Africa Oil Corp. - World-Class East Africa Oil Exploration (Seite 48)

[1OzQueen]

Antwort auf Beitrag Nr.: 66.585.497 von winni2 am 24.01.21 19:46:38

Hoffe, Du / Ihr seid erstmal zufrieden...?

==> Zufrieden? MEHR ALS...!
VIIIIELEN DANK, WINNI 👍

[winni2]

Antwort auf Beitrag Nr.: 66.585.635 von vandos am 24.01.21 20:02:42

... auf der watch ... da muss erst noch was kommen , und wenns "intern" ne Bestätigung ist ...aber
die huellen sich bisher in Schweigen . Nur auf Verdacht investier da lieber nicht , wär dann wie Lotto.

[vandos]

Antwort auf Beitrag Nr.: 66.585.518 von winni2 am 24.01.21 19:48:56

Danke Winni für die ausführliche Auflistung nebst Erläuterungen.

Hattest du nicht auch mal Trillion Energy (als Partner mit Türkei und dem Öl/Gasfeld SASB) im Depot, bzw zumindest auf der watchlist?

[winni2]

Antwort auf Beitrag Nr.: 66.585.497 von winni2 am 24.01.21 19:46:38

( letztes Satzfragment gehört nicht dazu , ist irgendwie da reingehuepft )

[winni2]

!

Dieser Beitrag wurde von FairMOD moderiert. Grund: themenfremder Inhalt

[winni2]

Antwort auf Beitrag Nr.: 66.580.703 von 1OzQueen am 24.01.21 10:40:23

Auch Hallöchen @10z , hast ne nette Art ,

Warum Versuch ? Wer fragt kriegt i.d.R. Antwort , sind ja nun keine "Geheimaktien" , auch wenn ich bei jetzt > 90 im Depot längst nnicht zu jeder was schreiben kann .... ausser paar ganz wenige , die
ich wegen ihrer noch abgrundtiefen Marktbewertung , Unbekanntheit und kaum Handelsvolumen ,
öffentlich nicht nenne , um das zu vermeiden, was dann durch blind aufspringende unerfahrene
Leser leider frueher zu oft passiert ist ( Erfahrung halt).

Ja ... der Öl-und Naturalgassektor bietet nach dem heftigen Öl-Preisschock trotz sich bereits wieder erholenden Ölpreises gerade jetzt immernoch grossartige Chancen fuer antizyklische Investments
Zum Einen hinken die Ölaktien der Preisentwicklung noch gewaltig hinterher , seht Ihr allein schon am Chart ... andererseits sind wir zwangsläufig auf dem Weg zu neuen hist. Ölpreisrekorden , warum wisst Ihr .

Ich selbst und im Sektor erfahrene Kollegen aus unserm Netzwerk reiten den Trend aber AUSDRUECKLICH NICHT mit den allseits bekannten unnd (nur scheinbar) alles beherrschenden
Dinosauriern mit Hunderten Mrd. MK ,wie Exxon Mobil , Royal Dutch Shell , Brit Petroleum (BP) !

Sondern mit akribisch ausgewählten , besonders wachstumsstarken mittleren und (noch) kleinen Produzenten , die mit starken erfahrenen Partnern durch aktive Exploration und Erschliessung
immer neuer hochqualitativer Öl-und Gasquellen in den noch immer längst nicht erschlossenen
Öl-Gasreichen Regionen in und um den afrikanischen Kontinent , aber auch im pazifischen Raum und in Ländern Lateinamerikas (bes. Kolumbien ) bereits hocheffizient fördern und expandieren. Onshore und offshore breit aufgestellt , und vielfach Synergieeffekte nutzend , durch im JV betriebene Exploration und Förderung , Kapitalverflechtung , flexible Kooperation in gemeinsamer Techniknutzung und im Logistikbereich Experten-und Technologieaustausch ....gegenueber den auf Marktbeherrschung , Verdrängung , Ausbau von Einflussphären bauenden Öl-Multies .

