Afentra (LSE:AET) — Trading Update

0:01 Good morning, and welcome to the AFENTRA PLC Investor Presentation. Throughout the quarter presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time just by using the Q and A tab that is situated in the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you CEO, Paul McDade. Good morning to you, sir.

0:33 Thank you, and thanks to everyone for joining us this morning on the webinar and, ultimately, for those that do take the time to view it later in the recording. What we'd like to do this morning is use this as an opportunity to provide you with an update, on our performance in 2024 and give you, some thoughts for from ourselves around '25 and and the outlook beyond 2025.

1:05 In in 2021, we set up AFENTRA, and, really, our our ambition was to take, what was a a $40,000,000 cash shell and turn it into a new African independent. I think we can safely say we've we've been successful, in in doing that over the last, three years, and we've made some really good solid progress in in that period in terms of value creation for for our shareholders, both those that were there from the start and remain and continue to support us, but also for those that have joined us, within those those three years. I think today, what we'd like to do is is provide you with that that detail of, I'd say, the performance in 2024.

1:54 Anastasia will will take you through the details of our our balance sheet, and also highlight to you the, cash generation that is occurring on the block three zero five asset. You know, it's it's been another very strong year from a cash generation perspective. And then Eno will take you through the, the three zero five assets and three zero five a and and really show you that, given the performance to date over the last couple of years since our involvement, that we truly believe that, the the the production profile we presented at our June webinar where we see production growing, through twenty six, twenty seven, twenty eight up to what could be, 40,000 barrels a day is a plan that's, very much on track.

2:47 The more we look at these assets, the more excited we get about the, the potential. And then Ian will go on and and talk about the, the additional assets that we've, secured, within 2024, and and we're we're busy working on at the moment. So with that, I'll hand over to, Anastasia who'll start to take you through, some of the financial, details.

3:12 Thank you very much, Paul, and good morning to everyone. Thank you for listening to to our story. Paul has wonderfully set the stage for me to talk about the financial value creation at AFENTRA that we achieved over the last three and a half years. As just a quick recap, Paul mentioned the cash shell of Stolt Energy, we took over in 2021. So that came with $40,000,000 of cash. So that's the beginning. Fast forward to year end 2024, we have completed three acquisitions, and we now have more cash on balance sheet than we had at inception. Our assets have contributed $87,000,000 of asset level cash flow. This is after OpEx, CapEx and all fiscals in 2024.

4:04 This is in addition to the 67,000,000 of cash flow generation the year prior. So the assets have been very material contributors to our success. We had a very strong year of production in 2024, and we achieved the realized crude oil price of $82 a barrel. In aggregate, since inception, we have received close to $300,000,000 of financing proceeds and cash flow contributions from the assets. We have spent $284,000,000 on deal completions and assets and corporate costs. And at year end 2024, we're sitting on a cash balance of nearly $55,000,000 We have a net cash positive balance of nearly $13,000,000 after the accounts for the RBL drawdowns of 42,000,000 I'll talk more about the RBL later on.

4:59 Switching to Slide five. Here, we present a full cash flow reconciliation, including the details of the asset cash generation I mentioned before of $87,000,000 We show here the acquisition payments that we made to Azuli and also this number of $33,000,000 includes all the contingent payments that we made with regards to all acquisitions during the course of 2024. We present the debt drawdowns, and also we talk about the debt interest and repayments. Our G and A fees came very close to budget, and this is reflective of the active business development pipeline that we have and also is reflective of our policy on oil price risk management, which, again, we'll talk about later on.

5:48 Our cash position has materially improved with a $35,000,000 increase in cash year on year. This provides us with a meaningful running room for future growth, including mergers and acquisitions. Switching to Slide six, a quick update and a recap on the logistics of our liftings. Most of you would remember, as we discussed this in June of last year, that we all lift barrels, all the JV partners lift our barrels proportionate to our working interest in the asset.

6:25 Have a full cost recovery pool, and that allows us to lift close to 85% of all the barrels that we produce in a year. So the plan for 2025 is to lift close to 2,000,000 barrels in four different liftings equally spread throughout the year. So a lifting per quarter of roughly 500,000 barrels. In 2024, we lifted a bit over. We lifted 2,270,000 barrels, and that's due to the inventory that we brought into 2024 from 2023. Even though we have a working capital facility, we manage our cash very carefully, and the full liftings that I just described allow us to effectively not utilize working capital facility throughout the course of the year unless we absolutely have to.

7:25 Our next lifting is planned for late February or early March, and our allocation for that lifting will be approximately 470,000 barrels. We manage liftings carefully, as I mentioned before, and we discussed it during the June webinar. We have ongoing joint lifting program with Moreland Prom. During the course of 2024, we have now extended it into 2025, so all liftings will be joined. In order to provide additional robustness for the cash flow generation, we also have a very active hedging campaign. Our policy is to hedge between 5070% of the next twelve months of production and between 3050% of the subsequent twelve months.

8:18 Given the recent volatility in prices, we've been very mindful of hedging ahead of time. We're currently fully hedged for the first half of two thousand twenty five, and we will be adding hedges for the second half of two thousand twenty five. At the top of the page, you will also see the types of hedges that we put in place. They broadly puts, and the rest of them are either zero cost collars or very small premium cost collars. We will update you on the hedging program throughout the year as we add additional hedges. Slide seven, very quick update on our RBL and our working capital facility.

