Afentra (LSE:AET) — Trading Update

0:01 Good afternoon, and welcome to the AFENTRA PLC Trading Update. Simply type in your questions and press that. Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Paul McDade. Good afternoon to you, sir.

0:25 Thank you, and welcome, everyone. Thank you for taking the time to join us for today's update following a recent trading statement. Today, what what we want to do is focus on a number of areas. It's actually just about five years since we started AFENTRA back in February 2021. And I think what we'll be able to demonstrate today is the extensive portfolio that we've built within Angola. If you look at the recent update on reserves and resources, we now have approximately a 120,000,000 barrels of 2C and 2P reserves and resources.

1:12 And at current production rates, that equates to reserve and resource life of about fifty years, a clear indication that we're at a point where production is about to grow and and grow significantly. Also, over the recent, period, we've continued to deliver strong production and strong revenue, and that has continued to support significant investment in our core assets offshore that you know talk about. But it's also continued to support the broader growth of the of the company, and as I say, building out that newer portfolio. As we look ahead into '26 and beyond, the for the next five years, what I think you know demonstrate is a very significant production growth we have ahead of us.

2:05 And we're have some near term activities later in '26 that will

2:11 stop that material increase in in production. We anticipate that we can up to triple production as we head towards 2030. Obviously, funding that investment is a priority, and managing our balance sheet appropriately will continue to be a priority. And as you've seen historically with AFENTRA, we've taken a prudent approach to our balance sheet. We have very low debt at the moment, and we're currently looking at, as you talked to that, how do we restructure the balance sheet in preparation for this next period of growth. So with that, I'll hand over to Anastasia to run you through some of the financial figures and financial background for the period.

3:04 Thank you, Paul, and good afternoon, everyone. As Paul mentioned in his opening remarks, 2025 has been another year of consistent delivery and very disciplined execution. Production has been in line with our expectations with cash generation reflective of the softer oil price environment of 2025. Total debt has been reduced with the principal repayments made during the course of 2025. In fact, since we took over the assets and funded our acquisitions, we have already repaid 40% of our initial borrowings. Our capital allocation was disciplined and primarily focused on the ongoing revamping and integrity campaign as well as preparation for the drilling and workover campaign in 2026 that Ian will talk about later on.

4:02 As a partnership and with a soft commodity prices outlook in the first half of twenty twenty six, Our preference is to commence activities later in the year. However, these campaigns are advancing and we're getting closer to the technical readiness. We have additionally progressed our portfolio with the completion of the operated Block three twenty four license, which provides an additional exciting growth potential for AFENTRA. With the addition of these operated positions, the team is keen to progress on the basis of our deep operating experience to support the next phase. We also anticipate completion of CONFOR and AETO transactions in the very near future. It is important we get both the pace of investment and the timing right in this volatile commodity price period. And as such, we remain flexible in our approach.

4:57 We're positioning the company for meaningful production and cash flow growth with a clear opportunity ahead. Execution will be measured and cautious, focused on getting the timing and the financing structure right. Moving on to the following slide, we'll talk about the cash reconciliation for the period. Again, for those familiar with our presentations, you would remember similar slides in the past. The asset cash generation here, again, you would recall that we always show it on an asset basis after all OpEx, all fiscal, including all taxes, but also equally as importantly, we show it on the basis of all material CapEx outlays in 2025.

5:46 So it's a net net net figure. In the first two years since the completion of the acquisitions, high oil prices have helped to build a very material cash balance that we benefited from during the course of 2025. That allowed us to satisfy the increased capital commitments, fully fund corporate requirements and to also to pay down the debt. We continue to carry very light debt levels relative to many of our peers. We're in an investment phase at the moment, cash burn is linked to asset build out and growth preparation will continue. The focus is on calibrating deployments while maintaining balance sheet discipline. The next slide shows our plans for the crude oil sales and our hedging position for the year.

6:35 Our projection for 2026 is an estimated crude sales of 2,300,000 barrels. This is based on production levels similar to those of 2025 and does not include any additional production from the drilling and heavy workover projects. The very material uplift relative to 2025 when we monetized 1,600,000 barrels is due to the timing of offtakes that resulted in the stock of 363,000 barrels shifted from 2025 into 2026. In fact, we already monetized that stock as we sold 517,000 barrels at an average price of 65.38, and that took place in January.

