Afentra, through its subsidiary Afentra Angola, has agreed to purchase a 12% stake in Block 3/05 and a 16% in Block 3/05A, offshore Angola, for a total consideration of up to $84.5m.
The UK-based independent oil and gas company has signed the sale purchase agreement (SPA) to acquire the stake from Azule Energy Angola Production (Azule).
Under the terms of the agreement, Afentra will obtain 12% and 16% equity interest in Block 3/05 and Block 3/05A, respectively, in exchange for an initial consideration of $48.5m.
The company will pay a contingent consideration of up to $21m over a period of three years, subject to certain oil prices and production constraints at Block 3/05.
It will also pay additional consideration of up to $15m contingent on the successful development of certain Block 3/05A discoveries and related oil price and production constraints in future.
Afentra 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 ~6kbbl/d and 2P reserves to 32mmbbls.
“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.”
In April last year, Angola’s state-owned petroleum and natural gas company Sonangol Pesquisa e Produção (Sonangol) signed an agreement with Afentra and partners to buy a stake in three blocks offshore Angola.
As part of the current deal, Afentra will amend the terms of its previous agreement with Sonangol, to reduce the interest it would acquire in Block 3/05 from 20% to 14%.
The initial and contingent considerations for the transaction will therefore reduce to $56m and up to $35m, respectively.
McDade added: “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.
“I would like to thank our shareholders for their continued patience through these processes and hope they share in Afentra management’s excitement about the value-creation implications of these deals.
“We look forward to the timely publication of the Admission Document and the recommencement of trading thereafter with an expectation to complete both Sonangol and Azule transactions in Q4 23.”
