Africa Oil Corp. (OTCPK:AOIFF) Q1 2024 Earnings Convention Name Might 16, 2024 9:00 AM ET
Firm Members
Shahin Amini – IR Supervisor
Roger Tucker – President and CEO
Pascal Nicodeme – CFO
Oliver Quinn – Chief Business Officer
Convention Name Members
Teodor Sveen-Nilsen – SB1M
Operator
Hiya, everybody. My title is Sharon, and I will likely be your convention operator right now. At the moment, I want to welcome everybody to the Africa Oil Corp First Quarter ’24 Outcomes Administration Presentation. [Operator Instructions] Please word that this occasion is being recorded. The recording will likely be out there for playback on the corporate’s web site.
I might now wish to go the assembly to Mr. Shahin Amini, Africa Oil’s Investor Relations Supervisor. Please go forward, Mr. Amini.
Shahin Amini
Thanks, operator. On behalf of administration, I thanks for becoming a member of us right now for our first quarter 2024 outcomes presentation. On the decision right now, we’ve got President and CEO, Roger Tucker; our CFO, Pascal Nicodeme; and our Chief Business Officer, Oliver Quinn. There will likely be a presentation of round 25 minutes earlier than we go into the Q&A session.
First, I want to remind everybody that remarks made throughout this session are topic to forward-looking statements, which contain vital danger components and assumptions which have been totally described within the firm’s steady disclosure reviews. The knowledge mentioned is made as of right now’s date and time, and Africa Oil assumes no obligation to replace or revise this data to mirror new occasions or circumstances, besides as required by regulation.
The corporate’s full monetary statements and associated MD&A can be found on the corporate’s web site and on SEDAR.
Roger, we’re prepared for you. Please go forward.
Roger Tucker
Thanks very a lot, Shahin.
And if we are able to get [technical difficulty] up. So, what this exhibits is that we’ve got had an especially energetic first quarter of 2024. And in case you can see on this — on this timeline that I since — properly, since I began is the place it begins.
However in case you really focus in on the primary quarter, you will note that we have had a vital variety of transactions, which has successfully modified the form of [technical difficulty] one was the farmout to Complete of our curiosity or a part of our curiosity in Impression in Namibia in return for a full carry proper the best way via [technical difficulty] and this was, as you may think about, an unimaginable transaction. And so, we’ve got fully derisked that a part of our portfolio.
Along with that, we then continued in March with the farmouts in opposition to Block 3B/4B in return for a two-well carry via the preliminary exploration section of that block. And we anticipate that we are going to see drilling in that block in 2025.
[technical difficulty] we’ve got successfully eliminated all CapEx from the corporate on a degree ahead foundation — the purpose ahead foundation, subsequently, considerably derisking the way forward for the corporate. Then in March, additionally, you will word that we’ve got made a suggestion to the minorities inside Impression to extend our curiosity — our fairness curiosity holding within the Namibian block, and that course of is ongoing.
So, within the subsequent slide, let’s go and have a look at what underpins what we’re making an attempt to do with the corporate. So, [technical difficulty] the following slide. And so, what we’re setting is, these are our strategic ideas. It is not a technique, however it’s our ideas.
And if we go across the circle within the heart, we’re going to develop our enterprise via the present portfolio. And the present portfolio, which we’ll go on to take a look at, is predicated round Nigeria for our manufacturing, Equatorial Guinea, the developments that we’re now into with exploration in Namibia and our exploration — carried exploration in [technical difficulty] Block 3B/4B.
We’re partnered with Tier 1 operators, notably Complete, as I’ve simply talked about, and Chevron, and we’ll attempt to preserve our pursuits and focus our consideration on our present asset [technical difficulty] property, to begin with. So, in different phrases, you are not going to see us leap into a brand new nation entry or something like that, as a result of we consider that we have got vital operating room throughout the property that we that we maintain. You’ll be able to see {that a} key basic component of that is that we’ll attempt to consolidate our personal core property and we’re within the strategy of doing that in the intervening time in Impression in Namibia. And our present progress technique is to develop round these present property.
Subsequent slide, please. And so, let’s focus then on what you are solely going to listen to us speak about. There may be nonetheless some noise in our portfolio, which we’re making an attempt to scrub up, and I am certain there’s going to be questions on that on the finish, however you are going to see us speak about Nigeria, which is the place we are literally in three fields, that are three of the highest 5 fields in the entire of Namibia, operated by Chevron and Complete.
You will note us speak about Equatorial Guinea, the place we have simply entered as an operator, are within the strategy of making an attempt to farm down that space. You will see us speak about Namibia, the place we’re in with Complete, one other world-class operator there. And you will see us speak about Block 3B/4B within the western facet of South Africa. And we consider that what we’re doing in the intervening time is creating, from the place that I inherited, a — successfully, a world-class unbiased E&P firm, uncovered to some pretty vital progress alternatives and really secure manufacturing base.