9:05 We have currently drawn $42,000,000 on the RBL. The pricing on it currently is around 12.5%. That's three months to four plus eight. The plan is to continue to repay facility in equal installments, which is about 10,500,000 annually. The facility is provided to us by Trafigura, who is also our off taker, and the Mauritius Commercial Bank, who is a partner with Trafigura in the RBL. Working capital facility is provided by Mauritius Commercial Bank. It's currently undrawn. We have up to $30,000,000 capacity on our working capital facility. The picture that I just described is a very healthy picture.

9:54 You would recall, we have generated $87,000,000 of cash last year. Our RBL is only $40,000,000 So the picture is very healthy. Finally, on Slide eight, we often have questions about the priorities we have from the fiscal and shareholder value creation perspective.

10:20 As we stand today, AFENTRA and AFENTRA shareholders have been blessed with some good fortunes. A lot of hard work went into the cash flow generation, and we are now sitting on a cash balance of nearly $55,000,000 as we discussed prior. What are the objectives for that cash flow and balance sheet? Well, the first priority for us is the ongoing reinvestments into our existing assets to drive future growth and Ian will talk about that in a minute. Our asset base is very robust and it's highly cash flow generative. And therefore, reinvestments that Ian will talk about will is anticipated to come from the ongoing asset production and cash.

11:08 Our next priority is the search for the value accretive deals. Ideally, on par with the ones that we have done before, and we will aim to achieve similar level of cash flow generation from the future assets we will aim to acquire. Of course, we can't comment on the likelihood of how quickly those deals will come together, but what we can tell you is that there's a lot of deal activity happening in Angola and also in West Africa, and we're very actively reviewing a number of different opportunities. Some of them are very sizable. Cash on balance sheet is a very strong negotiating tool, and AFENTRA is very well placed to be a strong competitor in a number of ongoing processes that we're reviewing.

11:55 Thirdly, it states here that AFENTRA become as AFENTRA becomes more mature and established, then we will consider the return of cash to shareholders for either buybacks or dividends. The Board of AFENTRA will continue to review all available alternatives on a regular basis. And should the anticipated M and A not materialize in the foreseeable future, AFENTRA will be discussing with the Board various alternatives with regards to cash flow returns to shareholders. Finally, I should mention that the debt repayment, of course, is an option. However, we consider our debt to be sourced at very attractive rates, and we will likely to keep our debt facilities as we are, and we'll continue to pay them down over time. And that will allow us to have additional equity capacity for future acquisitions.

12:51 With that, I'll hand it over to Ian.

12:55 Thank you, Anastasia, and good morning, everybody. Thank you for joining. Just following on from the introduction by Paul and Anastasia, I'll take you through the performance in 2024 and some thoughts. On the asset, just before I start talking about the progress, maybe it's worth also talking a little bit about the equity position in the asset. Because last year, we completed the deal.

13:26 And that what that does mean is that effectively 86% of the the asset, three zero five assets in in three companies. So that simplifies the partnership if you if you go back to where it was before. And and what it also means is that it it makes the the conversations, makes the decisions a lot easier. Sonogle is very much aligned with the plans that all as modern prom and ourselves work with them. On the asset in, in 2024, the safety record was excellent. We we had a shutdown, and, that started on time, finished on time. Just to try and put it in perspective, there are over 700 people, on the asset during that, that shutdown, going over the different platforms.

14:19 So that was carried out successfully. The focus was on integrity, power, water, water injection, and also gas metering, all about focusing to enable this asset to produce through to 2040 and beyond. Production delivered was 21,100. That was and that included the shutdown ahead of our internal expectations. That was that was strong. And actually, through the year, we went up above 25,000 barrels a day at times, which is the highest for over certainly over the last five years.

14:56 As we look at the asset, it just continues to get better as we we we get under the bonnet, let's say. More opportunities being identified across across the assets. And the asset history from a Total to Sonogol perspective almost makes it unique in in all the ones we've looked up in and down in West Africa.

15:21 The CPR is in progress at the moment. It'll be released in in q one. And to put it in perspective, where we're expecting is, is to be close to the reserves that we had back in 2022. So there, was about a 115. Mid twenty three, the last CPR, it's about a 110. And if you look at it, last three years since we've been on the asset, we've produced over 20,000,000 barrels since the acquisition. So we expect to have quite strong numbers when they're finalized.

15:54 So what's the takeaway on the asset?

15:56 Still is vastly undeveloped. We believe it can allow us to grow production, allow reserve replacement, while also replace reducing the emissions, and that that continues to be the case compared to last year. So the next slide is the one we we put in place in the webinar in in 2024 and a key slide on on the future production potential. Now what was the estimate of what we felt this this asset could deliver? We've updated it for '23, 24 actual productions,

16:32 target for 2025, four key building blocks. We'll talk through through again the stabilizer sustained production, the optimization of the wells, the infrastructure that is ongoing at the moment. We're starting to to look at infill drilling opportunities, and I'll talk through some of that work and then the development of of satellite discoveries. So what is when we look at this profile, we're encouraged. We think that it's still very much achievable, and the asset's got the potential to deliver it on or around 30,000 barrels a day in the 2027 time frame to remain on track.

17:14 Next slide takes is updated from last year, the production profile that we've achieved from January 2023, when we the asset is producing about 17,000 barrels a day to where we were at the end of last year where we were hitting 25,000 barrels a day. So how was it achieved? And on the right hand side, right hand part of the slide, you can go through the field management, the water injection, well works, the emissions. So the first thing on field management, I've just talked a little bit about the safety on it. Zero LTIs. Uptime is 87%. And we also did a lot of facility upgrades and the shutdown. The FSO was recertified, and that means we we don't have to do anything through till 2029.

18:02 And power is is a big focus in the next couple of years to get sustainable power.