Zu den starken , erfahrenen , hocheffizient und modern aufgestellten und in diesen lukrativen Entwicklungsregionen aktiven Partnern , die nicht dem Muster der Dinos folgen, gehören an vorderster Front die Öl-Gas-Sparte der in Schweden und Kanada ansässigen LUNDIN GROUP , mit ihrem int. breit aufgestellten "Fels in der Brandung" LUNDIN ENERGY ( 8 Mrd. MK ) und die
bekannte französische TOTAL ( 114 Mrd MK) , die sich solche flexiblen "Netzwerke" an hochinnovativen , explorations-und wachstumsstarken "kleinen" Produzenten aufgebaut haben , diese entweder als 100% subsidiaries unterhalten oder durch angemessene Kapitlbeteiligung von
mind. 30% strategisch fuehren und mit Kapital , Technik und technologischem know how unterstuetzen .
Und natuerlich gibts auch andere erfahrene und kapitalstarke "Macher" im Öl-Gas-Segment , die
ähnliche Konzepte erfolgreich praktizieren ... nach solchen , von starken Partnern bzw. Initiatoren /Finaziers/ High Net Worth unterstuetzten Unternehmen suchen wir , denn Öl-Gas-Exploration ist in allerhöchstem Mass kapitalintensiv und high risk , weshalb ich bis auf RECON Energy Africa
bewusst nur explorationsstarke PRODUZENTEN im Depot hab ... und RECON ist wie Ihr wisst ja nicht nur personell mit Renaissannce (REO) verbunden , die in Mexiko ja schon produzieren , cash generieren ( WER hinter den beiden steht, wisst Ihr auch) ... naja und hinter NG Energy Internat. in Lateinam . steht kein Geringerer als Frank Giustra , der auch den Platz im Unternehmen innehat ... und hinter der kanadischen, zu 90% im ölreichen Kolumbien aktiven Frontera Energy
steht der kolumbianische Staat mit allen erdenklichen Förderungen und starke nationale Partner der Öl-Gas-Industrie und mit 33% Anteil Catalyst Cap. Group.

Soo ...ich wills nicht unnötig kompliziert machen .... die Präsis lesen könnt Ihr selbst und seht dann, WER mit WEM verflochten und dahinntersteht .

Ich schick den Post jetzt erstmal ab ... und zähl meine Titel im Folgepost einfach auf

Bis denne...
mittelgrossen Öl-Gas-Unternehmen der schwedisch



teils ruede Födermethoden

[1OzQueen]

Hallöchen

Mein Versuch, Winnis ÖL-FAVORITEN-LISTE zu erraten:
- Recon (das ist ja leicht)
- Renaissance
- Kosmos
- Africa Oil
- Seplat
- und ???

[Spieler0815]

Antwort auf Beitrag Nr.: 66.447.239 von texas2 am 14.01.21 21:02:51

Danke

Herzlichen Dank für das Einstellen dieses hervorragenden Berichts.

Möchte nebenbei darauf aufmerksam machen (und das passt sehr gut zum Artikel), dass
der Starinvestor Christian Wolf in seinem Wikifolio (über 500 Prozent im Plus) Africa Oil
unter seinen TOP 3 im Depot hat

https://www.wikifolio.com/de/de/w/wfxwolf007

Wolf hatte bei solchen unterbewerteten Aktien bislang immer den richtigen Riecher, auch wenn es manchmal viele Monate dauert, bis diese aus ihrem Dornröschenschlaf erwachen - dann geht es aber schlagartig nach oben.

Spieler

[texas2]

Sehr detailreiche Zusammenfassung bei Tracking Errors

Africa Oil: Cash Flow Machine

Being a contrarian is easy in theory, but more difficult in practice…
Now let me tell you about an emerging markets oil company. In 2020, Africa Oil (AOI) had a free cash flow yield of almost 50% and that actually understates the value proposition.


Source: Africa Oil
Last January, Africa Oil completed a transformative acquisition, buying 50% of Prime Oil and Gas. The market has yet to recognize the value of the transaction. Even in the highly discounted energy sector, Africa Oil stands apart in terms of value and an ability to thrive at low oil prices. In addition to its cash flow, AOI owns a portfolio of other assets that offer considerable upside.

Africa Oil’s main listings are in Toronto and Stockholm, both with the ticker AOI. All amounts are in USD unless otherwise stated.

Current Price: $0.89 ($1.14 CAD)
Market Cap of $420M
Enterprise Value of $520M

Background

The details of the Prime acquisition help explain why the opportunity exists. Until recently Africa Oil was known more for its interests in a Kenyan development project (more on Kenya later). In 2015, they farmed out a portion of that project for ~$430M. As the Kenya project began to stall, Africa Oil looked for ways to deploy their cash horde.