So, subsequent slide, please. So, let’s go and look in some element at what we maintain. And also you — anybody’s been with us for a very long time, you’ll really know this. And one of many issues which is completely different in the best way that I’m describing the corporate since I got here in is that we regularly used to only say that we produced circa 20,000 barrels in Nigeria. In precise truth, what we do is we’ve got an fairness curiosity within the three fields, which are literally doing over 300,000 barrels a day.
They’re mature, well-known, secure property. And what is going on on nowadays is proven on this diagram. Initially, our OML 130 was prolonged for additional 20 years, which supplies you a sign of how lengthy these property are going to provide for. We now have an ongoing drilling program and that truly is ongoing nowadays, and we have simply prolonged the rig to proceed drilling in Egina.
And so, the following slide, please. And on this space, you will see natural progress, as a result of the Preowei area in PML 4 has gone via the FEED course of and we’re getting ready to develop that area, which can add pretty vital manufacturing to us, about 6,000-odd barrels a day. However once more, a really materials growth [technical difficulty] on the underside bullets right here, that’s really going to provide at a gross stage of 65,000 barrels a day over the present infrastructure. So, an enormous, large growth that we’ve got a fairly materials place in.
Subsequent [technical difficulty]. After which if we leap down and take a look at what is going on on in Namibia, we’re in two licenses there, however they’re each encompassed by the purple line across the across the two of them. And that is an space receiving vital exercise nowadays. And what we’ve got on this space is a really vital main oil discovery, the place Complete are starting to FEED out into the market the sheer scale of this.
The primary deal, Venus, has been now drilled and appraised by 4 wells, which have been examined, the newest of which is Mangetti, up within the north of the block, which is a fantastically attention-grabbing properly, as a result of that [technical difficulty] extension of the Venus area. We additionally examined a youthful fan on the highest of Venus reservoir, which can also be hydrocarbon-bearing.
So, we now successfully have two fields recognized [technical difficulty] actively reviewing growth choices. And you should have seen that Complete is starting to current information, each on the subsurface geology and of their Capital Markets Day have given a sign [technical difficulty] to FEED on the event, which will likely be Venus, someday this 12 months.
Subsequent slide. And I am — what I will do now’s go this over to Pascal, and I hope [technical difficulty] you may see the slide.
Pascal Nicodeme
I can see the slide. Thanks, Roger.
So sure, let me undergo the monetary highlights for the quarter. We’re posting for the quarter $3.5 million internet earnings, which is comparatively decrease than the standard run price revenue that we’re posting. And this is because of a loss that has been posted by Africa Power. They posted — they impaired their working curiosity in 11B/12B block in South Africa by $114 million.
So we’ve got picked up our internet share of that impairment by way of Africa Power immediately, but additionally not directly by way of our possession in Impression. So, as a consequence, we have additionally reversed a part of the impairment that we had ourselves booked within the final quarter. So we reversed roughly half of that internet loss, which signifies that the web impression this quarter of that Africa Power loss is about $14 million internet to Africa Oil, which explains the comparatively low internet earnings on this quarter.
In the event you look on the right-hand facet of this slide, you may see that the Prime efficiency has been secure. We’re having continued sturdy EBITDAX and money circulation from operation, $95 million of EBITDAX for the quarter and $77 million of money circulation from operation, which is defined by a sustained sturdy manufacturing. We — as Roger talked about, we’ve got two new wells in manufacturing on Akpo. The precise internet entitlement manufacturing for the quarter has been within the higher vary of our steering. And as Roger additionally talked about, the present REIT contract has been prolonged till October, so we anticipate to see a continued enchancment in manufacturing within the second half of the 12 months.
Subsequent slide, please. So, this exhibits how disciplined we have continued to be by way of managing our liquidity. We began the quarter with $232 million of money. The principle use of that money through the quarter has been the shareholder return program by way of the fee of a dividend finish of March, about $12 million, and the continued share — buy of share since January 2024 once we restarted the share buyback program after the announcement of the farm all the way down to Complete.
So, in whole, we have returned within the quarter greater than $25 million to the shareholders, and our money steadiness is now all the way down to $195 million. Prime has continued to have stronger money balances. The Prime internet debt was, on the finish of the quarter, $240 million. And mixed with our personal money steadiness, it is a internet debt place of $45 million.
Subsequent slide, please. When it comes to oil gross sales, once more, very secure habits. Once more, this quarter, we managed to get a sale value which is increased than the typical Dated Brent for the quarter, which is as a result of effectivity of our new advertising technique, as I defined within the earlier quarters, and we achieved 85 — greater than $85 per barrel common sale value versus an $83 common Brent over the identical interval, and publish interval, we additionally bought — Prime has bought two cargoes, once more, with common gross sales of 93 million — $93 per barrel, sorry, in comparison with a mean Dated Brent of $90 per barrel.
