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2016-11-15

AFRICA OIL 2016 THIRD QUARTER FINANCIAL AND OPERATING RESULTS

Africa Oil Corp. Quarterly report AFRICA OIL 2016 THIRD QUARTER FINANCIAL
AND OPERATING RESULTS November 14, 2016 (AOI–TSX, AOI–Nasdaq-Stockholm) …
Africa Oil Corp. (“Africa Oil” or the “Company”) is pleased to announce its
financial and operating results for the three and nine months ended
September 30, 2016. At September 30, 2016, the Company had cash of $490.1
million and working capital of $455.5 million. The Company’s liquidity and
capital resource position improved dramatically during 2016 with the
receipt of $439.4 million (inclusive of deposit received prior to 2015
year-end) upon completion of the farmout transaction with Maersk Olie og
Gas A/S (“Maersk”) whereby Maersk acquired 50% of the Company’s interests
in Blocks 10BB, 13T and 10BA in Kenya and the Rift Basin and South Omo
Blocks in Ethiopia. Proceeds received from Maersk include $350.0 million as
reimbursement of past costs incurred by the Company prior to the agreed
March 31, 2015 effective date and $89.4 million representing Maersk's share
of costs incurred between the effective date and closing, including a carry
reimbursement of $15.0 million related to exploration expenditures. An
additional $75.0 million development carry may be available to the Company
upon confirmation of existing resources. Upon Final Investment Decision
("FID"), Maersk will be obligated to carry Africa Oil for an additional
amount of up to $405.0 million depending on meeting certain thresholds of
resource growth and timing of first oil. Tullow Oil, Maersk, and Africa Oil
(the “Joint Venture Partners”) plan to recommence drilling activities in
the South Lokichar oil basin located in Blocks 10BB and 13T in Kenya in the
fourth quarter of 2016 with an initial programme of four wells and the
potential to extend this by a further four wells. The first two wells are
expected to be the Etete and Erut prospects in the north of South Lokichar
basin. Other potential prospects in the programme include further appraisal
of the Ngamia and Amosing fields to target un-drilled flanks, with an aim
of extending the size of these existing discoveries. In addition, the Joint
Venture is planning an extensive water injection test programme in the
fourth quarter of 2016 to collect data to optimise the field development
plans. Africa Oil holds a 25% interest in Blocks 10BB and 13T. In addition
to progressing the full field development work in Kenya, an Early Oil Pilot
Scheme (EOPS) transporting oil from South Lokichar to Mombasa, utilising
road, has been approved by the Joint Venture Partners. This will provide
technical and non-technical information that will assist in full field
development planning. The EOPS would utilise existing upstream wells and
oil storage tanks to initially produce 2,000 bopd around mid-2017, subject
to agreement with National and County governments. The Company has
completed the following significant operational activities during the third
quarter and to date in 2016: --

The Government of Kenya announced that it intends to run a crude oil
pipeline from South Lokichar to the port of Lamu. The Joint Venture
Partners have signed a Memorandum of Understanding with the Government of
Kenya which confirms the intent of the parties to jointly progress the
development of a Kenya crude oil pipeline. The pipeline Joint Development
Agreement is currently being finalized and is expected to be signed in the
fourth quarter of 2016. The Joint Venture Partners continue to progress the
technical, environmental and social studies and tenders required to proceed
to FEED for both the upstream and pipeline projects. Both FEED studies are
expected to start in early 2017. It is expected that any Kenya standalone
pipeline plan will take into consideration the potential to accommodate the
transportation of additional oil resource from bordering East Africa
countries.

--

On May 10, 2016, the Company announced details of an updated independent
assessment of the Company’s contingent resources in the South Lokichar
Basin in Blocks 10BB and 13T (Kenya). The estimated gross 2C unrisked
resources in the South Lokichar Basin, Kenya have increased by 150 million
barrels (or 24%) since they were previously assessed during 2014 to 766
million barrels of oil (Development Pending: 754 million barrels and
Development Unclarified: 12 million barrels).

--

Preparation for water injection testing commenced towards the end of the
third quarter of 2016 on the Amosing-3 well. The first results of the
testing are expected during the fourth quarter of 2016.

--

The Joint Venture Partners received a three-year extension to the Second
Additional Exploration Period (expiring 18 September 2020) on Blocks 10BB
and 13T.

--

The Cheptuket-1 well (Block 12A) completed drilling to a depth of 3,083
meters. The well encountered oil shows, seen in cuttings and rotary
sidewall cores, across a large interval of over 700 meters and post-well
analysis is still in progress. A FTG survey over Block 12A has been
completed to gain further data on this prospective area. Further
exploration activities in Block 12A and Africa Oil's other remaining
unexplored acreage, continue to be evaluated. Africa Oil holds a 20%
interest in Block 12A.

--

The Joint Venture Partners in the South Lokichar Basin continue to progress
work aimed at sanctioning development, including: continuing studies to
support reservoir modelling, additional core analysis, petrophysical
analysis, and advancement of commercial work related to the development
plans.

--- For the complete news release and report see attached file. For further
information, please contact: Sophia Shane, Corporate Development (604)
689-7842.

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