FSO Palanca; Source: Stapem Offshore

UK oil & gas firm gets its hands on much-anticipated stakes in two blocks offshore Angola

UK-headquartered and AIM-listed company Afentra plc – through its wholly-owned subsidiary, Afentra (Angola) Ltd – has tucked interests in two blocks offshore Angola under its belt after wrapping up the acquisition process with the country’s state-owned oil and gas company Sonangol.

FSO Palanca; Source: Stapem Offshore

Afentra entered Angola in May 2023 by closing the acquisition of a 4% interest in Block 3/05 and a 4% interest in Block 3/05A with Croatia’s INA-Industrija Nafte, however, the Sonangol acquisition was delayed. The approval for the acquisition of a 14% non-operating interest in Block 3/05 and a 40% non-operating interest in Block 23 – based on a sale and purchase agreement between Sonangol and Afentra from April 20, 2022, which was amended and restated on July 18, 2023 – was granted in November 2023.

The company confirmed the completion of the Sonangol acquisition on December 8, 2023. This increases Afentra’s interest in Block 3/05 to 18%, but the stake will increase to 30% upon completion of the ongoing Azule acquisition, which entails a 12% interest in Block 3/05 and a 16% interest in Block 3/05A offshore Angola for a total consideration of up to $84.5 million. The government approval process for this transaction is ongoing with the acquisition now expected to complete later in 1Q 2024.

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Regarding the Sonangol acquisition, Afentra discloses a payable cash consideration of $21.1 million at the completion, adding that the initial cash consideration of $56.5 million has been reduced by the impact of cash flow adjustments as of the transaction’s effective date. While the company inherits crude oil stock with an approximate value of $11.9 million at $75/bbl (158,691 bbls), the acquisition of a 40% non-operated interest in Block 23 for $0.5 million provides long-term upside potential.

In addition, the government of Angola has completed its process to terminate and redistribute the CSI interests thereby increasing Afentra’s current interest in Block 3/05A from 4% to 5.33%. This interest will further rise to 21.33% upon completion of the Azule acquisition.

The gross production from Block 3/05 averaged 20,560 bopd in November 2023, with annual gross production for 2023 forecast to be around 19,100 bopd. The production from Block 3/05A continues at around 1,300 bopd from the well Gaz-101. The production uptime improved quarter-on-quarter, from 77% in 1Q 2023 to 87% in 3Q 2023.

Source: Sonangol
Source: Sonangol

“These strong and increasing levels of production demonstrate the benefit of continued restoration works over the course of the year in addition to the well intervention activities underway in Block 3/05,” highlighted Afentra.

Furthermore, the continued light well intervention (LWI) program to date has focused mainly on re-perforation and stimulation operations across the Block 3/05 fields, but additional LWI operations also focused on improvements in gas lift are planned before the end of the year.

At the Gazela field in Block 3/05A, long-term testing continues at around 1,300 bbl/d, enabling the framing of potential low-cost development options. On the other hand, the future planned activities on Block 3/05 will consist of an additional phase of light well interventions and the installation of ESPs on a sample set of production wells and infill wells.

Additionally, a gas management workstream started in 1H 2023 to examine a holistic solution for gas which could enable a material reduction of emissions in the medium to long term. Block 3/05, located in the Lower Congo Basin, consists of eight mature producing fields discovered by Elf Petroleum – now part of TotalEnergies – in the early 1980s. This block has a diverse portfolio of over 100 wells.

Currently, it produces from around 40 production wells with nine active water injectors. The facilities include 17 wellhead and support platforms and four processing platforms, with oil exported via the FSO Palanca.