18:09 Water injection has been another key element. Pumps are upgraded or replaced, filters replaced, and the metering system. So we've been injecting over 80,000 barrels of water a day. That's been achieved. And we're testing two pumps. We're looking to get a third online as well. So the next challenge is making sure that we can sustain this since water injection is a key part of getting the recovery factor up.

18:37 The well works where we in 2023, we did a number of LWIs. We did 40 in 2024, which delivered over 20 over 2,000 barrels a day of of uplift. We're we're looking to do another 40 in in 2025. And the other component is that we've started investing in long lead items for rig related activity in the 2026, '27 time frame. So positioning the asset for for for more investment there. And the other component is we've also been investing on reducing or focusing on emissions reductions, measuring them, gas flow meters installed, The gas exports feasibility studies are due to start reporting back at the end of the first quarter with a view to target zero routine flaring by 2030.

19:32 So the program is delivering. On the right is some of the numbers in terms of OpEx, life extension, and CapEx. So what we've done a little bit differently in '20 reporting on 2024 versus '23 is we've reframed these numbers to to assist in consistency. OpEx, is remaining broadly flat, about $23 a barrel. And we see this, going forward that the OpEx numbers will will stay flat to maybe trend down as the production increases.

20:09 We broke out life extension. This is nonroutine investment into the asset over the next two years, which is going actually about ensuring that the asset can produce out to $20.40 and beyond, and then the CapEx program of of a 110. So putting it in perspective, what's the takeaway when you look at these numbers is if you look at 2024,

20:35 we invested about a $150,000,000 in life extension and CapEx, and that generated over $87,000,000 of free cash flow, as you heard from Anastasia. So looking forward into the next slide and talking through 2025.

20:54 So we've got a huge portfolio of wells. If you compare the number of active wells production and injection, we've increased them in 2024, and we're looking to increase them further in 2025. So that gives us diversity. We spoke on the last slide about the light well interventions. That's a continual program, looking through which ones we can go in and work over. Gas lift was completed. We now shift focus the focus is shifting to gas compression and network optimization.

21:27 And then the heavy workovers in the ESPs. So they're they're the next focus areas. We're we're looking at identifying which are the key ones, the feasibility and the planning for those underway with a view to start executing those in the twenty sixth time frame.

21:45 The ESPs, again, studying those, planning underway for initial installations in 2026 time frame as well. And the the program last year delivered 2,000 barrels a day for uplift. Move on to the next slide. So the next couple of slides, we've been working them really in parallel. This one talks about the infill drilling. The next one talks about some of the developments. We've got opportunities here from infill to field extension, and we've broken out one that you'll see here, Picasso Southwest, to to discoveries. So multiple different choices to to look at. And what we did in 2024 and '25 is that we're investing in long lead items to allow the rig activity to to to proceed potentially in 2026.

22:39 Probably guiding on on candidates at the moment. We're looking at lower GRI, that's gas oil ratio wells, which we could be able to bring on quicker. And they're probably one of the the field extension wells like Pacasa Southwest, which is highlighted on the left. We can leverage the existing platforms to further develop or support production in Gazela, so drilling from existing platforms and getting the production on stream. The undeveloped discoveries, which you see on the next slide in Orange, Punjab, Buffalo Norte, Gazela, and Caco, they're probably going to await a gas solution, which with the operators evaluating here, a gas export hub, which is all part of the wider gas management studies, which takes us down the road to reducing the flaring.

23:27 And once you've got that in place, then you can start bringing on some of these discoveries, which could produce up to 2,000 up to 10,000 barrels a day.

23:40 So if we move on to the last delivering material, the this the growth one. I've taken you through a number of the the chunks here. Key thing to take away here is that we remain on track. We delivered 21,100 barrels a day in '24, which was ahead of our internal budget. We're growing production in 2025.

24:04 All of the projects as we look forward, they're they're underpinned by identifiable costed projects. We can phase them depending on the value and volume. And when you look at this graph, which we put together last year, we continue to be encouraged that the shape of it is very much deliverable.

24:24 So I'll move on to the last slide in mind, which is about the Kwanzaa Basin. And the Kwanzaa Basin is quite different to Block 305. It's an asset that's or an area that we went into last year. Con 19 was approved mid last year with the signature, and we're expecting con 15 in first quarter. We continue to look at other blocks in the onshore. And and why is that? Well, we think it's is an overlooked petroleum system. The analogies from experience in West Africa,

25:03 we we look at Gabon Congo onshore, where we've been involved in the past, and we're looking at using modern technologies, which we've pioneered elsewhere in Africa to to evaluate it and unlock. And so the work this in last year, we were part of the the EFTG consortium, which has covered or started acquiring data over the 25,000 kilometers square kilometers of Kwanzaa. We got initial results from that in. It will be completed this year, and that will allow us to then select where we should shoot seismic. And if we're successful here, well, then there's the ability to rapidly commercialize by tracking up to Luanda. We're working with local companies, AETRA, Sonogol, Enego, to to assist in building capacity also with companies here. So this is we'll see where we get to this year, but it's starting to to actually show quite a lot of encouragement in terms of unlocking this petroleum system.

26:10 Thanks, Ian. So really just to start to wrap up. You know, as as we look forward to future growth potential for the company, I I'd split it into three areas. Ian's taking you through the C 05 and C 05 B assets, which we believe have very, very strong potential to deliver significant cash going forward out for the next ten years, and and beyond. You saw the cash generation levels in '23 of over 60,000,000 net to us, over 80,000,000 net to us in '24, and these were at around 20,000 barrels a day. So, you know, we get quite excited when we think about cash generation as we go further out, when we start taking ramp up production to 30 and maybe even 40,000 barrels a day.