Subsequent slide, please. So, specializing in our capital framework and the principle priorities that the corporate has, I feel we have defined that within the earlier quarters, however we need to preserve a powerful steadiness sheet. Prime continued to deleverage and repay the RBL facility and the target within the medium time period is to get their RBL facility prolonged to be able to make the amortization of that debt profile smoother.
On our facet, we’re working with our lenders in the intervening time to increase our company facility and we should always — we have obtained credit score approval from our 4 banks to increase the present facility for one more three years at a decrease quantity, as a result of we consider that at this stage, we do not want a lot out there liquidity. So it is going to be renewed at a stage of $65 million initially in opposition to the present $175 million.
So — and by way of order of precedence, natural progress, after all, we’re specializing in creating our present property. The farm all the way down to Complete in Namibia has been superb information and it has freed our steadiness sheet mainly from potential capital expenditures to come back sooner or later. Subsequently, the brand new deal with shareholder returns and the resumption of our share buyback program, we have accomplished about 38% of that NCIB since January. And since 2022, we have returned $130 million to our shareholders.
Subsequent slide, please. And I’ll hand over to Oliver now.
Shahin Amini
Oliver, are you able to hear us? You could be on mute.
Oliver Quinn
Sure, thanks, Shahin. Minor technical issue. Thanks, Pascal.
So I feel Roger talked about earlier, we, after all, introduced in March a suggestion to Impression minority shareholders to accumulate as much as an 8% incremental stake in Impression at a valuation of 100% Impression to $805 million, which might have been a most spend of $64 million.
Once more, the rationale is, after all, as we have talked about on this name, consolidation of the present portfolio. With the CapEx taken out of Impression and Namibia via the Complete deal earlier within the 12 months, it represents an necessary long-term progress alternative for us. So, extra [technical difficulty] of Impression, we predict, offers further energy in that long-term portfolio. So, the method has gone properly. I feel, as you may see on the slide, we’re nearing the tip of that course of and we might anticipate to shut and provides an replace on the ultimate conclusion earlier than the tip of the second quarter, so type of subsequent six weeks, actually.
Subsequent slide, please. So I feel that simply as a short remark right here, we have talked about consolidating the present portfolio, and I feel we have made type of good progress on that. The transactions, clearly, Namibia, South Africa, once more, as simply mentioned, shopping for somewhat bit extra of Impression. So, that helps, and I feel there is a couple extra issues to go there. As Roger talked about earlier, there’s the broader type of legacy portfolio that we’re engaged on to simplify as properly.
So I feel, once more, that is the following step, is to attempt to simply proceed, in case you like, the simplification of the enterprise. And once more, to the capital framework, it is self-discipline on capital and simplification, and that is — that would be the focus as we transfer into the third and fourth quarters right here.
So, I will hand again to Roger.
Roger Tucker
Thanks very a lot, Oliver. So, the following slide, which is now up. The strategic priorities that we deal with, and this has advanced since I have been right here, is that the best place to consolidate your corporation is in property that you realize. And so, we are going to proceed to aim to consolidate and beef-up our portfolio in present world-class property.
We’re going to preserve our monetary flexibility to be able to speed up progress. And you’ll hear, as we undergo these shows, that we’re now centered completely on capital allocation. And you have seen the advantages of that by eradicating all CapEx from the long run portfolio. And that we at the moment are — we’re additionally, on the company stage, fully debt free. We’re centered on shareholder returns.
And as you see within the second that we managed to farm out and take away the chance, the capital danger, in case you like, of investing within the growth in Namibia, we recommenced a really vital share buyback program, which is constant to this point [technical difficulty] and all the time to take care of our steadiness sheet energy once we then use that steadiness sheet to attempt to establish extra progress alternatives.
And with that, I will go this over to Shahin to manage the Q&A session, which we are going to [technical difficulty] three executives that you’ve on the desk — across the desk. Thanks very a lot.
Query-and-Reply Session
A – Shahin Amini
Thanks, Roger. And Sharon, in case you might remind individuals on learn how to submit their questions on the convention name, please.
Operator
[Operator Instructions] We are going to now go to our first cellphone query. One second, please. And your first query comes from the road of Teodor Sveen-Nilsen from SB1M. Please go forward.
Teodor Sveen-Nilsen
Good morning, guys or good afternoon, and thanks for taking my questions. A few questions for me — really, three questions. First, on steering, you might have offered manufacturing steering, working curiosity from — within the vary of 16,500 to 19,500 for the 12 months. I observed that first quarter manufacturing was 17,000 roughly. Is there any draw back danger to that, or ought to we anticipate manufacturing to remain flattish on the present stage all through the following few quarters?