7:24 We target an additional three to four liftings this year at around 400 to 500,000 barrels per offtake, with the next offtake anticipated in April, followed by a July cargo. In the later part of 2025, we made a decision not to hedge Q1 twenty twenty six offtake. However, we stayed opportunistic and with the recent uptick in oil prices, we have hedged fully the balance of first half of the year and we added a layer of hedges to provide a level of certainty for the second half of the year. We generally would prefer to maintain a higher level of hedging and will continue to stay dynamic and opportunistic while maintaining balance sheet discipline. Slide seven touches on our debt profile and working capital facility.

8:15 For those who were with us in the previous presentations, you would remember that we have initially secured financing with Trafigura and Mauritius Commercial Bank in the second quarter of twenty twenty two when we completed our acquisitions of assets from Songhol, Azule and Aemig. Both facilities have been secured at competitive market rates and worked well for us so far. As we enter a period of material growth, we continue to maintain optionality with regards to these facilities, which are both flexible and can be repaid or refinanced at the time of our choosing. As we look at the growth potential ahead, we recognize that the balance sheet will need to evolve. We're actively reviewing both facilities with the objective to reshape the debt profile to fit our ongoing funding needs coupled with refinancing into a larger RBL or term loan facility when warranted to support our growth ambitions.

9:13 We're actively assessing options and will move in a measured and prudent way given the current oil price environment and funding requirements. Slide eight, very quick recap. The AETO transaction we signed in June 2025. That is a strategically compelling acquisition, which progresses well through the approval process. Timing of approval remains procedural in rather than conditional in nature. The effective date for this transaction is end of December two thousand twenty three, and it's subject to customary completion adjustments. It has been taking a little bit longer for us to complete this acquisition. However, the patent is not too dissimilar to all prior deals, and we anticipate the completion to occur in the near future.

10:01 Finally, slide on the capital allocation framework, page nine. Where do we see the priorities from a fiscal and shareholder value creation in returns perspective? Our core objective is in maintaining balance sheet, growth, flexibility and also we aim to deliver shareholder value. Our priority number one is the ongoing reinvestment into our existing assets to drive future growth. We built a strong foundation for infrastructure investment for the period and now we're moving into drilling and workovers to grow production and reserves. Balance sheet strength is critical. We made substantial progress on the investments so far. We will accelerate activity in a measured way, supported by the right financing structure and market conditions.

10:51 With regards to the inorganic growth, we continue to screen and evaluate new opportunities in Angola and also elsewhere in West Africa, focused on value creation and disciplined execution. We're not pursuing deals for the sake of deal announcements. Any deal that will progress to announcement needs to be justified from a shareholder value creation perspective. Finally, when it comes to the shareholder returns, our current priority is reinvesting in accretive growth while preserving the flexibility to return capital to shareholders at the appropriate time. And with that, I'll hand it over to Iain. Thank you, Anastasia. So we'll build on the financial framework, and I'll walk through the operational side of the business. We're now moving into the next phase of the business, focused on executing the growth opportunities in front of us and accelerating value delivery.

11:43 Offshore, we believe the portfolio we hold today has the capacity to more than triple production over time. And on the right, there's a slide that we released a couple of weeks ago. I'm going to walk you through the specific projects that drive some of that ramp up in in today's presentation. Onshore, it's early days, but the work is is already well underway. Comm 15, on the right hand slide, we've begun identifying leads, and we've just completed the regional FTG survey. So all things considered, offshore is about execution, ramping up production via infill and new developments. Onshore is about building the pipeline that underpins that future growth. So let me start with the offshore portfolio first. This is where the immediate production growth sits.

12:28 And this slide really captures the scale of the opportunity. The metrics or the numbers are on the right, but we're sitting on more than 3,700,000,000 barrels of oil in place, plus significant gas volumes. Recovery to date has been relatively limited at the high 30%. Analogs elsewhere in Angola are in fifties. Over the last couple of years, our focus has been invested in revamping and upgrading the infrastructure in 03/2005. That infrastructure has huge capacity. And while doing that, we've managed to offset decline and increase production from 2023 by around 30%. And since then, we've stabilized production at the current levels. More recently, we released a contingent resource upgrade, which on 305 A, the discoveries there, which was a fourfold increase.