27:08 The the partnership is is working well. And so we're as Ian highlighted, we're very much on track to deliver what we set out earlier last year. Second point is really our position within Angola. Over the last three years and and historically before that, we built very strong relations, in Angola with all of our major stakeholders, whether that be A and P G, Senegal, the ministry, and and the local network of operating companies out there that we're working together with and looking forward to working with more of them. And really what that done, I I the onshore Kwanzaa that Ian just went through is a great example of us leveraging our position within Angola and exposing the company to what could be very exciting and and very high value acreage.

28:04 And I think that comes from our position on the ground and relationships with within Angola. And then finally, you know, m and a, you know, we are always looking at accretive acquisition opportunities. We continue to review new opportunities as as Anastasia mentioned. We are busy looking at things. Twenty five has got off to a strong start. There's quite a bit of activity. We would say that '24 was quite a quiet year across West Africa. But certainly, '5 looks to be a much more active year, whether it be in Angola or or beyond Angola. So in summary, I think we've successfully assembled a significant portfolio of cash generative assets.

28:58 We've created a new and and very much aligned partnership within block three zero five and three zero five a that's focused on really maximizing the development of these assets to generate cash for all stakeholders, both the operating companies that are involved and and the state of Angola. We'd indicate that the, you know, the these assets can generate very, as I said before, very strong cash flow. We we said we used to guide, you know, around $50,000,000 a year. And and what you've seen is in terms of delivery was over $60,000,000 in 2023 and over $80,000,000 in 2024.

29:47 Anesthesia demonstrated the strength of our balance sheet. You know, it's interesting to think that we only just completed, maybe, what, six, seven, eight months ago, our last acquisition, and, yeah, our balance sheet's sitting stronger than it's ever been. And that really provides the foundation for our future ambitions to grow the company both organically and and through acquisition. So I think 2024, I hope we've demonstrated, was a very successful year. We sit in a very strong position as we look forward to 2025 and beyond. And we think we can continue to deliver the significant value creation to our shareholders that we have done in the first three years of the company's existence.

30:36 So with that, I'll hand it back and we can move on to Q and A. Thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just placed in the Q and A tab situated on the top right hand corner of your screen. But just while the company take a few moments to view the questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published Q and A can be accessed by your investor dashboard. As you can see, we have received a number of questions both pre submitted and throughout today's live event. And Ben, at this point, if I can hand over to you to share the Q and A, that would be great, and I'll pick up from you at the end. Thank you, Alessandra, and you for team for the presentation. Alessandro said, there's quite a lot of questions that we received before the event and during the live, so we're trying to consolidate those. If I don't read out your exact question, you'll understand why.

31:24 So the first question is for Anastasia. Please, can you explain the costs associated with your hedging policy as a percentage per lift and what the benefits are of that? Look, it's a great question and very relevant question. So the way we think about hedging and the cost of hedging is, as I mentioned in my presentation of earlier, we broadly have two hedging strategies. Number one is a full strategy. So we buy either deferred premium puts or we pay for them on the day when we enter into a hedging contract. So that's strategy number one. Strategy number two is a zero cost caller or very small premium cost caller strategy.

32:13 So, again, the second one is, you know, that's zero. That's that's in the description of what that is. The small premium could be a dollar, give or take. So that's the second bit. The put strategy and the pricing for it is really depends on the duration. So are we entering into a contract a month ahead or are we entering into a contract fifteen months ahead? So the pricing for these will be very different. We work really hard to minimize those costs, but we have to incur costs in order to assure ourselves that we have complied with the policy and we buy ourselves a little bit of protection given the volatility in oil prices.

32:59 So we don't necessarily think of it as a percentage per lift, but the benefits for us are really from the balance sheet perspective is to protect our capital program, is to protect our ability to repay the debts, and ultimately, to protect our ability to do more m and a. So the costs are manageable. They're reasonable, but there is no definition I can give you as to the precise number of what that is. Okay. Question on operating costs. Can you break down the $23 per barrel between fixed and variable costs? Ian. Yeah. Look. The I mean, the way that we look at it is that the the $23 a barrel is remains pretty flat out at at the of that, and then that's the base OpEx to run the asset we've got out there. I think the key thing about it is that there there's there's the opportunity in that as we if base OpEx costs stay flat and we ramp up production to 25, 30,000 barrels a day, potentially up to 40, we could get the the OpEx per barrel down further.

34:15 Great. And and the main components driving this cost and what scope exists for reduction? I mean, main components are you're running 17 installations. When you're looking at it, you're you're looking at how do you can you be better on logistics? Can you be more effective on, on on the supply chain, etcetera? Okay. Thank you, Ian. Got one on field decline rates in reservoir health. What's the natural decline rate of your fields in, what, 03/2005 and 3058? Yeah. The so we've got a portfolio of fields. They will vary depending on the the the status of the wells and the age of the fields. So we assume between 610%, let's say.

35:07 The as we look forward and we we get the water injection ramp up, that will reduce to the lower end, the the decline rate. And, I mean, that that's if you if you think about where we come from, we started off in '23 at about 17,000 barrels a day. We we've got it up to or the operator's got it up to 25,000 barrels a day just on the light well interventions. K. What's the likelihood of recovery factors being revised upwards? I mean, on that one, we we look at analogs for these fields up and down in West Africa. Once we and as we put through and look at how these are all being delivered, then maybe the recovery factor can be be revised upwards. We guided that some of the analogs were over 50% in West Africa.