In October of 2018 a consortium of Vitol Investment Partnership (50%), Delonex Energy (25%), and Africa Oil (25%) agreed to the purchase of a 50% interest in POGBV (now Prime) for $1.407b (an additional deferred payment of $118M may be due under certain conditions). According to pg.4 of the investment prospectus, any potential buyer(s) needed to meet two requirements: i. Market Capitalization over $2B. and ii. a Net Debt/EBITDA ratio below 5.0x. By themselves Africa Oil would not have met either criteria. Africa Oil was invited to join the consortium because they had cash in hand. Not many non-cash flowing juniors get offered these kinds of deals. It should be noted that the seller Petrobras, was motivated to dispose of assets, as they were embroiled in the fallout from Operation Car Wash.

Fast forward to November of 2019 and the announcement that Vitol and Delonex dropped out of the consortium leaving Africa Oil alone. No reason was given for why they left the consortium. Jurisdiction seems unlikely as Vitol has a long history of working in Nigeria. As for Delonex, Nigeria would have actually improved their jurisdiction mix (Chad, Kenya, and Ethiopia).

How does a company with no cash flow and less than $400M in cash, complete a $1.4B purchase? The deal included a ‘lock-box‘ agreement, whereby the purchase was deemed effective January 1st, 2018. From the effective date until closing, the buyers had been accruing dividends from Prime (roughly $900M). The deal was approved by the Nigerian government and closed January 2020. It has been also been reported that the accrued dividends amounted to $1.03B.

At closing, Africa Oil made a payment of $519.5M. $250M of the payment came from a bridge loan from BTG Pactual, the owner of the other 50% of Prime. From January 2018 to December 2019 Africa Oil’s 50% interest in Prime generated $900M in dividends ($450M/year). Africa Oil currently has a Market Cap of ~$420M!

Prime Oil and Gas: High Quality Assets

Africa Oil’s primary asset is its 50% ownership in Prime Oil and Gas. The ownership of Prime is split 50/50 between Africa Oil and BTG Pactual (A Brazilian financial services company). AOI also owns a stake in a major development project in Kenya and a portfolio of equity positions in junior explorers. First, what are Prime’s assets?

Prime Oil and Gas, owns stakes in three non-operated high quality Nigerian producing offshore oil fields. Together with their joint venture partners they own each fields’ FPSO (Floating Production Storage and Offloading facility).


Source: Africa Oil August, 2020 Corporate Presentation
Agbami Field: Prime owns an 8% interest (4% net to AOI) in the field and it is operated by Chevron. Production started in 2008 and it is expected to have over a 20 year life (until 2028). Current production is around ~150,000/barrels a day (6,000 net to AOI). It is a part of OML 127, which is up for renewal in 2024. Possible further exploration at Endi and Ikijia.
Akpo Field: Prime owns a 16% interest (8% net to AOI) in the field and it is operated by Total. Production started in 2009. Current production is around ~98,000/boe a day/mostly condensate (7,800 net to AOI).It is a part of OML 130, which is up for renewal in 2025.
Egina Field: Prime’s crown jewel is operated by Total, production started in 2018/19. Egina is also within OML 130 and Prime owns 16% (8% net to AOI). Normal production is roughly ~200,000/barrels a day (16,000 net to AOI) and production is expected to increase over the next couple of years. Due to OPEC+ cuts production is currently under 150,000/barrels a day. The FPSO is brand new and built at a cost of $16B. The FPSO is scheduled to be at site for 25 years (production beyond 2040). The Egina field produces a particularly desirable crude (low sulphur) that is in demand by refineries. Egina South is also located in OML 130.
Preowei prospect: Though not currently in production, the Preowei prospect is still worth mentioning. Located in OML 130, the field is operated by Total and Prime owns 16% (8% net to AOI). Appraisal work paused due to the Covid crisis, but is expected to start again in 2021. The field size is 700mm barrels and growing. Development could start in 2022 and be achieved using the Egina FPSO.
Normalized production attributable to Africa Oil is roughly 30,000/barrels a day. However there are two important details to note about production numbers. One production has been temporarily reduced to comply with OPEC+ cuts (27,000boe/day in Q3). Second, there is a mechanism whereby the amount of economic entitlement increases as the price of oil decreases. This creates a natural hedge in a low price environment.