13:18 Those discoveries are gas gas rich, and we have a gas management solution for 305 A, which is more likely to be implemented from about '28 onwards. And those volumes come through later at the production profile. What has changed more recently in the last couple of months is block three twenty four. We were awarded that block late last year, and it's moved up the priority list because it offers low GOR oil, existing wells that we can reenter, and a very cost effective development pathway using infrastructure that already is there. So what I'm gonna do is I'm gonna talk today in a couple of slides about the specific growth projects that sit in front of us in field drilling and workovers on 03/2005, which really start to drive the production ramp up from '26 onwards. Now before we get into the drilling and workover projects, I just want to update you on the progress we made on the revamp program and the water injection.

14:10 On the top of the slide is the FSO recertification. That's now being completed with a formal recertification expected in q one twenty six. And that pushes out dry docking into the 2030s. Aviso has also been overhauling power gen, key mechanical systems and materially improved operational resilience. We're a lot of business. Business. Of And continued into q one twenty or into January 26. And the target is to move towards 100,000 miles a day through this year. That's critical. It remains a focus for us. Water injection is key to recovery. Recovery ultimately drives production and reserves growth.

15:02 On the next slide, we talk a little bit about OpEx reduction, which primarily is driven by production growth. On the right, you can see production growing from '25 to '27 to 2030, and the downward vectoring of that OpEx per barrel as the production ramps up. We've also commissioned, well, the partnership commission via Sonogol, an independent operational review with McKinsey. And on the left, you can see a number of those levers that they identified. That is more of a work in progress, and you'll see that more to come in the future. But particularly on logistics, over the next couple of years, we'll be looking at how we can reduce those. The key driver, really, for 03/2005 at this stage is all about production growth. If OpEx amounts stay relatively flat as you ramp up production, that OpEx per barrel goes down, as shown on the right.

15:58 So given we're moving into an operational phase in the second half, I'm just now going to discuss the examples that we've included in the presentation. So start off with Impala. And this is the first of our near term production growth projects, and it's a great example of the upside that exists across this asset. There's substantial oil in place that's shown as the metrics in here, somewhere between sixty and two hundred million, yet only about 12,000,000 barrels has been produced. So that's about a 5% recovery factor if you take the 200,000,000 barrels. Looking at the well itself, we expect to deliver about 4,000 barrels a day. It will cost about 50,000,000, and we have a first oil targeted for 2026. The other crucial bit about Impala is that it's drilled for an existing platform. We've got five slots spare, and we can leverage that.

16:47 In an upside case, then this development alone could add up to 50,000,000 barrels of reserves, which is around 50% of our current 2p pace. In terms of payback, at $60 a barrel, it's under two years. At $70 a barrel, it's one under a year. Moving on to the next project. Picasa South West is another compelling opportunity. It's an undrilled fault block adjacent to the main Picasa field, which just to bring everybody's thoughts on it, has an oil in place of 1,100,000,000 barrels. It's an independent technical review. It's got strong structural definition, and it's on the migration route the kitchen through to Percassa. Now clearly, there is some degree of risk on this.

17:32 Impala two is a well in the heart of the field. Percassa Southwest is drilling in an undrilled full block, but it is adjacent, as I said, to an existing billion barrel field on the migration route adjacent to prolific producers. The metrics of this well, we're expecting or we're targeting 5,000 barrels a day. It has a similar cost profile to Impala, and its first oil is targeted for q four twenty six. In a success, this could deliver up to three additional well. It just doesn't add one well. It potentially opens up an entirely new development area, you know, adjacent to the the existing field. It could be that we actually have to deploy or we we deploy a platform on this. Again, in terms of metrics, this is payback time in under two years at $60 about.