36:06 We the key components of that will be getting water injection into the ground and then drilling more wells. Okay. Got a few questions on investment returns. What's the expected payback period for the 2025 investment program? So the way we think about the investment returns, and we also presented that in our webinar, really depends on the type of the activity. So some activities like light dwell interventions, those have paybacks and weeks. Those payback in four to eight weeks time. There will be a number of different other activities, like heavy workovers that will take longer to achieve payback.

36:55 However, the way we think about our investment program is really a holistic approach. So we think about it as holistic return of cash back to the business. So even though there is a range of various returns, some in weeks, some will take up to two years of the asset. And we also look at it from a perspective of the production sharing contract where we are actually incentivized to spend more and achieve more. So it's not as easy as to say, let's look at each individual investment in isolation and look at each individual return in isolation. We'll look at it as a holistic program. If if I just add on the what we're doing at the is that we're laying the foundations for us to, you know, maybe we get the power up, we get the water injection in the ground, the metering.

37:55 So when we get the drilling commencing, recommencing the twenty six, 27 time frame, any wells that are drilled, we can bring that production straight online. You're not having to back it out. Okay. Because there's a follow on question, which you just alluded to there in terms of a breakdown of the GBP 180,000,000 by project type in terms of what the split between maintenance and growth is. I think the there's about probably a third of it in is going to be on growth. I mean, whether it's LWIs or LLI, the long lead investment. The other component is asset integrity and the CapEx. And does the partnership have a a rate of return for which you require project approval?

38:46 No. I I maybe if I chip in here. I I think in terms of whether it's ourselves, AFENTRA, or the partnership, I think the one thing is I alluded to, we've got incredibly strong alignment that all three of the major partners, self MMP and Sonoco, see this asset in the light of the the production profile we we presented in June and remain on track to deliver that there is huge significant cash generation potential. And I think as Ian alluded to, we don't look at each dollar in isolation. What we see ourselves doing is spending the appropriate capital to put in make sure the infrastructure is in good shape for the next fifteen years because that's how long or or probably longer that this field these fields will be generating cash and producing oil.

39:38 And then then you'll see this ramp up in cash generation if we start to drill wells. So we're pretty aligned. There's a really good consensus across the partnership of how we go about investing the money. And and, of course, we run economics as Ian alluded to. We have a lot of safe drill options. We're we're ranking them by return, by risk. So all all the things you'd expect to do in our economic model. Great. And so you've got a few questions on the RBL facility. Can you just find over the key RBL covenant requirements? So our RBL is, right now, drawn at $42,000,000 That's about if you look at the ratio, the net debt actually, we have positive cash.

40:31 So that ratio doesn't even imply in this case. If you look at the actual drawdown, put it relative to our projected EBITDA for year 2024, we'll call it point five times, which is a very enviable position to be in. We have regulatory determinations. We run another six months schedule. We don't anticipate any challenges to come our way from any upcoming redeterminations. Incidentally, we have checked with a variety of independent sources to understand what is it that the debt capacity is in our existing assets if we were to go and refinance this facility, and it's double or more. So if we were to go into the market with the idea of refinancing this facility, we can probably achieve something in the order of $100,000,000 refinancing.

41:30 And what that would do for us is, of course, we'll release somewhere in the order of 50,000,000 or higher of effectively equity. If we were to go and pursue acquisitions that we mentioned in the past, that would become an equity that we can contribute to any future deal. So RBL is, you know, the least of our concerns at the moment. We have a very robust hedging policy in place to further protect the RBL and the $10,000,000 repayments that we mentioned earlier for the full year is a very safe place to be. So RBL is not a concern. We've got a lot of questions on M and A, and you obviously touched on it within presentation. Can you just find an overview of what the typical size of acquisition is that you might be targeting or what the range is?

42:21 Yes. I think as I've often said, since the inception, we we've continued to screen the market. And we look at many, many. I think as of about six, nine months ago when we last kinda accumulated the number of things we'd screened, we were over 40 or 50 potential acquisitions. So we are screening things all the time. We we try not to be too narrow in our selection of what we screen, but we don't spend a lot of time on any particular deal unless we believe there's a real chance of it getting traction and and delivering ultimately value to the shareholders. In terms of the range, we we are looking at things as small as a thousand to 2,000 barrels a day and as large as kinda 10,000 barrels a day. So, you know, within that that range.

43:13 And in terms of geographies, we are obviously looking at things in Angola where we obviously have, I believe, a competitive advantage, but we we also look look out outside Angola. Thanks. Anastasia alluded to it in the previous question, but in terms of financing acquisitions, what what's the approach with regards to existing cash, debt, and and perhaps, you know, new equity? I think I think, you know, as I said, I mean, I think we're one point we're trying to get across in the this presentation is our balance sheet and the financial health of the company is very strong. You know, any acquisition, we are always, relatively modest in our kinda debt equity ratio assumptions.

44:01 With respect to the debt component of financing and acquisition, we've got many avenues, and we've we work. We have been working over the last two or three years, you know, talking to many sources of debt. Right now, we're as Anastasia mentioned, we're working with Trafficura and MCB, but there are alternatives out there. So debt site is very much deliverable for the type of assets that we're looking at, which will generally it'll be cash generative. And then you look at the equity side, and I think I've always said that, you know, our ambition is to continue to grow the company without having to come back to the market for equity. That's our ambition. We've done it successfully so far using our original cash balance of 40,000,000. And I think as Anastasia laid out, we're we're in a stronger equity position today, than we were then. So I think we got really strong coverage from the equity point of view from our balance sheet.