Prime’s producing fields collectively, have very low production costs. In 2019, they averaged $7/boe and in Q2 of 2020 that number dropped to $5.1/boe. Costs are low because of the high quality of the fields and the fact the joint ventures own the FPSOs. OML 127 and OML 130 licenses come up for renewal in 2024 and 2025 respectively. Please note that the Nigerian government has never denied a license renewal.

At the end of 2018 proved plus probable reserves (2P) attributable to Africa Oil stood at 94.7 million barrels. Roughly 9 years of production at current rates. 2P reserves include the partially appraised Preowei field, but not the other prospects in OML 127/130. As the Egina FPSO was built at a cost of $16B, is scheduled to be on site until past 2040, and is owned by the joint venture partners, it can be deduced that the JV partners hves a high level of confidence in increasing reserves. As Prime is a private entity it is difficult to find more detailed information on their assets.

Debt: Manageable or over leveraged?

At first glance the debt situation for Africa Oil looks problematic. In order to close the Prime acquisition, Africa Oil needed to take on a $250M bridge loan with their new partners. Additionally, their new purchase Prime, had $1.8B ($900M net to AOI) drawn on a reserve based loan (RBL). When the deal closed, Africa Oil’s was exposed to $1.15B in debt.

First, the bridge loan with BTG Pactual for $250M. It came with steep terms and was collateralized by AOI’s junior explorer portfolio. The debt carries a 15% interest and a payment schedule which requires a majority of dividends distributed by Prime to go towards paying off the debt. The debt also included a provision that Africa Oil can not pay off the debt early without penalty (before July 2021). As of December 2020, Africa Oil has $141m remaining on its bridge loan and an estimated $40m cash on hand. The company has stated that they plan to refinance the loan on better terms in July 2021. This will significantly reduce interest payments. Africa Oil needed to take on this loan at the time and BTG knew it, hence the bad terms. Refinancing will be a positive catalyst.

In addition to the bridge loan, Africa Oil is exposed to Prime’s Reserve Based Lending (RBL is a loan based on the NPV of cash flows of an underlying asset). RBLs are periodically adjusted through a redetermination process. In October 2020, Africa Oil announced that the RBL redetermination outcome was much better than expected. Africa Oil had given guidance of a reduction in the loan base of $630m, but the actual number came in at $520m ($260m net to AOI). The next redetermination is scheduled to be completed on March 31st, 2021.

At the time of the first Prime announcement (October 2018) the RBL stood at $1.245B and it increased to $1.8B by the time the deal closed. It seems Prime increased the RBL to pay out dividends to AOI’s ‘lock-box’ to help facilitate the transaction. Now with the redetermination complete the debt is down to more historic levels. Currently, the RBL sits at $1.3B. Africa Oil has not given details on Prime’s cash position. Comparing the expected outcome to the actual outcome of the redetermination it could be over $100M.

In 2020, Prime reduced its RBL debt by $522M (29%) of the principal from the start of the year. And Africa Oil reduced its debt by $109M (44%) from the original amount. Africa Oil and Prime were able to accomplish this in spite of low oil prices. The increase in leverage, necessitated that production be hedged to ensure repayment. Therefore, Prime’s production for 2020 was hedged at an average price of around $65/barrel. And most of H1 2021 production is hedged at $60/barrel. The credit for this well executed hedging strategy goes to Prime’s management.

Valuation

If you can figure out the value of Prime, you can figure out the value of Africa Oil. So, what is 50% of Prime worth? The question can most easily be approached from two directions. One, an illustrative valuation based on dividends. Two, a discounted cash flow analysis. Given that Prime related data is not accessible, both methods will have shortcomings. Using conservative assumptions, they both reach the same conclusion, that Prime is worth more than the market is giving credit for.

A valuation based on dividends leaves a lot to be desired. But I think the exercise is worthwhile as it gives an overview of what kind of results Prime has produced over the past three years. A couple of notes; the dividends are irregular and not scheduled and we don’t know Prime’s payout ratio or cash situation.


Over the past three years Prime has paid $1.1B in dividends to Africa Oil, while only taking on a further $16.5M in debt attributable to AOI. Over that time costs have decreased and production has increased with Egina coming online.