18:20 We leverage existing infrastructure, has low execution risk. And this one, it targets material upside. We move on to the hydraulic workovers. This is a campaign we've been working on over the last couple of years, and now moving to execution. These are low cost short cycle interventions on shut in wells. Phase one, shown on the left hand side of the red wells, the candidates, includes three workovers. We're targeting about three and a half thousand barrels a day of uplift in year one, 5 to $10,000,000 per well, with the first restarted in late twenty twenty six. The cost of development is between 3 and $6 a barrel, depending on the price of the well. What we have, importantly, identified is another 20 plus candidates across the fields.

19:10 So it's a repeatable, scalable program, and it delivers near term production uplift while steadily increasing recoverable reserves. Again, paybacks. At $60 a barrel, we have payback under two years. At $70 it's well under a year. So that summarizes phase one of our drilling hydraulic workover activity. I'll now move on to block three twenty four, which is a license that we brought into the portfolio late last year. It's a step change opportunity in the near term, and it's being prioritized ahead of three zero five a because it's lower GOR oil. It has existing wells we can reenter, and it sits close to the existing infrastructure, particularly in Polanca, which has spare capacity.

19:56 On this block, we've got 10 discoveries. All wells were tested, and flow rates were up to 6,000 barrels a day. In terms of how much is discovered, about over a 190,000,000 barrels of oil already discovered on this block, and over 400 BCF of gas in place. And that was signed at a cost of $40,000. Our initial GPQ development, Kalungu Palenkan at Northeast Kisama, targets around 10,000 barrels a day. And the FID is targeted for q four this year. It's a fast track infrastructure led development and a very capital efficient growth opportunity in the portfolio. We're going to look at phase two of Block three twenty four with the other discoveries. And then some of you may notice there's yellow polygons that have now appeared on this map. These are exploration prospects that we've identified around existing fields that we'll be looking to mature in the future.

20:55 So moving on to block three zero five and beyond the drilling and development of three twenty four, we've got other opportunities in offshore. Punjab, Buffalo Norte, Kako Gizalua and Chefu all contain material oil volumes associated with significant gas. There's no further appraisal required. The constraint here is how do you manage the gas appropriately in order to unlock the liquids. The solution we're evaluating is tying into nearby gas infrastructure. We've talked about this previously, the ALNG import pipeline, which is at the top of the slide. And tying into there would allow us to export gas, allow the JV to export gas while monetizing the associated condensate and oil. So it's about doing the right way, reducing emissions, extending field life and unlocking a substantial liquids opportunity that currently sits in contingent.

21:47 So hopefully, you can see why we're pretty excited about the offshore. As Paul mentioned, the contingent resource upgrades with fifty years of production at current rates, we've got a large resource base, and we're at production inflection point. I'll now move on to the onshore. So beyond the offshore, the Kwanzaa Basin represents the next layer of opportunity in our portfolio. What makes this interesting for us is it isn't just about greenfield exploration. These are areas where oil has already been found and produced and then effectively left behind. Today, we hold positions in COM fifteen and nineteen, which are shown on the map on the right. That gives us a broad broad footprint across the basin. We expect COM four to be awarded shortly. And both these blocks, COM4 and 15, add oil flow to surface.

22:36 So COM4 is the real near term opportunity. It includes previously produced fields, existing infrastructure and a clear pathway to early redevelopment and production, and also the early or the potential for early cash flow into the Luanda refinery. Alongside that near term focus, COM fifteen and nineteen provide longer term running room across the basin, giving us exposure to both redevelopment as well as exploration upside. And that gives us flexibility, optionality in a basin we believe has been materially underexplored. We've preinvested in a regional FTG survey to identify sweet spots, and now that is now complete. So moving on to the next slide, we'll talk about Con IV, and we expect this to be approved in Q1 'twenty six. It's got a combination of produced fields, previously produced fields, as seen here, at exploration.

23:28 And although not fully awarded, we have been preparing already. We've just completed a high res EFTG survey, which will integrate with existing two d seismic data. We're planning reentry of existing wells. We believe, using modern technologies for onshore US, we can rapidly bring Galanorte back into production and exploit some other discoveries in the block. And this can be then rapidly transformed to cash by trucking to the Luanda refinery. Working the partnership has already commenced. On a wall, expect us, the joint venture, to move quickly on this. So on to the exploration of these blocks. We've got a couple more slides before we wrap up. So I've talked previously about why we consider the Qantas untapped and overlooked based on analogies elsewhere when we released when we did the webinar last year.

