Africa-focused Afren saw first-half production decline to 20,397 barrels of oil equivalent per day (boepd) from 22,964 boepd in the corresponding period last year, reflecting natural reservoir depletion. However, the company's substantial Ebok field remains on track to begin production before the end of the year and, combined with further drilling at the company's largest producer, Okoro, management expects production to rise significantly in the second six months and beyond.
The first phase of development at Ebok has involved drilling five production wells and a water injection well to increase flow rates. The mobile offshore production unit will have an initial oil production capacity of 50,000 barrels per day.
The discovered but undeveloped Okwok field demonstrates the same oil-bearing reservoirs as Ebok, and significant further potential at greater depth. The company recently started drilling an Okwok appraisal well, with results expected in late September. The acquisition of an interest in the OML 115 licence expands the potential of these reservoirs beyond Afren's core Ebok/Okwok area and adds further potential for development synergies. Afren plans to start exploration drilling at OML 115 in late 2010.
Prior to these results, Evolution Securities was forecasting full-year pre-tax profits of $193m (£125m) and EPS of 2.84¢.
| AFREN (AFR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 97p | MARKET VALUE: | £860m | |
| TOUCH: | 96-97p | 12-MONTH HIGH: | 111p | LOW: 61p |
| DIVIDEND YIELD: | nil | PE RATIO: | 14 | |
| NET ASSET VALUE: | 80¢* | NET DEBT: | 2% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 155 | -37.4 | -7.3 | nil |
| 2010 | 215 | 75.4 | 5.7 | nil |
| % change | +38 | - | -178 | - |
*Includes intangible assets of $209m, or 24¢ a share £1=$1.542 | ||||