Since the acquisition, Prime has averaged slightly over $350M in dividends per year. What is Prime worth if it can pay $200M/ year in dividends (the amount paid in 2020) and what is it worth if it can pay out $350M/year (3 year average)?


This simple model assumes production stops in 2028, (the Egina FPSO is scheduled to be in production until after 2040). At $200M/year, 50% of Prime is worth $1B over 2x AOIs current market cap of ($420M). At $350M/year 50% of Prime is worth almost $2B or 4x Africa Oil’s MC. The model uses a 15% discount rate, as that is the interest rate on the bridge loan. There are arguments for using both a higher rate (country risk) or a lower one once the loan is refinanced.

A discounted cash flow analysis is going to be much more robust. To give a sense for how valuable these assets are and the margin of safety they provide, three DCF scenarios are outlined below.

*Note: the simple models below assume uniform repayment of the Prime debt over the life of the model ($650m remaining net to AOI). Capex in 2020 will be about $50m attributable to AOI. Capex will increase in conjunction with an increase in production life. An additional category has been added to account for Prime G&A (And other costs). Production costs assume $7/boe. I will also assume production will decline 5%/year (even though production at Egina is in a ramp up phase). I think these assumptions are reasonable without further details regarding Prime.

Bear Case
This scenario assumes OPEC production cuts become permanent (~28,000/boe/day to start). The price of oil stays at $40/barrel long term ($50 in 2021 due to hedging already in place). And that the Nigerian production leases are not renewed in 2025 (has never happened before).


Base Case
This scenario assumes an end to OPEC production cuts, with 2021 production at 31,000/boe/day. A long term oil price of $50/barrel, and that production extends only to 2028 (current 2P reserves).


Bull Case
This scenario assumes 2021 production returns to its 2019 level of 33,000/boe/day before declining. In 2029 production resets to 16,000/boe/day (Egina only) and capex is reduced by half as production continues until 2040. This scenario uses a long term oil price of $60/barrel.


With so many unknowns, I don’t think it would be difficult to poke holes in these DCFs. Having said that, conservatize assumptions were used and no actual oil bull would approve of the ‘bullish’ scenario. The market is valuing AOI as if it it thinks the bear case is likely. I’m more inclined to use the parameters of the bull case with today’s oil price ($50/barrel). With those inputs you get an NPV very close to $1.4B, equal to Prime’s purchase price.

Portfolio of Assets

Prime alone more than covers the current valuation of Africa Oil and you get their other assets for free. Beyond Prime, Africa Oil owns equity positions in three junior oil explorers, a 25% stake in a major development project (Kenya), and they are the operator of an early stage prospect.


Source: Africa Oil
The most straightforward to assess are Africa Oil’s stakes in three junior oil companies.

Africa Energy (20% ownership stake): Originally spun-out of Africa Oil, Africa Energy’s main asset is a 10% stake in an confirmed discovery offshore South Africa. Total is the operator of blocks 11b/12b that could contain over 1 billion boe. Africa Energy has declared their intention to monetize the asset within the next 12 months, if they get an acceptable offer. Africa Energy is well funded and can be patient. In the interest of being conservative, AOI’s stake in Africa Energy will be valued at it current market rate. $75M.
Eco Atlantic Oil and Gas (18% ownership stake): Their main asset is an interest in a field offshore Guyana. Exploration to date has found oil, but it is heavy and sour. From the Africa Oil perspective this can be viewed as an unlikely lottery ticket. The region is prospective and they have the funds for another season of exploration. At market price, its value to AOI is $10M.
Impact Oil (31% ownership stake): Impact recently completed a deal with Africa Energy and now own 37% of Africa Energy (giving AOI an additional 10% indirect ownership in Africa Energy). Their main property is the Venus prospect offshore Namibia. Africa Oil is very optimistic about success there and a test well is funded. The operator is Total. Impact is a private company and therefore I can’t attach a market value. Africa Oil paid about $75M for their stake in Impact. Arguably their stake in Africa Energy ($50M attributable to AOI) plus the Venus prospect are worth much more than what AOI paid. To be conservative the value of the Impact stake will be set at the investment price of $75M.
In total, Africa Oil’s exploration portfolio can be comfortably valued at around $160M.

