Maurel & Prom Provides Activity in 2020

Source: 1/28/2021, Location: Africa

Robust financial position and lower net debt in 2020 thanks to the success of the adaptation and cost reduction plan
o Cash breakeven before debt servicing lowered below $30/bbl as a result of cost reduction efforts in 2020
o Net debt of $455 million at 31 December 2020, down from the previous fiscal year ($469 million at 31 December 2019)
o Cash position of $168 million at 31 December 2020, after debt repayments of $77 million during the year
ē M&P working interest in 2020: 26,076 boepd
o M&P working interest production on the Ezanga permit in Gabon of 16,896 bopd, down 15% from 2019 due to production cuts related to OPEC quotas
o M&P working interest production of 3,933 bopd in Angola and 31.5 MMcfd in Tanzania
ē Sales of $330 million in 2020, down sharply as a result of the drop in crude prices
o Average sale price of oil $40.1/bbl, down 40% from 2019 ($67.2/bbl)
o Valued production (income from production activities, excluding lifting imbalances): $324 million, down 37% from 2019 ($519 million)
ē 2P reserves for M&P working interest at 31 December 2020: 183 MMboe
o Reserves stable after being restated for 2020 production

Olivier de Langavant, Chief Executive Officer at Maurel & Prom, stated:
ďIn a year marked by a particularly difficult economic environment, Maurel & Prom demonstrated its responsiveness by taking immediate action to address the difficulties encountered. Despite a sharp drop in crude prices and reduced output due to OPEC quotas, we managed to reduce net debt during the year, thereby proving the effectiveness of the action plan introduced in March. We are now looking to keep up these efforts, as well as initiatives enabling us to take advantage of this period to put Maurel & Prom in the best possible position for its long-term development".

M&Pís working interest production for 2020 stood at 26,076 boepd, down 5% from 2019 (27,340 boepd).

This decline was largely due to production cuts on the Ezanga permit in Gabon (16,896 bopd for M&P working interest in 2020 versus 19,828 bopd in 2019) after OPEC established new quotas.

The average sale price of oil was $40.1/bbl versus $67.2/bbl in 2019, a drop of 40%.

The Groupís valued production (income from production activities, excluding lifting imbalances) was $324 million, down 37% from 2019. The restatement of lifting imbalances net of inventory revaluation had a neutral effect overall and resulted in a downwards adjustment of $1 million. After inclusion of the $6 million earned from the activities of the drilling subsidiary (Caroil), Group consolidated sales for the year totalled $330 million.

Production activities

ē Gabon
M&Pís working interest oil production (80%) on the Ezanga permit was 16,896 bopd (total production: 21,120 bopd) in 2020, down 15% from 2019. The company took advantage of the period of low crude prices to temporarily suspend production at certain wells, starting in May 2020, in order to improve reservoir conditions for the long term. This effort has subsequently continued under the quotas established by OPEC, of which Gabon is a member.

In January 2021, production at the Ezanga field was still limited to 19,000 bopd (or 15,200 bopd for M&P working interest). It is expected that this constraint will be gradually relaxed during the first half of 2021.

ē Tanzania
M&Pís working interest gas production (48.06%) on the Mnazi Bay permit stood at 31.5 MMcfd (total production: 65.5 MMcfd) in 2020, a slight drop of 7% compared to 2019.

This decline was offset at the sales level by the allocation of additional rights to M&P. These rights related to corporate income tax now being charged to the partner TPDC, pursuant to the production sharing contract. Consequently, M&P sales in Tanzania rose by 26% to $43 million, versus $34 million in 2019.

ē Angola
M&Pís working interest production (20%) in Block 3/05 in 2020 was 3,933 bopd (total production: 19,663 bopd). Despite the drop in crude oil prices, valued production was up by 30% ($40 million versus $31 million in 2019) due to the asset being included over the entire period (versus just five months in 2019).

Group reserves as at 31 December 2020
The Group's reserves correspond to the volumes of technically recoverable hydrocarbons representative of the Groupís share of interests in permits currently in production plus those revealed by discovery and delineation wells that can be operated commercially. These reserves were certified as at 31 December 2020 by DeGolyer and MacNaughton in Gabon, Angola and France, and by RPS Energy in Tanzania.

The Groupís 2P reserves stood at 182.9 MMboe at 31 December 2020, including 120.1 MMboe of proven reserves (1P). The change from 2019 was due to production in the year just ended, with no significant revision in 2020.

2P reserves for M&P working interest:
Note that these figures do not take into account the 20.46% interest held by M&P in Seplat, which is one of Nigeriaís main operators listed on the London and Lagos stock exchanges. For the record, Seplatís 2P reserves stood at 509 MMboe at 1 January 2020 (or 104 MMboe for the 20.46% stake held by M&P).

In addition, due to the international sanctions against Venezuelaís state oil company PDVSA, the activity of M&P, relating to its stake in the company PRDL, is limited for the time being to operations related solely to the safety of staff and assets, and to environmental protection. Consequently, no reserve to date has been retained as regards this share.

Financial position
The Groupís cash position at 31 December 2020 stood at $168 million, versus $212 million at 30 June 2020 and $231 million at 30 September 2020. Net debt fell in 2020 from $469 million to $455 million after a $77-million debt repayment ($75 million for the Term Loan and $2 million for the Shareholder Loan).

The $43 million debt of the Gabon Oil Company (GOC) associated with its entry on the Ezanga permit in 2019, and corresponding to the amount owed to M&P in respect of the pre-2018 carrying cost, has now been validated through a procedure to obtain an expert opinion from the ICC (International Chamber of Commerce). These $43 million, which are not included in the cash position of $168 million at 31 December 2020, are subject to procedures in order to obtain them quickly.

The cost-cutting initiatives that began in March 2020 and the asset impairments recorded during the first half of 2020 significantly lowered the Groupís breakeven in terms of net income. The breakeven is now $45/bbl (excluding exceptional items and share of Seplatís earnings) based on current production figures. As far as the cash breakeven is concerned, this is less than $30/bbl before debt servicing.

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