. The data is interpreted to show fold
and thrust structures beneath the interpreted Base Cretaceous Unconformity
('BCU'). If the fold and thrust belt model is correct the petroleum system
analogous to this would be of Cryogenian in age and produces about 40 kbo/d in
Oman.
FINANCIAL REVIEW
Selected financial data 2021 2020
Year end cash net to Group $million 37.7 42.7
Adjusted EBITDAX $million (2.0) (0.8)
Loss after tax $million (5.0) (1.9)
Year end Share price Pence 14.6 9.4
Non-IFRS measures
The Group uses certain measures of performance that are not specifically
defined under IFRS or other generally accepted accounting principles. These
non-IFRS measures include capital investment, debt and adjusted EBITDAX.
Income Statement
The loss from operations for 2021 was $5.0 million (2020: loss $2.2 million)
for the reasons described below.
During the year, net administrative expenditure increased to $5.0 million
(2020: $2.2 million) as a result of exceptional (one off) items relating to
costs associated with the migration to Afentra, a change in management and an
increase in contractors and advisors.
In 2021, a portion of the Group's staff costs and associated overheads have
been expensed as pre-licence expenditure ($2.4 million), or
capitalised/recharged ($77k) where they are directly assigned to capital
projects or recharged. This totalled $2.4 million in the year (2020: $1.3
million).
Finance income in the year of $36k (2020: $326k) represents interest received
($13k) and foreign exchange gains ($23k) on cash held by the Group. The
reduction in interest received year on year was as a result of the global
pandemic amongst other factors impacting interest rates.
Finance costs during 2021 totalled $45k (2020: $58k).
The loss for the year was $5.0 million (2020: loss $1.9 million):
$' Million
Loss for year 2020 (1.9)
Increase in G&A and pre-licence costs (2.8)
Decrease in finance income (0.3)
Loss for year 2021 (5.0)
Group adjusted EBITDAX loss totalled $2.0 million (2020: $761k loss):
2021 2020
$' Million $' Million
Loss after tax (5.0) (1.9)
Interest and finance costs 0.0 (0.3)
Depletion and depreciation 0.2 0.2
Pre-licence costs 2.7 1.2
Total EBITDAX (Adjusted) (2.0) (0.8)
The basic loss per share was 2.3 cents per share (2020: loss 0.9 cents per
share). No dividend is proposed to be paid for the year ended 31 December 2021
(2020: $nil).
Statement of financial position
At the end of 2021, non-current assets totalled $22.0 million (2020: $22.1
million) the majority of which relates to the Odewayne block ($21.3 million).
Net assets/total equity stood at $58.9 million (2020: $63.9
million).
Net current assets reduced to $37.3 million (2020: $42.5 million).
At the end of 2021 cash and cash equivalents totalled $37.7 million (2020:
$42.7 million), the reduction primarily being related to spend on G&A.
Cash flow
Total net decrease in cash and cash equivalents in the year was $4.9 million
(2020: $2.2 million), a full reconciliation of which is provided in the
Consolidated Statement of Cash Flows.
During the year there were minimal cash investments on the Odewayne Block in
Somaliland due to the Group's interest being fully carried by Genel Energy
Somaliland Limited for its share of the costs during the Third and Fourth
Periods of the PSA.
Accounting Standards
The Group has reported its 2021 and 2020 full year accounts in accordance with
UK adopted international accounting standards.
Cautionary statement
This financial report contains certain forward-looking statements that are
subject to the usual risk factors and uncertainties associated with the oil
and gas exploration and production business. Whilst the Directors believe the
expectation reflected herein to be reasonable in light of the information
available up to the time of their approval of this report, the actual outcome
may be materially different owing to factors either beyond the Group's control
or otherwise within the Group's control but, for example, owing to a change of
plan or strategy. Accordingly, no reliance may be placed on the
forward-looking statements.
