UK oil & gas player ups its stake in two Angolan offshore blocks

Afentra, a UK-headquartered and AIM-listed upstream oil and gas company, has sealed a deal to acquire half of the stake one of its joint venture (JV) partners holds in two blocks off the coast of Angola. The other half will go to another JV partner, Etablissements Maurel & Prom (M&P).

After participating in purchase negotiations, alongside M&P, to buy additional interests in blocks 3/05 and 3/05A offshore Angola, Afentra has signed a sale and purchase agreement (SPA) with Etu Energias for its 50% share of the acquisition, encompassing 5% net in the first block and 6.67% net in the second one. This deal is subject to customary conditions, including government approval.

With a net initial consideration of $23 million and a contingent consideration of up to $11 million across both blocks, linked to a combination of oil price thresholds, production performance, and the development of key discoveries, the effective date of the transaction is December 31, 2023.

Block 3/05, which entails eight mature producing fields discovered by Elf Petroleum, part of TotalEnergies, in the early 1980s in the Lower Congo Basin, produces hydrocarbons from around 40 production wells with nine active water injectors and has 17 wellhead and support platforms and four processing platforms, with oil exported via the FSO Palanca. 

The acquisition, which will be funded entirely from existing cash resources, is said to represent a further value-focused step in Afentra’s strategy to build a high-quality portfolio of cash-generative production and development assets, offering additional exposure to high-margin, long-life producing and development assets in Blocks 3/05 and 3/05A; and a further consolidation of the JV partnership that is re-developing the material upside of this multi-billion barrel offshore asset.

As profit before tax on the Etu interest was $14 million in 2024, the total headline cash consideration payable by Afentra at completion includes $22 million for the Block 3/05 interest and $1 million for the Block 3/05A stake on a cash-free, debt-free basis, subject to customary adjustments for working capital and crude inventory balances between the effective date and completion.

Paul McDade, Chief Executive Officer of Afentra, commented: “We are pleased to have signed this SPA with Etu Energias, providing Afentra with additional interest on similar terms to our previous transactions in Blocks 3/05 and 3/05A.

“This transaction enhances the alignment within the joint venture and reinforces our exposure to these high-quality production and development assets that continue to perform strongly as the partners demonstrate the ability to realise the upside of these world-class assets.”

The UK company explains that it may pay up to $6 million in contingent consideration for Block 3/05, which applies only to the years 2025 and 2026, with the annual contingent payment capped at $3 million based on a sliding scale of average annual Brent oil price between $75 per barrel and $123 per barrel, and only if average gross production exceeds 15,000 barrels of oil per day for the relevant year.

In addition, a further $5 million in contingent payments may be made in connection with the CacoGazela and Punja discoveries, with two payments of $2.5 million payable one year after first oil from each development, subject to a minimum Brent price of $75 per barrel and gross production averaging at least 5,000 barrels of oil per day during the twelve months following first oil, which needs to occur by December 31, 2029, for the contingent payments to become due.

The completion of the Etu acquisition, which remains subject to customary conditions precedent, including government approvals in Angola and finalization of definitive documentation, is currently anticipated in H2 2025.

“The structure of the transaction reflects our disciplined approach to capital deployment, combining a modest upfront payment with a value-linked contingent consideration. We look forward to continuing to work closely with Sonangol and M&P to deliver the material upside in these assets providing long-term value for all stakeholders,” stated McDade.