And second query is on the Venus CapEx. After all, a fantastic deal you probably did there on the farm down, however might you simply remind me of the estimated worth of the CapEx carry? After which last query is on the cleanup of your entire construction with the Impression, Eco Atlantic, and Africa Power. And naturally, you briefly mentioned that, however might you simply give us an replace on how we should always anticipate this to appear to be going ahead? Thanks.
Roger Tucker
Okay. Shahin, there have been three questions there.
Shahin Amini
Sure.
Roger Tucker
However right here in Montreal, really, that did not come throughout terribly clearly. So, are you able to really simply summarize the primary query?
Shahin Amini
Sure. So the primary query — first query is on manufacturing steering.
Roger Tucker
Sure.
Shahin Amini
And will we see draw back danger over the following few quarters to that?
Roger Tucker
Pascal, do you need to do this, or would you like me to do it?
Pascal Nicodeme
I can do it, if you want. So, I imply, I inform everybody, I feel the — I imply, it is clear that manufacturing in Nigeria has been declining, when trying on the Q1 final 12 months, manufacturing was increased, clearly, than this quarter. However as Roger talked about, the present drilling marketing campaign has been prolonged. So we anticipate this decline to proceed to be compensated by these new wells coming onstream. So we had lately two new Akpo wells that got here onstream, which is extraordinarily excellent news for us. So we anticipate these new wells to not less than compensate for the decline.
So, the reply to your query is, sure, we anticipate the manufacturing to be not less than secure for the remainder of the 12 months and doubtless enhance barely.
Roger Tucker
Sure, I will simply add in there. What you are seeing within the Q1 numbers is a [technical difficulty] work program as properly. I imply, the shutdown was prolonged barely, so we misplaced manufacturing there as a result of shutdown, and we’re actively drilling. However these implausible fields are over their peak of manufacturing and they’re going to decline over the following type of 30 years, in case you like, on a gradual foundation.
There isn’t a indication that there’s a — both a subsurface drawback that we do not perceive or an issue with the infrastructure on the floor [technical difficulty] you may see is a delayed — an successfully delayed work program and there’s no basic drawback with the underlying asset. It is a delay within the work program. However in some unspecified time in the future, these property, they will decline. And that is one of many nice — really, one of many nice issues about them. They’re so well-known within the subsurface.
After we offer you steering on the manufacturing, barring some main difficulty within the operability of the infrastructure, they may carry out as we predicted. They’re extraordinarily well-known within the subsurface. Pascal, do you need to add something extra to that?
Pascal Nicodeme
No, no. In no way.
Roger Tucker
Subsequent query, Shahin, if you wish to simply cowl that off, as a result of we could not hear it precisely.
Shahin Amini
Sure, it is on Venus CapEx.
Roger Tucker
Sure.
Shahin Amini
May you simply remind listeners and contributors on the anticipated worth of the CapEx carry?
Roger Tucker
Sure. And so, we won’t provide the precise quantity, however you can begin to work it out your self, as a result of Complete have indicated that we’re already right into a two FPSO case on Venus. And you will have seen that from their Capital Markets Day, though unusually, the headline in offshore and the entire trade pundits speak about 180,000 barrels a day. That’s really per FPSO, and there are two on the best way.
Now, you may work out the numbers now and begin to get a barely clearer thought of the numbers, however I can not provide the inside numbers from Complete. However it’s multi, multi billions of {dollars} that’s going to be spent on this. And as I say, we’re fully carried via it. And that is all I can provide you in the intervening time. However you may go on to the — and speak within the trade about how a lot two FPSOs will price you, and you’ll work out that what we have here’s a very, very vital carried scenario that we have managed to barter.
Shahin Amini
I feel Teodor’s line continues to be open. So, earlier than going to his third query, I need to revert again to him and to see whether or not he has any follow-on on the responses to first two questions.
Teodor Sveen-Nilsen
Effectively, no, really. I feel I will advantageous with all of that. Effectively, then perhaps additionally importantly, on manufacturing, there isn’t any draw back danger on the present steering so far as I interpret. Is that right?
Roger Tucker
Sure. What we’re making an attempt to level to right here is — I imply, that is the oil and fuel trade. However as we mannequin it in the intervening time the fields, we’re proud of our steering on Nigerian manufacturing.
Teodor Sveen-Nilsen
Certain. Understood. That is smart.
Shahin Amini
And I consider Teodor’s third query was to do with our non-core property and the way the corporate could possibly be trying sooner or later. Teodor, do you need to elaborate on that and maybe repeat your query, if crucial?
Teodor Sveen-Nilsen
Sure, certain. Completely. Sure, you already mentioned it briefly, however I simply needed the construction you might have with the Impression, Eco, and Africa Power, after which perhaps particularly Eco and Africa Power. How ought to we anticipate this construction to appear to be sooner or later? Are you trying to divest Eco Atlantic and/or Africa Power shares, or will that be merged into Africa Oil, or what to anticipate right here to get a less complicated construction sooner or later?