Kenya – South Lokichar (25% stake)
For long term shareholders of Africa Oil, hearing the word Kenya probably induces heartburn. The South Lokichar development prospect was (before the Nigerian acquisition) the main focus of Africa Oil. The partial monetization of Kenya provided the capital to complete the Prime acquisition. Since then it has been more of a source of frustration than optimism.

In 2010-12, Africa Oil farmed out a 50% interest in Kenya then a early stage exploration project to Tullow. From 2010 to 2015, exploration led to an attractive development project (Oil prices ranged between $80-110 during that time frame). In 2015 Africa Oil farmed out half of their remaining share (25%) of the project to Maersk for $430M. In addition one of the terms stipulated that Africa Oil would be carried for an additional $400M if certain conditions were met. It is unclear whether those terms will ever be met. Subsequently, Maersk was acquired by Total who now owns the 25% stake. Based on the farm out transaction, you can see why Africa Oil is optimistic on Kenya.

Over the past couple of years operator Tullow (50%) and the Kenyan Government have taken turns holding the project up. Tullow for financial reasons and Kenya for regulatory ones. Final Investment Decision (FID) is now scheduled for late 2021. A cautious view is appropriate, the FID has been delayed several times before. Tullow is currently retooling the development plan to make it more economic in the current environment. But Tullow is currently struggling and is also looking to sell a part of their stake. The Kenya government has not been the most helpful partner, but ultimately do want the project to move forward.

There are signs that Total, the other partner, puts little stock into this project. Like Tullow they have indicated they are also looking to sell their stake. Total have also recently signed an agreement with the Tanzania government to build a pipeline to export crude from their Uganda project. Originally Total was looking to build a shorter pipeline through Kenya (and the Lokichar project), but could not come to an agreement with the Kenya government.

In 2015, 25% of the South Lokichar project sold for $430M, today it might be generous to value Kenya at $0 (zero). Kenya is not expensive to hold, but it will burn some cash every year before it gets into production. Conversely, if high oil prices return it could provide the next leg in AOI’s growth.

Africa Oil has one further asset worth mentioning, it is an early stage exploration block offshore South Africa, where Africa Oil is the operator. This block is at a very early stage (pre-drilling) and beyond me to assign a probability of success. Africa Oil has a great track record with exploration. Kenya was an exploration success, but so far a development failure. Is exploration a good use of funds when possible M&A opportunities exist? AOI has stated that they will spend 10-15% of their budget on exploration. Its too early to assign a value to this block, but it still worth mentioning.

Risks

Jurisdiction is the obvious concern for Africa Oil. Being reasonably comfortable with Nigeria is a prerequisite for making an investment. There are three aspects of risk in regards to Nigeria that need to be examined, operational risk, security risk, and government risk.

Operations is perhaps the easiest concern to address. Deepwater oil extraction is technically very difficult. Africa Oil is not the operator, Chevron and Total are running the show, which is exactly who you want. There have been rumours that Chevron is looking to sell of some of its Nigerian assets (something to monitor). State of the art FPSOs operated by world class partners, spread over three operations, mitigates a lot of the concern.

Security is an issue for Oil companies in Nigeria, especially those operating in the Delta. While operationally it is difficult to work 100km offshore, the distance provides a great deal of security. The further offshore a field the more secure from domestic security concerns.

Government is where things become a little bit more difficult to assess. Local politics anywhere are hard for outsiders to judge and Nigeria is a complicated country. That complication creates a perceived risk that may be overstated. Total has a fairly good track record in Africa and building an $16B FPSO is a strong endorsement. In recent years Nigeria has also moved up the Fraser Institute‘s ranking of jurisdictions, but there remains work to be done.

With any commodity business, you need to view commodity prices as a potential risk. With Africa Oil it might actually be a source of opportunity. Prime’s hedge book has meant a realized oil price of ~$65 for 2020. With the first half of 2021 hedged at $60. If oil prices rebound, Africa Oil will do well. If the long term oil price is $40 Africa Oil will still be able to deleverage and possibly make acquisitions. And in that second scenario there would be a lot of distressed sellers.

In large part how you view the investment case for Africa Oil is a function of how safe you view investing in Nigeria.

Management

Africa Oil is a Lundin Group company, of which Lundin Energy and Lundin Mining are the most prominent. On the balance, the Lundin Group’s successes have more than made up for their setbacks. In particular they have a great track record in going to jurisdictions that are perceived to be risky and making it work (ex. Lundin Gold in Ecuador).