24:22 Our position extends across three blocks. We continue to evaluate others. The FTG has been completed. On comp 15, the operator is moving forward on the ESIA, and we have a tender out there for two d seismic acquisition in second half. So onshore exploration is about upside we can access at low cost, scalable, and can be monetized quickly. And just a few snippets of what we've seen already. On the left is the lead map for com 15. You can see that there's a number of leads mapped, and this will mature. So we can now we've completed the FTG. We've got a number of leads mapped across the whole of of the acreage. On the bottom of the slide is a cross section through Con 15, and it shows Banfru 1.

25:09 That demonstrates a working hydrocarbon system. We have other wells on the block. But it shows a typical Gulf Of America style salt type here with structures around them. Banfu 1 tested a turtle structure and also salt flank traps. So potential uptip. It was drilled in 1960 and encountered oil shows from two five hundred to 3,000 meters. Importantly, it also flowed oil to surface from both the Twenza and the Pinga formations. We now know from

25:39 recent seismic, since recorded in 2010, that the well actually was drilled off structure. We have seven square kilometers of closure up of closure and about a 100 meters of relief up dip, so it is a very attractive reentry candidate. So the last slide just brings it all together, milestones and catalysts. Offshore twenty six-twenty seven is about advancing and starting to execute infill drilling and workovers, progressing 03/24 towards FID, continuing infrastructure optimization, while onshore, what I hope you have heard, it's about completing the interpretation work, progressing seismic and moving selected opportunities toward drilling, the next layer of growth opportunity. So with that, I'll hand back to Paul.

26:25 Thanks, Ian. That's Anesthesia.

26:28 Hopefully, you'll all agree that, you know, over the last five years, we've successfully built a substantial oil and gas business from what was a cash shell that we entered into in 2021. It's obviously been done through a combination of the acquisitions we did early on. I think what's been very successful is not only those acquisitions and the accretive notes of the acquisitions, but the success we've had through working locally with both A and P and Sonigol and a number of local partners, oil and gas partners, to build out the portfolio both onshore and and offshore. Whilst the market can get very focused on acquisitions, I think as Ian mentioned, Block three twenty four is a really accretive deal. You know? The fees paid were around about a $100,000, so normal, to sign up a new license.

27:31 But as Ian's slides indicated, we think that investment can lead us to a very low cost development of up to 10,000 barrels a day. So I think what you've seen is a combination of smart m and a at the beginning followed by a smart build out of the portfolio, utilizing

27:53 our kinda semi unique position within Angola and the relationships that we have within Angola, with both the government and local partners. Again, emphasized the very significant growth potential we already have within the asset base. I think you can see specifically how we see the future going from what is around six and a half thousand barrels a day, our current equity, not post the AETU acquisition, increasing up to around about 20,000 barrels a day as we head towards twenty thirty, so over the next five years. And that does not include the significant potential that Ian highlighted on the onshore acreage.

28:39 So I think, you know, we have a lot to do within the existing portfolio, but we continue to see further opportunities within Angola to add further to the portfolio through expanding our current license portfolio, both onshore and offshore. We continue to look at opportunities to acquire additional production assets within Angola. And also, we continue to screen opportunities out with Angola and other parts of West Africa. However, we have to see the setup we have in Angola, both the political stability and the very positive investment environment tends to focus us continually back to Angola as the optimum investment location within West Africa at the moment.

29:33 So we're looking forward to the coming year. A lot to do, a lot of growth to deliver within the portfolio. And with that, I'll pause and hand over for some questions.

29:52 Okay. So we've had a couple of questions come through. I'll start with an an m and a one. One of AFENTRA's key strategies in recent years has been to chase inorganic growth. In January 25, the Board said that it saw more opportunities for acquisitions. Reference to acquisitions seem to have died down in the past six months. Is it due to competition or opportunities now proving too expensive? Paul, let me talk to you. Thanks. Yeah. I I as I was just saying, I I think we we spent quite a bit of time continuing to screen opportunities. The opportunity can have been organic opportunity market within West Africa has been relatively quiet in 2025.