Roger Tucker
Clearly, [technical difficulty] we won’t any type of ahead statements in right here, as a result of we’re really speaking in regards to the Q1 outcomes. However — and I pointed to within the presentation that we’re actively taking a look at rationalizing our portfolio. And I would like us to get [technical difficulty] from the historic method that we have held fairness pursuits in corporations. And so, we’re taking a look at choices for these which we’re evolving, as we communicate. However I will not offer you a ahead assertion on what we’ll do, however [technical difficulty] that is happening in the intervening time.
Teodor Sveen-Nilsen
Understood. Thanks.
Operator
Thanks. [Operator Instructions] I’ll now hand again to Shahin for net questions.
Shahin Amini
Thanks, operator. Only a fast word from me. There was one query on the webcast on why there isn’t any video broadcast for this occasion right now. The administration staff, due to enterprise journey, are literally becoming a member of you from three completely different areas. In order that’s the rationale why for this specific occasion we have not adopted our normal strategy of broadcasting video.
So, let’s go to questions submitted over the webcast system. And there is a few inquiries to do with particular dividends. So that they’re type of associated. So let’s get them addressed in the identical go. So there is a remark that is on Slide 13, there was a reference to a particular dividend upon monetization occasions. And the associated query is, what must occur for shareholders to see a particular dividend?
So, Pascal, chances are you’ll need to handle this, please?
Pascal Nicodeme
Sure, certain. I imply, the query is about particular dividend in case of monetization. Effectively, we do not plan to monetize any of our property in the intervening time. We — I imply, we had doubtlessly the intention earlier than signing the farm all the way down to Complete to monetize our participation in Venus, which has not occurred since we want to remain for the long run within the growth. So there isn’t any envisaged particular dividend that may be associated to a monetization occasion, for certain.
I am certain the buyers and the shareholders have observed that we’ve got considerably stepped up our present returns to the shareholders, particularly by way of the share buyback. And we’re shopping for our shares in the intervening time on the nearly the utmost price we are able to purchase the shares at, each in Toronto and Stockholm. We need to protect some liquidity. As you realize, we’ve got an impressive provide for the Impression minorities in the intervening time. So, till we all know the ultimate results of that course of, we need to stay cautious by way of managing our liquidity.
So, subsequently, we’re — I might say, to reply the query, that we’re totally dedicated to the present NCIB. And relying on the end result of the affords we have made to the Impression minorities, we would rethink this or enhance the tempo of the returns.
Shahin Amini
And I suppose the crucial underlying message right here is that we stay totally dedicated to shareholder capital return. So, at a while sooner or later, if there’s a liquidity occasion, at the moment sooner or later, it’s attainable the corporate, topic to Board approval, might pay a particular dividend. However that’s a part of our dedication…
Pascal Nicodeme
Precisely.
Shahin Amini
— and see what occurs sooner or later. Thanks, Pascal.
Proper, there’s a query on Prime’s money and debt steadiness. So that they have $268 million in money and $750 million excellent in debt. Why do not they pay down debt? And the follow-on query from the identical participant is, have the Akpo wells met expectations? So, Pascal, maybe you may deal with the primary a part of that query, which is Prime’s debt administration.
Pascal Nicodeme
Sure, certain. So, the shareholder settlement we’ve got with Prime provisions that Prime must preserve not less than $150 million of money steadiness in any respect time. So the truth that they’ve barely greater than $150 million of money in the intervening time is precisely as a result of they’re planning to repay a part of the RBL facility within the subsequent quarters from their present money steadiness. So, that is definitely completed.
And the best way the RBL facility works is that they’re six month-to-month redeterminations, the place the banks on the finish of March and the tip of September are mainly figuring out the brand new most excellent quantity underneath the ability.
So, Prime would usually watch for April/Might to repay the borrowing primarily based out to the utmost stage after which once more in September. In order that course of is ongoing. And the truth that they’ve additional cash in the intervening time than the $150 million is simply to organize for future amortization and in addition the truth that they’re paying money price in the intervening time for the drilling marketing campaign.
In order that — the 2 components explains why Prime has this barely bigger money steadiness than anticipated.
Shahin Amini
And I’ll have a — I will go first in making an attempt to handle the second half, which was on the Akpo wells’ efficiency. Sure, there have been two Akpo West wells that had been accomplished in Q1, as we’ve got described in our first quarter 2024 MD&A shareholder reviews. These wells did exceed expectations. Nonetheless, please recall that the Akpo area then went right into a deliberate upkeep shutdown. That program is over and the sector is ramping up. So we will present additional updates on that sooner or later when the sector is out of this ramp-up section.
I do not know if Roger, Oliver, Pascal, you need to add anything to that on the Akpo wells?
