Africa Oil 2023 profit driven by Prime investment

Africa Oil Corp (TSX:AOI) swung to a profit for the full year 2023 driven by income from its joint venture Prime Oil & Gas Coöperatief U.A.For the year ended December 31, 2023, Africa Oil posted a profit of $87.1 million or $0.19 per share, compared to a net loss of $60.3 million or a loss per share of $0.13 for the previous financial year. 

Profit from Prime was $228 million which was offset by associate investment losses of $47 million and an impairment to its Kenyan intangible exploration assets of $62.2 million writing these assets down to nil.Prime produced approximately 19,800 barrels of oil equivalent per day (boepd) compared with mid-range 2023 management guidance of 20,000 boepd. Average daily net entitlement production was approximately 22,400 boepd compared to guidance of 22,000 boepd.

For 4Q, Africa Oil narrowed its loss from $182.1 million or $0.39 per share to $88.8 million or $0.19 per share.  CEO Roger Tucker noted that 2023 was a good year for the company with two highlights being the renewal of Prime’s OML 130 license for a further 20-year period and the successful appraisal of the Venus discovery, which he said supports the case for its commercial development.

“The OML 130 renewal not only secured the long-term future of our core producing assets, it also facilitated the refinancing of Prime’s debt on competitive terms and allowed a dividend distribution of $175 million to Africa Oil for the year,” Tucker said. “The renewal also supports further investments including in the Preowei development project.”

Meanwhile, the company said its year-end 2023 reserves saw a small increase in the after-tax proved reserves (1P) net present value valuation of $722 million, up from $714 million at the 2022 year-end.Its year-end 2023 reserves have delivered an after-tax proved plus probable reserves (2P) valuation of $1.19 billion, compared to $1.23 billion for year-end 2022.

It reported year-end working interest and net entitlement 1P reserves of 29.9 million barrels of oil equivalent per day (MMBoe) and 35.6 MMboe, compared to 34.6 MMboe and 35.6 MMboe respectively for 2022 year-end.Its working interest and net entitlement 2P reserves were 52.2 MMboe and 59.6 MMboe for year-end 2023, compared to 55.6 MMboe and 63.9 MMboe for the previous period.

“Our assets offshore Nigeria have performed in line with our expectation and continue to provide us with significant high netback production,” Tucker said.“Our focus for 2024 is to enhance the value of our core assets, including our operated exploration assets through strategic farm down transactions, and pursuing opportunities to consolidate and streamline our asset ownerships.”

Management said it expects its 2024 production will come solely from its shareholding in prime, expecting production in the range of 16,500 to 19,500 boepd and net entitlement production range of 18,000 to 21,000 boepd with approximately 78% expected to be light and medium crude oil and 22% conventional natural gas.Africa Oil is a Canadian oil and gas company with producing and development assets in deepwater Nigeria and an exploration/appraisal portfolio in west and south of Africa, as well as Guyana.