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Wednesday, July 19, 2023
Afentra has announced that its subsidiary, Afentra (Angola) Ltd, has signed a Sale and Purchase Agreement (SPA) with Azule Energy to purchase a 12% interest in Block 3/05 and a 16% interest in Block 3/05A, offshore Angola (together the Azule Acquisition) for a firm consideration of $48.5 million and deferred contingent payments of up to $36 million subject to oil price, production and development conditions.
In order to ensure support for this additional transaction and an appropriate balance of equity interests in Block 3/05, Afentra has agreed with Sonangol Pesquisa e Produção S.A. (Sonangol) to amend the terms of the SPA dated to reduce the interest being acquired by Afentra in Block 3/05 from 20% to 14%. The SPA terms for the Amended Sonangol Acquisition will remain unchanged from those previously announced with the exception that the acquisition consideration will be reduced on a pro-rata basis to reflect the reduced interest acquired. The firm and contingent considerations will therefore reduce to $56 million and up to $35 million, respectively.
In accordance with the AIM Rules for Companies, the company’s ordinary shares will be suspended from trading on AIM with effect from 7:30 a.m. July 19. Trading in the company’s ordinary shares will remain suspended until such time as either an admission document is published, or an announcement is released confirming that the Amended Sonangol Acquisition and the Azule Acquisition are not proceeding. The company expects to publish the Admission Document in early Q4 2023, with both the Azule Acquisition and the Amended Sonangol Acquisition being subject to shareholder approval thereafter. We now expect both transactions to complete, subject to shareholder approval, in Q4 2023.
Commenting on the update, CEO Paul McDade said: “We are delighted to have agreed terms with Azule and signed the SPA increasing Afentra’s interest in the high-quality producing Block 3/05 and a material increase in our Block 3/05A interest offering access to existing discovered resources. This highly accretive transaction further demonstrates the Company’s commercial discipline and focus on robust cash flow, increasing our net production to ~6 kbbl/d and 2P reserves to 32 mmbbls.3
“As we continually seek to work closely and ensure support from Sonangol, we have sought to amend the Sonangol Acquisition SPA to reduce the acquired equity from 20% to 14%, reducing the upfront and contingent consideration on a pro-rata basis. This helps to ensure a balanced equity ownership in Block 3/05 and to progress the Azule Acquisition; moreover, we view the combined acquisitions as an attractive step forward for the business given the relative value at which we are acquiring the combined interests. Finally, as frustrating as it may be to suspend Afentra shares today, we continue to highlight how attractively structured these acquisitions are given the backdated effective dates – as demonstrated at completion of the INA acquisition – and, in the meantime, we continue to work closely with our joint venture partners to optimize the production and development of these high-quality assets …”.
The full announcement including timelines and financial info can be found here.
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