Roger Tucker
No, I do not — I feel that is completely correct. The wells have are available in as predicted. We’re pursuing an energetic [technical difficulty] program. And so, they gave no surprises in any respect.
Shahin Amini
Superb. There’s a variety of questions on Namibia, particularly on Block 2913B. So that is Venus and Mangetti. One query, when do you anticipate that there could possibly be a attainable appraisal on the Mangetti fan there?
Roger Tucker
Effectively, the Mangetti properly got here in, in a really favorable scenario, in case you like. And at the moment, what we had been doing, what the opposite operation was occurring is we had been buying the 3D seismic to the south to verify to [technical difficulty] acquired an entire protection of 3D over the entire block. And as I discussed to you in earlier calls, one of many causes that we needed to remain on this license is there wasn’t full 3D within the south and we appreciated the look of the Damara prospect.
Now, what then occurred is Mangetti, that 3D seismic that was occurring within the south of the block was briefly terminated, in case you like, and the acquisition of 3D seismic moved to the north and east of Mangetti, which supplies you a sign we just like the look of this Mangetti discovery. Now, on the map which you can see that we’ve got up there, what it seems to be like is that the Mangetti fan heads off the block. It’s extremely vital on our block, however it heads on to the Chevron block up in direction of the Galp discovery.
And it’ll undoubtedly be appraised. However who’s going to do the appraisal? Is it going to be us or is it going to be Chevron? How is that this going to work? So I can not assure to you that in 2024 Mangetti goes to be drilled on our block. [technical difficulty] is very probably that the extension of that characteristic in some unspecified time in the future within the close to future will likely be drilled, as a result of it does look extraordinarily engaging.
Does that reply the — that is mainly all I can say in the intervening time. So…
Shahin Amini
Sure.
Roger Tucker
Do not wait essentially for it to be us and Complete to do it, however it — that characteristic goes to get drilled in some unspecified time in the future.
Shahin Amini
I feel it is necessary to focus on that, clearly, throughout this most up-to-date appraisal exploration program on Block 2913B, operator TotalEnergies has acquired a variety of information and now have shot 3D seismic. So, there’s a treasure trove of information that must be processed and analyzed. And we — as we have all the time stated, we are going to replace the market in coordination with our investor firm, Impression, and operator, TotalEnergies, when there’s a materials work plan confirmed. And we –
Roger Tucker
And what I’ll do is — while we’re speculated to be speaking in regards to the Q1 outcomes, there may be one other properly instantly adjoining to us that is essential, too, which is Shell’s Enigma-1X, which can also be a hit. And you may plot it on a map and see the place that’s. And that may be a — what seems to be doubtlessly like a big discovery, is correct adjoining from our Damara characteristic.
And so, the — what — as I’ve tried to clarify once I speak about Namibia, we’re within the midst of the event, in case you like, of a serious new international petroleum province. The drilling is not all going to be ours, and it is advisable to preserve your eye on what the opposite individuals are doing. And I feel I’ve seen a number of the questions there, individuals are asking about what Galp has found and no matter.
And you are going to see that we’re in a really privileged place as a really small — comparatively small unbiased, uncovered to drilling that is going to go on round us, which can delineate the form of this whole province. And that is occurring as we communicate.
And it’s extremely, very — type of like within the growth of this province, as a result of the primary discovery within the space, which was a Shell discovery, solely occurred in 2022, and it is simply been one after one other within the space. There will likely be a restrict to it, I imply, in some unspecified time in the future. However the trade goes via a studying curve on how these reservoirs work, the distribution of the hydrocarbons. And it is necessary that any investor in us retains their eye on what is going on on round our block as properly, what we’re doing on our personal block.
Shahin Amini
Sure. And there is a query that does particularly point out Galp, as a result of Galp did put out a press launch saying there’s 10 billion barrels of oil equal in place on the Mopane discovery. I will suppose that a few of our shareholders, buyers are persevering with to surprise when can we anticipate to have comparable statements, say, on Venus or Mangetti or different alternatives that we’ve got in our portfolio.
Roger Tucker
Effectively, I feel it is — I feel it is attention-grabbing to — I imply, it was a implausible press launch. I imply, there isn’t any query about that. And the motivation behind it might — Galp are going via a farmout course of on the time.
However then in case you go to the Complete Capital Markets Day, what Patrick stated when he was requested a really comparable query, and I might are inclined to agree, it is vitally, very early, having simply drilled two wells, to say precisely what the in-place reserves are. It’s a very daring assertion. We’ve not actively seen the entire information. Galp is a really properly revered firm, however it’ll take some time to work out precisely what the — and what I’ll say is that you have seen that Complete have introduced that it is a two FPSO growth. What you are going to begin to see, as a result of these are such large developments, is it may be reserves producible by every FPSO. And the positioning of the FPSO, the useful resource base, is a extremely essential factor to work out so that you just maximize the general restoration. And that’s the work that’s ongoing nowadays.
