ADM Energy PLC, an oil and gas investing company quoted on AIM, provides a strategy update for 2020 and beyond.
In the second half of the year, the Company made significant changes to the Board and strengthened the management team to take advantage of the assets now being made available across Nigeria and West Africa.
Specifically, it appointed Osamede ("Osa") Okhomina, a specialist in the Nigerian Oil & Gas sector with deep-rooted connections in the country and across West Africa, as its Chief Executive Officer. It also appointed Peter Francis, a veteran of the oil industry, as Non-Executive Chairman, and financier Manuel Lamboley as Non-Executive Director.
As a result of the Board and management changes, the Company will be progressing in a meaningful way its plans to build a larger investment portfolio of projects. By leveraging its extensive network across Africa, the new management team has identified a number of investment opportunities and contines to evaluate new potential investments in assets at varying stages of the production cycle including appraisal, development and producing assets. It has also actively engaged in conversations with a number of parties including potential funding partners, off-takers and local project partners to further support the Company in the development of its asset portfolio.
The Company's primary approach to investments will be to "option" appraisal assets where oil and gas has already been discovered, conduct a detailed evaluation, and then make a debt or equity contribution to access future upside. The benefit of this approach is that the Company raises equity only after the asset has been secured.
The Board believes that in the upstream sector, the international oil companies ("IOC") have divestment programmes planned and management estimates that up to 500,000 barrels per day could be sold to independent operators. For these deals to be financed, they will require local expertise, close relationships and experience of operating in the region. As a result, ADM plans to acquire value investments by adopting the following methods:
International Trading Partners
In the Board's opinion, the major oil traders have become the de-facto financiers for many acquisitions, however they often struggle to find partners with the necessary credibility. It is the intention of ADM to use the relationships of the senior management team to partner with these trading companies, who can provide capital for projects identified by ADM and whose strong balance sheets will underpin ADM's potential asset purchases.
Furthermore, the Company has mature, long-standing relationships in place with key providers of debt within Africa which are supportive of natural resource deals. These can potentially provide the Company with funding to be deployed alongside its equity investment.
Equity as Currency
In addition to the IOCs, there are several local companies looking for financing. In this instance, ADM intends to use its local experience and trusted relationships of its leadership team to invest in such companies willing to do part-cash and part-equity deals.
The appointment of Osa as CEO in July 2019 significantly expanded ADM's network of industry contacts and expertise in oil and gas across West Africa. Osa, who was educated in Nigeria and the UK before attending Cambridge University, has 18 years' experience in the upstream oil & gas sector, originating and completing multiple transactions in Nigeria as well as Equatorial Guinea, Libya and Mauritania, including joint ventures with ExxonMobil and Chevron. As a result, he has extensive industry contacts within Nigeria and with IOCs. He also has considerable familiarity with how the Nigerian government works through his personal business dealings with several federal ministries.
Additionally, the Company has augmented the Board with the appointment of Peter Francis as Non-Executive Chairman, bringing over 35 years of experience working with major international oil companies including ExxonMobil.
ADM has also appointed Manuel Lamboley, a financier with over 30 years' experience in international broking and investment banking, predominantly in the natural resources sector, to the role of Non-Executive Director. Manuel is based in Geneva and holds extensive contacts with commodity trading houses and European Investors. He has been instrumental in helping to bring fresh capital into the Company.
Since August 2019, ADM has raised approximately £1.32 million in two fundraises to help strengthen its balance sheet. In doing so, it has brought in new long-term investors which have helped to build up the Company's supportive shareholder base.
Meanwhile, the recent appointment of Fox-Davies Capital Limited ("Fox-Davies") as the Company's Lead Broker, and Fox-Davies Capital DIFC as financial adviser, adds signficiant specialist knowledge of the industry and African markets that will assist ADM in executing its investment strategy. As a broker, Fox-Davies has extensive relationships with dedicated oil investors and investors outside the UK. The Company believes this to be a complementary appointment to the work and assitance provided by Pello Capital.
The Company has also appointed a financial controller to strengthen its accounting function. These measures are part of ADM's commitment to add both technical expertise and financial oversight as the Company seeks to expand its investment portfolio.
Osamede Okhomina, CEO of ADM Energy, commented: "I joined ADM because I have long recognised the value that could be created by structuring oil and gas opportunities through public markets. The Company has set out a clear strategy based on the strength of our existing asset base and our team's ability to identify additional undervalued investments. As a country, Nigeria represents a compelling value proposition for investors. It is a buyer's market, with many of the oil majors embarking on significant divestment programmes. This opens up an opportunity for companies that have the local contacts, experience and financing options to acquire assets at very attractive prices. Consequently, we are very much looking forward to an exciting 2020 for ADM and hope to have an active deal flow to accelerate our growth."