Anastasia Deulina - Chief Financial Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
31st December 2021 31st December 2020
$000 $000
Other administrative expenses (2,249) (953)
Pre-licence costs (2,734) (1,221)
Total administrative expenses (4,983) (2,174)
Loss from operations (4,983) (2,174)
Finance income 36 326
Finance expense (45) (58)
Loss before tax (4,992) (1,906)
Tax - -
Loss for the year attributable to the owners of the parent (4,992) (1,906)
Other comprehensive (expense)/income - items to be reclassified to the income
statement in
subsequent periods
Currency translation adjustments (5) 7
Total other comprehensive (expense)/income for the year (5) 7
Total comprehensive expense for the year attributable to the owners of
the parent (4,997) (1,899)
Basic and diluted loss per share (US cents) (2.3) (0.9)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note 31st December 2021 31st December 2020
$000 $000
Non-current assets
Intangible exploration and evaluation assets 4 21,289 21,209
Property, plant and equipment 725 844
22,014 22,053
Current assets
Trade and other receivables 288 193
Cash and cash equivalents 37,727 42,674
38,015 42,867
Total assets 60,029 64,920
Equity
Share capital 28,143 28,143
Currency translation reserve (202) (197)
Retained earnings 30,953 35,945
Total equity 58,894 63,891
Current liabilities
Trade and other payables 518 209
Lease liability 234 205
752 414
Non-current liabilities
Lease liability 347 581
Long-term provision 36 34
383 615
Total liabilities 1,135 1,029
Total equity and liabilities 60,029 64,920
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Currency
Share translation Retained
capital reserve earnings Total
$000 $000 $000 $000
At 1 January 2020 28,143 (204) 37,851 65,790
Loss for the year - - (1,906) (1,906)
Currency translation adjustments - 7 - 7
Total comprehensive expense for the year attributable to the owners of the - 7 (1,906) (1,899)
parent
At 31 December 2020 28,143 (197) 35,945 63,891
Loss for the year - - (4,992) (4,992)
Currency translation adjustments - (5) - (5)
Total comprehensive expense for the year attributable to the owners of the - (5) (4,992) (4,997)
parent
At 31 December 2021 28,143 (202) 30,953 58,894
CONSOLIDATED STATEMENT OF CASH FLOWS
Note 2021 2020
$000 $000
Operating activities:
Loss before tax (4,992) (1,906)
Depreciation, depletion & amortisation 241 193
Finance income and gains (13) (326)
Finance expense and losses 45 59
Operating cash flow prior to working capital movements (4,719) (1,980)
(Increase)/decrease in trade and other receivables (95) 57
Increase/(decrease) in trade and other payables 309 (230)
Increase in provision 2 4
Net cash flow used in operating activities (4,503) (2,149)
Investing activities
Interest received 13 326
Purchase of property, plant and equipment (127) (12)
Exploration and evaluation costs 4 (80) (90)
Net cash used in investing activities (194) 224
Financing activities
Principal paid on lease liability (234) (237)
Interest paid on lease liability (39) (46)
Net cash used in financing activities (273) (283)
Net decrease in cash and cash equivalents (4,970) (2,208)
Cash and cash equivalents at beginning of year 42,674 44,851
Effect of foreign exchange rate changes 23 31
Cash and cash equivalents at end of year 37,727 42,674
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General information
The results announcement is for the year ended 31 December 2021.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2021 or 2020, but is
derived from those accounts. Statutory accounts for 2020 have been delivered
to the Registrar of Companies and those for 2021 will be delivered following
the Company's Annual General Meeting. The auditors have reported on those
accounts; their reports were unqualified, did not draw attention to any
matters by way of emphasis without qualifying their report and did not contain
statements under s498(2) or (3) Companies Act 2006.
While the financial information included in this announcement has been
prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards (IFRSs), this announcement does
not itself contain sufficient information to comply with IFRSs.
The Annual Report and Accounts and the notice for the Company's Annual General
meeting, which is to be held at 10.00 a.m. on 24 May 2022, will be posted to
Shareholders on 29 April 2022.
2. Going concern
The Group business activities, together with the factors likely to affect its
future development, performance and position are set out in the Asset summary.
The financial position of the Group and Company, its cash flows and liquidity
position are described in the Financial Review.
The Group has sufficient cash resources for its working capital needs and its
committed capital expenditure programme at least for the next 12 months. As a
consequence, the Directors believe that both the Group and Company are well
placed to manage their business risks successfully despite the ongoing
pandemic and uncertain economic outlook.
The Directors have, at the time of approving the financial statements, a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. This assessment has been
made by the Directors who remain confident the Group has sufficient cash
resources at the date of signing the annual report to meet its liabilities as
they fall due for a period of at least 12 months from the date of signing
these financial statements, notwithstanding; the impact COVID-19 has had, and
continues to have internationally and the current situation in Ukraine and the
impact to commodity prices and foreign exchange rates. The Group currently has
no unconditional, legally binding commitments in relation to the disclosed
transaction in Note 5. The Directors believe that the Group is in a strong
position to absorb any potential impact on the Group arising from COVID-19,
and thus, they continue to adopt the going concern basis of accounting in
preparation of the financial statements.
3. Operating segments
Africa operations in 2021 focused on exploration and appraisal activities in
Somaliland. The UK corporate office is a technical and administrative cost
centre focused on new ventures. The operating results of each segment are
regularly reviewed by the Board of Directors in order to make decisions about
the allocation of resources and to assess their performance.
The following tables present income, expense and certain asset and liability
information regarding the Group's operating segments for the year ended 31
December 2021 and for the year ended 31 December 2020.