30:41 There were some deals, but not so many. There is an area that we continue to be very active in. It tends not to be the area we talk about because you tend to talk about acquisitions when you've done them as opposed to when you're in the process of looking at them. But being reassured, we see that as a continued avenue of opportunity. But I do go back to what I said earlier and look at the very significant value added through license opportunities, which we we would argue are just as important and and potentially more important than spending money on m and a. So I say, you know, where else could you add something that can give you growth potential of up to 10,000 barrels a day for a nominal invest initial in the acquisition effectively of a $100,000.

31:36 So we continue to look at m and a. '26 looks looks like it may be a more active year than '25, but you'll also see us continue to very much focus on the organic growth potential in the portfolio. An operational question just on com15 and com19 and the and the activity plan for 2026, which Ian covered in the presentation. But just if there's anything else to add. Yeah. No. I could just answer that. So on COMP 15, we've got a high resolution EFTG survey that has now been completed literally in the last few days. And the other thing there is we're tender or the operator, is is gonna be tendering in the first half for two d seismic acquisition for acquisition in the second half of of twenty six.

32:30 Commenting is just integration of the FTG over it. Okay. Another one. If the market for acquiring assets in Angola is more competitive, then why not farm out high equity exposures given the gap between the vendors' valuation and the transaction value of the licenses? One question there. Yeah. I I I think we we saw one deal in Angola last year, and when we highlight the read through metrics, it certainly indicates that the assets that we hold are are highly undervalued when one looks at our come share price. However, what I would say is that, you know, when when I look at Block 305 and the 305 area, there's very significant growth potential.

33:21 So I I think what you see us is focusing on delivering some of that growth potential as a as very much a first step. And as Ian highlighted, I think, when he was talking about the onshore, you know, we have positions in two licenses. We're about to get a position in the third license. We continue to look at other licenses within the onshore, and and that may or may not involve kinda trading certain equity percentages across blogs. I mean, what we're trying to do off the back of the EFTG, which could we have the whole base in the EFTG is make sure that we've got a balanced equity portfolio across the basin focused in on the right places in the onshore. So you you may see us evolve our equity positions in the onshore.

34:13 But I think at the moment, we we feel like the 305 area is a kinda highly priced area that we're better organically investing in. And from the most recent lifting, January 21, dollars 17,000,000 of the $34,000,000 was received in December 2025. Was this $17,000,000 advancement factored into the year end net debt position of 21,800,000 Thank you, Per. So 17,000,000 was a prepaid instrument. It's not a it's a contract liability, and it's reflected as a payable on the balance sheet. So effectively, 17,000,000 was in advance and it was part of our cash balance.

34:58 However, the liability is not factored in the net debt position. Another question. With increasing sort of instability around Central And West Africa, what's the the management's view of Angola in that respect? Yeah. I I think as I always say, one one has to look at Africa as a continent of diverse countries, diverse politics, and diverse security situations. So we we do and and I'm sure some of our investors here, of instance, particularly up in the Sahel area, that would be quite concerning Northern Nigeria. Recently, there's been reports of insecurity.

35:47 It's very much in contrast to what we find in Angola. I was in Angola just one week ago. Very calm. Angola is an incredibly politically stable area. And and certainly from a a security point of view, there's just no no concerns at all. Certainly no operational concerns whether it be offshore or onshore. And even from a personal point of view, You know, I I I find myself wandering around in Rwanda feeling as secure, if not more secure sometimes, than wandering around in London. So, you know, I think Angola is is a a very good place to invest both from a stability point of view, a security point of view, and then as I mentioned earlier, you know, a very attractive fiscal environment investment.

36:38 Thank you. That's all the questions, and I'll hand back over to Paul for closing remarks. Thanks, Barry. Yeah. So everyone, thank you very much for taking the time out to listen to the update today. We will continue to keep you fully aware of what's happening as we go go through the year. We've got an interesting year ahead. Looking forward to significant activity both onshore as we look at the prospectivity and maybe move towards seismic. But more importantly, as we get to this inflection point where the activities that Ian mentioned offshore will start to significantly increase our production levels.

37:25 So thank you very much. Good afternoon. Excellent. Thank you very much indeed for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected behalf of the management team, we would like to thank you for attending today's presentation, and good afternoon to you all.