ADM Energy plc, a natural resources investing company, announces its interim results for the six months ended 30 June 2020.
- 5% equity investment in the Aje field, part of OML 113 offshore Nigeria
- Operations largely unaffected by COVID-19 and oil production continued throughout the period, except during scheduled technical maintenance on the FPSO
- Two wells (Aje-4 and Aje-5) producing at an average of 2,126 bopd (H1 2019: 2,967 bopd), with 106 net to ADM. The temporary drop in production reflects a period of maintenance on the FPSO and the Partners anticipate production will increase in H2 2020
- Total gross production volume of approximately 394,812 barrels of oil from January to June 2020 with 24,941 net to ADM
- Asset-level operational costs reduced by 37.5% - breakeven reduced to US$28 per barrel
- Partners exercised right to store oil on FPSO for later sale with anticipated recovery in crude oil price
- The next lifting is planned for October 2020 and will enable the Company to benefit from any recovery and upturn in oil prices
- Entered into an agreement with EER to increase revenue interest in OML 113 from 5% to 9.2%, expected to complete in H2 2020
o Significantly increases ADM's net 2P reserves from 8.9 MMboe to 16.4 MMboe with net daily reserves, based on current production, rising from 106 bopd to approximately 196 bopd
- Signed strategic alliance MoU with Trafigura to develop African energy projects and provide conditional pre-finance of up to US$100 million
- Raised £400k for working capital, with directors participating, and converted £152k of debt to equity
- Secondary listing on the Berlin and Frankfurt stock exchanges to support growth and broaden investor base
Post Period Highlights:
- Strengthened the Board with the appointment of two high-calibre Non-executive Directors, Sir Henry Bellingham and Dr Stefan Liebing
- Added two oil and gas veterans, Darrell McKenna and Dr Satinder Purewal, to the technical team
- Raised additional equity and debt of £672,500 through a placing and subscription, with five directors participating, and converted £395,798 of debt to equity
- Submitted bid for a marginal field in Nigeria's 2020 Marginal Field Bid Round
Osamede Okhomina, CEO of ADM Energy plc, commented: "We made excellent progress in the first half of the year despite difficult macro conditions. Operations at the Aje field continued largely uninterrupted by COVID-19 and costs were significantly reduced at the asset level, bringing break-even costs down to US$28 per barrel, which ensures the asset remains profitable even at lower oil prices.
"By storing oil on the FPSO, we have avoided making sales at depressed prices and are now positioned to benefit from any potential increased forward curve in oil prices as the global economy begins to re-open. We are excited by the prospects at the Aje field and are increasing our stake from 5% to 9.2% ahead of plans to drill three new wells in 2021, potentially significantly increasing production to 9,000 bopd.
"We continue to drive forward our strategy to build a multi-asset portfolio by targeting projects with highly attractive risk-reward profiles. As oil majors continue to look to divest assets, the current economic climate has further depressed their value but not their quality, which presents attractive investment opportunities. With a strengthened management team and Board, extensive contacts and experience in West Africa, ADM is well positioned to execute its growth strategy and capture the significant opportunities that exist in the near to medium term."