Corporate Africa Total
2021 2020 2021 2020 2021 2020
$000 $000 $000 $000 $000 $000
Other administrative expenses (2,249) (953) - - (2,249) (953)
Pre-licence costs (2,734) (1,221) - - (2,734) (1,221)
Loss from operations (4,983) (2,174) - - (4,983) (2,174)
Finance income 36 326 - - 36 326
Finance expense (45) (58) - - (45) (58)
Segment loss before tax (4,992) (1,906) - - (4,992) (1,906)
Other segment information
Depreciation 241 193 - - 241 193
Segment assets and liabilities
Non-current assets (1) 725 844 21,289 21,209 22,014 22,053
Segment assets (2) 38,015 42,867 - - 38,015 42,867
Segment liabilities (3) (1,121) (1,016) (14) (13) (1,135) (1,029)
(1 )Segment non-current assets of $21.3 million in Somaliland (2020: $21.2
million).
(2 )Corporate segment assets include $37.7 million cash and cash equivalents
(2020: $42.7 million). Carrying amounts of segment assets exclude
investments in subsidiaries.
(3 )Carrying amounts of segment liabilities exclude intra-group financing.
4. Intangible Exploration and Evaluation assets
Group
$000
Net book value at 1 January 2020 21,119
Additions during the year 90
Net book value at 31 December 2020 21,209
Additions during the year 80
Net book value at 31 December 2021 21,289
Group intangible assets at the year end 2021:
Odewayne PSA, Somaliland: A(EA)L 34%, Genel Energy Somaliland Limited 50%,
Petrosoma 16%.
Classified as a joint arrangement in accordance with IFRS 11.
5. Subsequent events
On the 11 April 2022 the Company confirmed that Sonangol had announced Afentra
had been selected as preferred bidder to purchase interests in Block 3/05 and
Block 23. The next steps in the process have involved finalising a sale and
purchase agreement that contains a number of conditions precedent that will
need to be satisfied or waived before the Acquisition can be completed. In
addition, a final due diligence exercise is required to be completed in
connection therewith. If Afentra ultimately proceeds with the Acquisition, it
would be classified as a reverse takeover transaction in accordance with Rule
14 of the AIM Rules for Companies. There is, however, no guarantee at this
stage that the Acquisition will be completed.
DEFINITIONS AND GLOSSARY OF TERMS
$
US dollars
Companies Act or Companies Act the Companies Act 2006, as amended
2006
2D
two dimensional
AIM
AIM, a SME Growth market of the London Stock Exchange
AGM
Annual General Meeting
Articles
the Articles of Association of the Company
Board
the Board of Directors of the Company
Company
Afentra plc
Directors
the Directors of the Company
E&E
exploration and evaluation assets
E&P
exploration and production
EBITDAX (Adjusted) earnings before
interest, taxation, depreciation, depletion and amortisation, impairment,
share-based payments, provisions, and pre-licence expenditure
EITI
Extractive Industries Transparency Initiative
Farm-in &
farm-out a
transaction under which one party (farm-out party) transfers part of its
interest to a contract to another party (farm-in party) in exchange for a
consideration which may comprise the obligation to pay for some of the
farm-out party costs relating to the contract and a cash sum for past costs
incurred by the farm-out party
G&A
general and administrative
G&G
geological and geophysical
GBP
pounds sterling
Genel Energy Genel
Energy Somaliland Limited
Group
the Company and its subsidiary undertakings
HSSE
Health, Safety, Security and Environment
hydrocarbons organic
compounds of carbon and hydrogen
IAS
International Accounting Standards
IFRS
International Financial Reporting Standards
IOCs
international oil company
JV
joint venture
k
thousands
km
kilometre(s)
km(2)
square kilometre(s)
KPIs
key performance indicators
lead
indication of a potential exploration prospect
London Stock Exchange or LSE London Stock Exchange Plc
LTIP
Long-term incentive plan
M&A
mergers and acquisitions
m
metre(s)
OECD
Organisation for Economic Cooperation and Development
Ordinary Shares ordinary
shares of 10 pence each
Petroleum
oil, gas, condensate and natural gas liquids
Petrosoma
Petrosoma Limited (JV partner in Somaliland)
Prospect
an area of exploration in which hydrocarbons have been predicted to
exist in economic quantity. A group of prospects of a similar nature
constitutes a play.
PSA
production sharing agreement
QCA Code
Corporate Governance Code for Small and Mid-Size Quoted Companies 2018
Reserves
reserves are those quantities of petroleum anticipated to be
commercially recoverable by application of development projects to known
accumulations from a given date forward under defined conditions. Reserves
must satisfy four criteria; they must be discovered, recoverable, commercial
and remaining based on the development projects applied. Reserves are further
categorised in accordance with the level of certainty associated with the
estimates and may be sub-classified based on project maturity and/or
characterised by development and production status
Seismic
data, obtained using a sound source and receiver, that is processed to
provide a representation of a vertical cross-section through the subsurface
layers
Shares
10p ordinary shares
Shareholders
ordinary shareholders of 10p each in the Company
Subsidiary
a subsidiary undertaking as defined in the 2006 Act
United Kingdom or UK the United Kingdom
of Great Britain and Northern Ireland
Working Interest or WI a Company's
equity interest in a project before reduction for royalties or production
share owed to others under the applicable fiscal terms
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