44:56 A lot of questions on capital allocation. And again, you touched on it in the presentation with regards to dividends. But can you just reiterate the point with regards to the approach to shareholder returns in the form of dividends? Sure. And look, we get asked this question a lot. And look, all we can say right now is the activity deal pipeline in West Africa is very strong. So coming off Christmas and into the New Year, we see a lot of, activity, and we're actively participating in a variety of different processes. Some of them are, you know, one on ones. Some are, you know, broader auctions, but we're very active.

45:42 The one thing that we can absolutely assure you, having cash on balance sheet is a fantastic bargaining chip. There's a lot of different players in the market that's not as well placed as AFENTRA to compete. We're also aiming to achieve very accretive deals, which means we're not aiming to pay the top dollar. You can always overpay and acquire the asset. That's not our objective. So it's a balance of achieving accretive deals, and that requires keeping some of that cash ideally in place for the time being. So if there is nothing happening in the next twelve months, you know, of course, you know, with the ongoing board engagements, we'll come back and we'll update you. And if there is nothing happened in the next twelve months, we will most likely come to you and say, look. Here is the situation as of today, and here is our policy on how we will approach dividends.

46:38 We've been very consistent to say that AFENTRA is yet to reach this point of stagnation, if you will, where we will be just a very large, boring $2,000,000,000 market cap company. And at that point, we'll be happy to pay very constant dividends. It will be a very different phase of AFENTRA. Right now, we're still a very small, nimble, independent. We aim to grow, and we will, for now, preserve the cash to grow. And on the same theme, does that extend to buyback as well? That is correct. So dividends and buyback, we don't view them necessarily as independent decisions. This will be a decision that we will come to once we are free the next phase of growth of AFENTRA, which we truly believe will come.

47:24 Thank you. Just switching gears on to operational folks now. How would you summarize the prospectivity in the Kwanzaa Basin? And how do you go about obtaining a strong foothold in the region? The million barrel question. Look. I I think the it's it's difficult to really quantify what is what is there. What we use is and we've shared in the past is analogies of of what could be there in that there's other basins along Trent in The Congo and the Gabon where we've got experience of and that that they've delivered significant reserves. I think the key thing here is that there is a working petroleum system.

48:12 We know that from the fields that have were discovered in the sixties and the seventies. The the question now is what else is out there because the the acquisition, the seismic acquisition back then was was very limited. The the sub salt penetrations were off structure and, again, limited, but they also had chosen. So as we look forward, you know, what's the way to approach it? We have to get the right data in. You have to be disciplined in how you acquire it. So getting EFTG into Interpret is a key enabler. We we've seen that elsewhere in Uganda, Kenya, Ethiopia, and other ones.

48:58 So that was that was commenced last year, and that will come in. And we'll use that then to to actually deploy and correctly locate the two d seismic program from there to to identify prospects to drill. In terms of, you know, the opportunities there, there there's we we have continual incoming from people who would like us to to work with them, and we've got the two blocks that we have there. We're looking at others, but it's been about select being selective about which ones will fit our strategy areas. Okay. Great. Back on the the M and A theme, I mean, what's the company's approach to asset and geographic diversification?

49:46 I I think, as I said already, we we look at many, many opportunities, and we we screen many opportunities. We're looking at opportunities within Angola where we've clearly established a competitive advantage and a and a very strong presence and, I would say, a a very positive and strong reputation. But we are looking elsewhere, you know, the team, not just the executive team who are with me here today, but the whole team within AFENTRA are very familiar with many of the other jurisdictions within West Africa. So we continue to to screen opportunities that arise there. So yeah. I mean, we we will keep looking. But, ultimately, when we take action and we deliver the next, acquisition, it will be more driven by value than than location.

50:37 And maybe just to put I mean, we're talking about earlier, that's the perspective of Angola. So if you look at just some of the numbers, producing about a million barrels a day, and we're net to us, we're we're producing 7,000 barrels a day. So of that million barrels a day, 95% plus is in the hands of either the NOC or the majors. So will it change in the future? I'm sure it will, but we're at a very, very low less than 1% of that production is is an AFENTRA's business. Paul, you you touched on the m and a landscape already, but just a question about the how competitive it is. Would you say competition has increased in the last few years, and and where do you see AFENTRA's competitive advantage within that landscape?

51:32 Yeah. I I don't believe it has become more competitive. I mean, I I think there are generally, there's always competition. I mean, we we'd say that in Angola and the deals that we did previously, we we really were had a big first mover advantage where we saw an opportunity, I think, that many others didn't see both in the assets themself and in the investment environment within Angola. Many people had a very different perception to us how it is now. So, so I think we can talk differently about Angola than the broader West Africa. I think across broad West Africa, I don't see very significant changes in the level of competition. I think from an independence point of view, AFENTRA has kind of certainly put Angola on the map.

52:24 So I I would anticipate more competition within Angola. But I think as Ian pointed out a second ago, you know, think of Angola as a very large opportunity, and a set of multiple opportunities over multiple years. Just like and we all we often compare to the The UK North Sea where divestments and m and a opportunities have have gone on for thirty years. They're not singular events, and we very much see the scale of Angola having that sort of potential. So, you know, we're we're we're pretty excited. I think we can compete. I think in places like Angola, we certainly have a competitive advantage, but I would argue we have advantages elsewhere because from the team's previous experience, we have both relationships and very strong understanding of assets that will come up for sale in in other jurisdictions.