When it comes to once we could make an announcement is, what we’ve got to do due to the best way that we maintain our curiosity on this, is comply with Complete, and Complete will, hopefully, after they go into FEED, make a extra fulsome announcement of what the reserves base is. However we are going to comply with Complete as a very good companion.
Shahin Amini
Superb. Thanks, Roger. I feel it is solely honest to present you and Pascal a break and perhaps might put a query to Oliver, if that is okay with you, Oliver. However we’ve got a query on, mainly, capital allocation and the long-term technique for the corporate.
The query is, how do you measure and calculate return on investments? And what hurdle charges will you might have? For example, would you might have a threshold inside price of return in round 20% for investments? And I do know you’ve got been very busy, Oliver, with a few of these strategic factors. Can you shed some shade on our pondering?
Oliver Quinn
Sure. Thanks, Shahin. I feel it is a good query. I feel it is most likely a few methods to handle it. I feel the primary one, after all, is what’s our price of capital, proper? And significantly, what’s the price of capital within the for the corporate, however within the jurisdictions that we’re in, proper? And I feel — we take into consideration IRR and Nigeria, the place, after all, we have manufacturing via Prime.
We’re not going to do issues there which are low price of return, proper? I imply, there’s a — usually a reduction across the NAV and the asset worth that you just get for property in these jurisdictions. So, once more, that drives — as you speak about in capital allocation slide right here, drives a self-discipline round that.
I feel the second level is, I do not suppose — it is most likely not useful to place a selected quantity on the market, as a result of [technical difficulty] it is alternative particular. After all, a number of the infill wells that Roger and Pascal talked about, they’ve very excessive IRR, as a result of they pay again extraordinarily shortly. There are different issues with decrease however sturdy IRRs, however they’re completely different form of profile and longer-term money profiles, proper? And [technical difficulty] in pretty energetic mode. You see that via the transactions that we have completed. So simply merely commercially, I feel it is no advantageous to throw numbers on the market that may distract us from executing there.
However I feel — once more, I level to the capital allocation framework, the self-discipline, and the execution round that self-discipline, each in taking CapEx out of the enterprise and, as Pascal talked about, the share buybacks, proper, which tells you ways we finally see the worth of the cash, in case you like, in returns.
Shahin Amini
Thanks. Oliver. There’s a few follow-on questions on FPSOs for Venus. I feel it is honest to say that at this stage, the operator nonetheless is analyzing information and creating a possible attainable growth idea.
And the questions are, are there going to be two FPSOs producing from the start? And we have not stated that, however Roger, maybe you simply need to make clear that time that it is, probably — properly, not going, however it’s attainable that there could possibly be two FPSOs on Venus, however they do not essentially are going to be there producing in parallel from day one. Right?
Roger Tucker
Sure. Pay attention, usually individuals say that that is the primary time they’ve ever seen something like this and it is distinctive on this planet. I really was fortunate sufficient to see a really comparable scenario taking part in out [technical difficulty] with the event of the Santos basin, and I consider that that is going to comply with the identical route. There’ll, clearly, be a phasing. When the FPSOs arrive, it will be extraordinarily uncommon if each FPSOs [technical difficulty] on the similar time, perhaps not even in the identical yard. However there’s a dedication to begin the event with two FPSOs. What the delay in between the primary and the second depends on the best way that these FPSOs come via the yard course of.
I can not [technical difficulty] logical factor to do to attempt to fee to at precisely the identical time. And it will be more cost effective in case you did one after which one other arrived after which the identical staff carried on and commissioned the following one. However that is me speaking and it isn’t what Complete has [technical difficulty] in public. And all I am doing is offer you my expertise after residing via a really comparable factor with BG within the Santos basin.
Does that reply the query?
Oliver Quinn
Effectively, it could be value simply refreshing individuals on the carry, as we talked about earlier, and the event funding and the way that works in that context, as a result of it is all spent on the blocks pre first oil. So even in case you go down the street, as Roger described, the place you simply, as an example, there is a phased growth of two FPSOs, after all, the spend on the second FPSO as much as the purpose of first oil on the [technical difficulty] block FPSO can also be lined. So I feel that is a extremely necessary part that we’re really insured in opposition to that growth timeline, in case you like. So if it comes very aggressive and really early, that is okay, as a result of we’re carried, and if it comes later, that is okay, as a result of we’re receiving money circulation from the asset to fund our future obligations. So — sure.
Shahin Amini
Thanks. I feel that does reply the query properly. We now have three questions from one in all our longstanding shareholders. First one, will Preowei growth price be — price recoverable in opposition to the manufacturing from Egina and Akpo or solely from Preowei? Pascal, do you need to have a go at that, or I will be glad to begin, after which you may right me if I get it improper.
Pascal Nicodeme
Sure, go forward.
