Africa Energy Corp., an oil and gas company with exploration assets offshore South Africa and Namibia, announces financial and operating results for the three months ended March 31, 2021.
Garrett Soden, the Company’s President and CEO, commented: “We recently closed the Block 2B farmouts and are now focused on procuring a rig to drill the Gazania exploration well offshore South Africa this year.
We will benefit from a carry on the Gazania well, which will target a relatively low-risk rift basin oil play with significant upside for Africa Energy shareholders. On Block 11B/12B, the Brulpadda and Luiperd gas condensate discoveries were among the top global discoveries over the last few years, and there is substantial follow-on potential across the block. The recent Luiperd results were better than expected with high condensate yield and excellent reservoir connectivity and productivity. We continue to integrate these results with the final fully-processed 3D seismic volume, and we look forward to updating investors on the potential development of the Paddavissie Fairway soon.”
In 2020, Africa Energy announced the successful drilling and testing results of its second consecutive discovery on Block 11B/12B. The discovery on the Luiperd Prospect reconfirms the Paddavissie Fairway as a world-class exploration play with substantial follow-on potential. Due to the success at Luiperd, the joint venture decided to proceed with development studies and engage with authorities on gas commercialization. We believe the fundamentals are strong for a gas condensate development on Block 11B/12B as South Africa is a large energy market looking to transition from coal to natural gas and is currently limited to expensive imports.
The Block 2B joint venture partners are focused on procuring a rig for the Gazania-1 oil exploration well offshore South Africa in order to spud in the third quarter of 2021. Block 2B has significant contingent and prospective resourcesin shallow water close to shore and includesthe A-J1 discovery from 1988 that flowed light sweet crude oil to surface. Gazania-1 will target two prospects in a relatively low-risk rift basin oil play up-dip from the discovery.
- At March 31, 2021, the Company had $13.9 million in cash and no debt. Subsequent to the end of the first quarter, Africa Energy received $1.5 million related to the Block 2B farmout completed with Azinam Limited.
- On April 19, 2021, Africa Energy completed two farmout agreements whereby the Company transferred operatorship and an aggregate 62.5% participating interest in Block 2B. Africa Energy retains a 27.5% participating interest in Block 2B and is carried on the Gazania-1 well expected to spud in Q3 2021.
- The Block 11B/12B1 joint venture is conducting a full prospect analysis from the fully-processed 2D seismic dataset acquired by Shearwater over the eastern part of the block (7,033 linear kilometers) that was received in September 2020. The dataset confirms the Kloofpadda Play Trend, which
consists of several large and encouraging leads.
- The Block 11B/12B joint venture received the final fully-processed 3D data that integrates the PGS and Polarcus surveys over the Paddavissie Fairway in the first quarter of 2021 (2,305 square kilometers from PGS and 570 square kilometers from Polarcus). This fully-processed 3D volume has significantly higher resolution and will be integrated with the drilling and testing results to facilitate development studies and to mature previously identified leads into prospects within the Paddavissie Fairway
EARNINGS TREND AND FINANCIAL POSITION
Operating expenses increased by $0.5 million for the three months ended March 31, 2021, compared to the same period in 2020 due mainly to an increase in bonuses paid to employees in the first quarter of 2021 as well as an increase in professional fees related to completion of the Block 2B farmout agreements.
At March 31, 2021, the Company had cash of $13.9 million and working capital of $12.0 million compared to cash of $19.6 million and working capital of $18.2 million at December 31, 2020. The decrease in cash and working capital can be attributed to cash based operating expenditures and investments in Main Street 1549 required to fund Block 11B/12B expenditures.
The Company plans to report results for the three and six months ended June 30, 2021 on August 11, 2021.