53:25 Great. Thank you. Back on the ops side, somebody's asked that they presume that three zero five and three zero five are PSCs. Can you elaborate on AFENTRA's entitlement to production going forwards? And do you expect significant change due to cost oil and profit oil mechanism? So at current oil prices and at current reinvestment pace, we project four to five years that the cost pool will continue to remain at that level. We might have a potential opportunity, which we're working on through the course of this year, to merge cost pools and Blocks three zero five and three zero five a. Should we achieve that in the next twelve to eighteen months, we will extend the cost pool for an additional two, three, four, five years.

54:16 So again, for the time being, we're in a good place. The 20% effective tax rate is what we anticipate for the 2025, 'twenty six, 'twenty seven, 'twenty eight period. But again, we're working to extend that runway for longer. Great. You include the chart in the presentation, but there's a question here. What's your time line to achieve the 30,000, 40,000 barrel a day through organic growth? Yeah. I I I think we came out in June post the Azuli completion and laid out our view of this asset. I think it hopefully was positively received that this is not a mid mature declining asset. This is very much mid mature asset with significant potential for growth.

55:03 We were never specific about, you know, achieving 40,000 barrels a day when exactly. I think the point we're trying to make is that with sound operation and sound investment over the years as as we've since we've been involved really since '22, so '23, '24, '25, making those sound capital investments, we continue to believe we'll deliver a ramp up to 30,000 barrels a day by 2027 or thereabouts. And depending on how we decide to continue the investment intensity, we can either ramp up to 40,000 barrels a day. I think that's definitely possible, or you may extend a plateau in the thirties. But I think either we we haven't defined which is still still very much a work in progress.

55:54 But I think we, today, very much have confidence that we're we will get up to 30,000 miles a day and beyond, and that can be sustained or increased in years beyond, '27 and and later. We just add on. I mean, I I sort of talked a little bit about how this this asset is is is almost unique. And the the the level of opportunity that we have from low cost to infill to to developments is is huge. So trying to make sure we get the right ones, but that that is, from our experience up and down West Africa and in the water depths, is almost unique.

56:39 And and and I think the other thing to say about this profile is that that's liquids only. That doesn't include anything on the the gas side that is a work in progress at the moment. K. Got some questions on g and a. Had quite a few. What's the reason for the increase in the g and a, and what should we expect on g and a going forward? Look, I think as I mentioned in my remarks, actually, our g and a was delivered on budget. There are no overruns or material increases that we wouldn't have anticipated. Look. The reality is running of a public company is not cheap.

57:24 There is a certain amount of expenses that are associated with the running of our business as a publicly listed entity, and that amount is not insignificant. We have grown as a team. So again, we have started off with around ten, eleven employees. We are approaching seventeen, eighteen at this point. So there has been a gradual increase. If you were to go and look at your 2022 financials, obviously, there is a little bit of an increase, and that's associated with just a much bigger footprint of our business. So we do not anticipate any material increases in our G and A absent an acquisition or a transformation of the company.

58:11 So we'll probably stay at current levels. But like I said, there is a cost associated with just running business day to day. Back on the M and A screening. How much importance do you place on the age of assets, well integrity, production uptime history and the history of infrastructure maintenance? That's okay. All of those important aspects of how we look at assets. I mean but if you if you step back and you think about block three zero five, one person could look at that and say, well, that's an aging asset because it was started in the nineteen eighties, but it's also being looked after, and we're investing in them. So is integrity important? Absolutely. And we did a due diligence report back in 2021, 2022 upon the assets, so we knew what we're getting into. Likewise, EHS, likewise emissions, likewise potential.

59:13 So aging asset, yes, it is important, but it's also important to look at how is it being looked looked after and what is gonna be the investment in it to keep it operating. I mean, on 03/2005, we're investing in it because we believe it's still gonna be producing out in 2040 and beyond. K. Question you may be able to answer. It's been worded in a in a way where it understands disclosure. Would would you hope to announce a deal in 2025? Yeah. Do. Expect to. Look. It it it's always impossible to see when when the next deal is gonna arrive. I think all we can reassure our investors is that we are very active reviewing and screening deals.

1:00:03 We will pursue some, I'm sure, in 2025. And and, really, whether we complete them or not will be dependent upon pricing and the value creation we see. So are we hopeful of completing a deal or certainly securing a deal in 2025? Yeah. We we absolutely are hopeful we're going to do that, and we'll be disappointed if we don't. But it's really important. I think we said it in previous years, really important we keep our discipline to ensure that any deal we do complete actually is value accretive to our shareholders. And openness to AETRA becoming an operator, is that part of the the long term plans?

1:00:49 Yeah. So we we've always been open minded. Clearly, the team have extensive experience of operating shallow water, onshore, deep water. So we have the skills. We have access to the human resources that that it would take to become an operator. The way we look at it is what what's really important too is is the partnership we're joining, the competency of the operator that we're joining, and the openness of the operator that we're joining, if we are not the operator, to our ideas and our input. And I think, you know, Sonigol has been a great example of where we've gone in as a JV partner, a material JV partner. We've got a good operator who's been very open minded to listen, not just to ourself, but M and P, our ideas, and then work really quite collegiately as a team to deliver the value. So that's that's what we're looking for as opposed to being operator. It's really the level of influence we have on the direction of the asset.

1:01:54 But, you know, if we find a circumstance where we feel that more value could be created and taking on the operatorship would be very much worthwhile, then we're we'd be very happy to do it. Got a question on on the macro. How do you see oil prices going with Trump now in power? And and how does AFENTRA position itself with regards to forward pricing? Yeah. I I mean, I I think we none of us know what the oil price is going to be. We all we all have our views. We can you know, I personally, I'm quite bullish on the oil price in the kind of medium to longer term. But, you know, my anticipation is it will continue to have volatility in the shorter term.