Shahin Amini
So, to begin with, I feel on Preowei, one factor is that — properly, definitely my understanding is it can profit from a five-year royalty vacation. In order that’s a optimistic. In order that must be accounted for. And that, mainly, Prime is now paying company tax, proper? And — however clearly, by way of the associated fee restoration that may come underneath the PSA association, so sure, it can have the advantages of that underneath the PSA for these property.
Pascal, do you need to affirm that or inform individuals –
Pascal Nicodeme
Sure, confirmed. Sure.
Shahin Amini
Wonderful. Thanks.
So, second query from our investor, how a lot upkeep associated downtime was there in Q1 for Egina, Akpo, and Agbami, and the way a lot downtime will we anticipate within the second quarter?
Effectively, definitely we did not have any downtimes on Egina and Agbami. It was solely on Akpo. And I consider that begins on March 19. So, in Q1, we might have had round 10 days to 11 days of downtime. Roger, do you might have any expectation for variety of days these fields could possibly be down in second quarter? Or Pascal?
Pascal Nicodeme
As you say, the — what we all know from that deliberate shutdown, it took barely longer than anticipated and that in the intervening time, they’re ramping up manufacturing once more, although, we’re not again to the earlier manufacturing stage. So it is now mid-Might. So there will likely be undoubtedly an impression on manufacturing for the second quarter.
Shahin Amini
Okay. However we do not anticipate any impression on Egina or Agbami for this quarter?
Pascal Nicodeme
No.
Shahin Amini
Superb. There’s a few questions on Equatorial Guinea. Principally, individuals need an replace, and do we’ve got a timing expectation for the farm down of EG-31 and EG-18?
Oliver Quinn
Sure, so misplaced you for a second, Shahin, however I can take that. So I feel the method is ongoing. There’s been a number of corporations via that information room. I feel the steering that is most likely most helpful is that, return to capital allocation framework and what we’re saying there may be, we’ll be very, very disciplined about spend, significantly within the type of early stage pre-production work. So I feel what we’re doing there may be, saying, look, we should always take somewhat bit longer, however take somewhat bit longer to [technical difficulty] that fulfills these technique, in case you like, that offers us a spot the place there’s minimal — zero CapEx in that.
So there’s most likely barely longer than individuals are anticipating, however I feel that is the rationale, is to — once more, capital self-discipline and guaranteeing that we get issues totally funded via these transactions and [technical difficulty].
Shahin Amini
Thanks, Oliver. Operator, can I simply test with you? Are there any additional questions on the phone line?
Operator
There are presently no additional questions on the cellphone line.
Shahin Amini
Thanks for checking. Proper, there is a query on our, successfully, possession of property in Nigeria. Are there plans underway for us to consolidate these? Is that — properly, we’ve got indicated that is one in all our aspirations. However Oliver, maybe you wish to share your ideas on that?
I feel we might have misplaced Oliver and Roger once more.
Roger Tucker
Grasp on. Sorry. What I will do is minimize throughout that. I imply, it is a good query, however what we have to do is deal with the Q1 outcomes that we have — we simply printed right now. We now have an aspiration to consolidate within the property that we like, however we’re not going to right now offer you any indication of [technical difficulty] tighten the doability of any of that. However you’ve got seen from the transactions that we have completed on this first quarter that it’s pointing you to a path of journey that we’re actively pursuing. And I feel I want simply to [technical difficulty]
Shahin Amini
Sure.
Roger Tucker
Shahin, in case you’re proud of that.
Shahin Amini
No, completely. I feel that is a very reasonable remark. Superb. So I am simply trying on the remaining checklist of questions. There’s one query on what’s the firm’s relationship to the Lundin Group.
I’ll take this one. The Lundin household did exit the place, and we had been very lucky that we had a blue chip worldwide fund that took that place and at the moment are a second largest shareholder in Africa Oil.
Roger Tucker
Which is Constancy.
Shahin Amini
Sure. And I feel on that word — sure, I feel we have answered all these different questions that I nonetheless see on the queue, and we have solely acquired a minute left.
So, on that word, Roger, do you might have any last feedback that you just need to share with the viewers?
Roger Tucker
I do not suppose I do, Shahin, except you suppose that we missed one thing. And I might identical to to thank everybody for dialing in and listening to this. And simply watch this house, as a result of we’re in a really energetic mode. And that is all that I’ll say from my viewpoint.
Shahin Amini
Thanks, Roger. A last remark from me. We will likely be internet hosting our AGM subsequent week on Might 23. I will likely be getting ready a press launch with particulars for shareholders that need to be part of a Q&A session, and we anticipate to ship the small print of that later right now. So sure, only a reminder, our subsequent occasion is our AGM subsequent week.
And please, operator, I will hand it again to you to finish this name.
Operator
Thanks. This concludes right now’s convention name. Thanks for collaborating. You could now disconnect.