Capital allocation is one of the most important metrics by which to judge a management team. Keith Hill and Africa Oil pulled off a coup by completing the Prime deal after their partners dropped out. Selling 25% of Kenya for $430M also looks like smart business. Lastly, the portfolio of juniors was purchased for ~$100M and is now worth over $160M, achieved in an oil market that has trended down. Post refinancing, Africa Oil will have lots of excess cash to deploy and it will be very interesting to see what they do. Presumably they have three options; pay a dividend, do a share buyback, or make an acquisition.

Instituting a big dividend could generate an immediate increase in the share price. $0.10/year would result in a >10% yield at today’s share price. It would cost about $50M/year at a ~25% payout ratio (based on 2020 dividends received). A buyback program, could have a similar positive impact.

My preference though, would be for the company to make an acquisition . There are motivated (forced) sellers out there and now is the time to make a deal. This would not be ideal empire building. If another deal similar to the Prime deal presents itself, I would like to see them be acquirers. It will be interesting to see which way they go, it might even be a combination of all three.


Source: Africa Oil October, 2020 Corporate Presentation
Catalysts
There are several possible catalysts in 2021 that could be important for Africa Oil.

Big Dividend: If there is a repeat of 2020, the first dividend of the year from Prime to Africa Oil could be big ($62.5M in 2020). There is no guarantee of this, but with the positive outcome in the RBL redetermination Prime may be sitting on more cash than they thought.
Q1 2021 financial results: This will be 4 consecutive quarters with positive earnings (Q1 2020 had a large non cash write down on Kenya) after which Africa Oil will screen much better.
Bridge Loan Refinancing (July 2021): Not only will this reduce AOI’s interest payments, it could free up a lot of liquidity to make a acquisition.
Acquisition (and jurisdiction diversification): Africa Oil has stated they are looking to buy another producing West African asset. This would reduce their exposure to Nigeria.
Africa Energy Monetization: Africa Energy has begun the monetization process, which will result in a large payment to Africa Oil and Impact Oil.
Discovery for Eco Atlantic or Impact: A possible repeat of Africa Energy, again it could result in a pay day for Africa Oil or they may elect to retain an interest as a development asset.
An increase in reserves. Further appraisal work at Preowei or another prospect could crate further runway for Africa Oil in Nigeria.
Kenya FID: Tullow is working on rightsizing the project in the hopes of reaching a final investment decision. It will be interesting to see what the economics of a revamped project will look like.
Conclusion
What is Africa Oil worth?

There is lots of hidden value and optionality in AOI’s non-Prime assets, for the sake of simplicity I will value them at $160M (The value of the junior portfolio). In 2015, 25% of Kenya sold for $430M, here the remaining 25% will be valued at zero. Africa Oil has corporate net debt of $100M ($140M in debt minus $40M cash). Taking the three DCF scenarios outlined earlier in the post, you get three valuations.


These are not price targets, but they emphasize the opportunity. A plethora of potential catalysts should make 2021 an interesting year for Africa Oil. But without them, Africa Oil is cheap, offers a margin of safety, and has plenty of upside. Thank you for reading.

Disclosure: Long Africa Oil (AOI)

A great source for Africa Oil news flow and related information is the Africa Oil investor group/aktiegrupp on Facebook. I highly recommend joining.

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AuthorTom
Posted onJanuary 3, 2021
TagsAfrica Oil, AOI

[Boersiback]

Antwort auf Beitrag Nr.: 66.316.886 von winni2 am 06.01.21 21:07:52

Seplat ist ein Klassewert einschl chart... ich denke da kaufe ich auch welche.
Danke für die Ausführungen, da war ich nicht im Bilde.

Bei Mart damals war es so dass sie neue Pipelines von Shell nutzten
"Using the new Royal Dutch Shellpipeline will allow Mart to avoid high pipeline losses while increasing production" (2014)

War um MArt nach heftigem Anstieg (glaub 2 cents auf ca 2) danach 80-90% runterging weiß ich nicht mehr, da war ich schon raus... hatte mich nur später gewundert. Irgendwann wurden sie dann übernommen

(24.03.2016 — Mart Resources on Thursday was acquired by Nigeria-based Midwestern Oil & Gas Company.)