1:02:40 And I think as Anastasia laid out, when, you know, when we look at the the kind of short to medium you know, the the next year, the next couple of years, we use hedging as an insurance policy against that oil price volatility. When we look at m and a and acquisitions and investments, we are not betting on there being a high oil price going forward. We structure deals to ensure that we can create value at certainly current oil prices and much lower. But in the structures of those deals, we are always willing to kind of share some of the oil price upside with with the seller. So, you know, we can all have our views on oil price. What's important when you're running the company is that you secure the company against lower oil prices, and you maximize the potential when we do go through periods of higher oil price.

1:03:35 Right. Gonna finish off with a few questions on marketing and IR. Recently appointed a a new broker. Can you just touch on the the rationale for that? Yeah. So we the company's inception, the start inception, the we we obviously reversed into an existing listing. Pure Hunt were the Nomad and the broker for for that listing, and and we carried that relationship on for the last, almost three and a half years. And also, the inception of the company, we invited Tennyson to come on as a joint broker. We are always reviewing our advisory, not just a broker, Nomad, but across the board.

1:04:21 And in 2024, as we did that review, we decided that, you know, we were going to switch to Stifel and and appoint them as Nomad and broker. I think they have an excellent team here in London, and and I'd say that they are very focused in our market. And and I think they have very, very strong focused expertise in our market, and I think it will position us well as we we go forward. And got a question about the investor relations function. Can you just remind the the audience of of what you have in place in terms of IR? Yeah. I I think as Anastasia said previously, we are we are always focused on g and a. When we started the company, we didn't have cash flow because we hadn't completed any deals, so we were very careful with our shareholders' money and really tried to minimize the g and a as much as possible.

1:05:19 So we started off with a very small team. I personally, led the IR, push, with support from the rest of the team. You know, over the last couple of years, we've realized we really needed to strengthen that area of the business, and we're very thankful that Christine joined us, about a year ago. And we we've seen the benefit of Christine being head of IR over 2024 as we've seen increased number of research notes out there, increased number of relationships with a broader group of brokers. So that's really paying dividends, and I think it's great timing. I think the combination of the new relationship with Stifel, Christine having established herself as a key part of the team. I'm quite excited about what we can do on the IR front as we look at 2025 and beyond.

1:06:10 Great. Just had one come in here with regards to Somaliland. Any update on Odawain block? At the moment, we just the op the operator is reprocessing the two d seismic. We were and we're evaluating potentially a a gravity survey as well, reprocessing the seismics to to better image beneath some of the unconformities. It's maybe worth adding to what Ian's given in terms of the operation of the I often get a question about some other land, and it it kind of maybe doesn't sit quite well in AFENTRA's portfolio. And, know, for those that maybe are newer to AFENTRA, could remind you that we inherited Somaliland through our entry into what was Sterling Energy.

1:07:00 Asset is is not the type of asset. We we are not a frontier exploration company, and you won't see us move into any other high risk or frontier exploration. But given it's an asset, it's our duty to look for ways to create value from assets that we have. So, I'd say the Somaliland asset is not a core part of AFENTRA, but it has potential intrinsic value, and we'll we'll do what we can to kind of extract whatever value we can for our shareholders. Okay. And so you had a had a question come in here about the 9,500,000 in other Are we able to provide any sort of a breakdown, or is some of that confidential?

1:07:47 Look. Unfortunately, not. We have a marketing fee that is not publicly disclosed, so that that that's part of it. There is a portion of that expense associated with our hedging. Again, I broadly described our approach to it, and so that's included in those numbers. But also, equally as importantly, we have a very active ongoing business development pipeline. So we have a portion of that cost that's associated with those activities. So probably, it fell totally free buckets. Thank you. Got a final question here, which I think is quite an appropriate one to end on, saying that they believe that the stock is undervalued by the market, which I think we'd all agree with. I mean, what are your thoughts on that? And how the company drives growth from here?

1:08:37 Yeah. I mean, I think we definitely all all agree on that. But, you know, our our job is to build out an oil and gas company, basically create whatever value we can from the assets we have, go and acquire more assets where we think it's accretive to shareholders to do so. And then then do as we're doing today, which is communicate with our shareholders the the value we see in the assets and, you know, be patient on the the share price. But, you know, our belief is there's a lot more intrinsic value in the company than is represented in the share price, and it's our job to continue to build more value and communicate effectively to try and transfer some of that value into the share price. You know? As as executive management, we don't control the share price. We control the company. So we need to focus on what we control, and continue to communicate as strongly as we can.

1:09:32 Great. Thank you. Look, I I think we've covered off all all the questions. Obviously, covered a lot of ground there. And if we haven't answered specific questions, do please get in touch via the the IR contact on on the website. But I'll just hand over to you, Paul, for any, closing comments before we, finish the webinar. Yeah. No. I'm I'm conscious of time, and we probably kind of run over our our our plan to our slot, but, you know, appreciate the time that people have spent this morning listening, to the webinar and contributing to the q and a. Also kind of appreciate, those that take time to look at the recording of the webinar. We're very much appreciative of the support that we have from our existing shareholders, many of whom have been with us since the inception of AFENTRA.

1:10:25 And you can be rest assured, we are very focused on creating further value for our shareholders. So with that, I'll, I'll hand it back. Thank you very much for updating investors today. Could I please ask investors not to close this session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This won't take a few moments to complete, but some should be greatly valued by the company. On behalf of management team of AFENTRA PLC, we'd like to thank you for attending today's presentation, and good morning to you all.