22nd Nov 2006 13:30
Afren PLC22 November 2006 Afren plc (AIM: AFR) Toronto - 08.30; London - 13.30 Heads of Agreement reached on acquisition in Angola and completion of acquisition of Heritage Congo Limited London, 22nd November 2006 - Afren plc ("Afren" or "the Company") is pleased toannounce it has signed Heads of Agreement with Gulf Energy Resources ("GER") forthe acquisition of a five percent stake in the highly prospective onshoreCabinda Central Licence Block B ("Angola acquisition") and completion of theacquisition of Heritage Congo Limited announced in June 2006. Summary: Completion of Acquisition of Heritage Congo Limited o Afren has completed the acquisition of Heritage Congo Limited, givingthe Company a 14% share of the highly prospective La Noumbi permit o The La Noumbi permit lies adjacent to the world class M'Boundi field,which is currently producing over 50,000 bopd, and covers circa 2,830 km2 ofhighly prospective acreage o The La Noumbi permit includes the existing Tie Tie discovery, whichflowed at 1,689 bopd. Five prospects have been mapped on existing 2D seismic,including the 50-75mmbbl Doungou prospect o The forward exploration programme for La Noumbi includes 500km ofseismic acquisition which is scheduled to be completed by January 2007. Anexploration well to test the Doungou prospect is planned for early 2007,together with up to six contingent wells in 2007 o The consideration for Heritage Congo has been revised from US$28million to US$21 million and the purchaser warrants reduced to 1,500,000, following the exercise of pre-emption rights on the Kouakouala A and KouakoualaB,C,D licences by the partners. The Company believes that the revisedconsideration for the 14% stake in La Noumbi is favourable to Afren Heads of Agreement for Cabinda Stake o The Cabinda Central Licence Block B Licence (the "Block") is located inthe Cabinda province and covers an area of 1,125 km2 o The Company has signed Heads of Agreement with Gulf Energy Resourcesfor the acquisition of a carried 5% stake in the Block o The Block contains highly prospective acreage with explorationpotential at several stratigraphic levels o The previous exploration history includes 32 wells, with severaldiscoveries that found light oil, and 950km of 2D seismic o The forward plan is to commence a 2D seismic programme to gather 650kmof data in 2007, followed by the re-commencement of exploration and appraisaldrilling in 2008 o The licence is operated by Devon Energy (30%) and other partners areRepsol (25%), Sonangol (20%) and Petrogal (20%) Afren post acquisitions o Afren has rapidly expanded since IPO in March 2005 to build adiversified portfolio across five countries; Nigeria, Sao Tome and Principe,Gabon and now Congo and Angola o This follows the recent announcement appointing Dr Rilwanu Lukman asnon-Executive Chairman and establishing the International Advisory Boardcomprising Brian Ward and Ennio Sganzerla, and John St. John as StrategicFinancial Advisor to the Board. o Afren has an active forward programme, with intensive development andappraisal work on existing discoveries and an intensive exploration programmetargeting new prospects o Nigeria - the Okoro 3 well is currently being drilled. The Global SantaFe Adriatic VI drilling unit has been secured for a nine month programme todevelop the Okoro and Setu Fields commencing August 2007, targeting first oil inearly 2008 o Gabon - an exploration well on Themis Marin, Q2 2007 o Congo - an exploration well on the Doungou prospect, early 2007 o Overall the Company remains on track to reach its target of 15-20,000bopd by early 2008 Brian O'Cathain, Chief Executive, commented: "I am delighted to announce that we have signed Heads of Agreement on theacquisition of GER's stake in the highly prospective onshore Cabinda CentralLicence. Entry into Angola and Congo marks significant steps in thediversification and expansion of Afren's West African portfolio. "The acquisition of Heritage Congo gives Afren a strategic entry into the Congoand a material share of the very exciting La Noumbi permit, which was theprimary attraction of the acquisition with a number of identified high impactexploration prospects." Angola acquisition The Heads of Agreement establishes a foothold into Angola, a leading area forexploration in sub-Saharan Africa with 11.4 billion barrels of provedundeveloped reserves. The Cabinda Central Licence Block B Licence ("the permit") is located in theCabinda province and covers an area of 1,125km2. The Permit is operated by DevonEnergy (30%) and other participants are Repsol (25%), Sonangol (20%) andPetrogal (20%). The GER stake is carried by Devon through the first US$18million of expenditure. The acreage is considered to be highly prospective with exploration potential atseveral stratigraphic levels. It is located on trend and adjacent to severaldiscoveries, including one of Africa's largest onshore fields, the 300mmbblM'Boundi development. M'Boundi, currently produces at over 50,000 bopd from theVandji sandstone and the Vandji sand fairway extends south into Cabinda. TheCretaceous Vandji has been previously overlooked in the region, due to anhistorical focus on shallower reservoirs. This marks Afren's second focusedannounced acquisition targeting the Vandji sand fairway, following La Noumbi inCongo. 32 wells have been previously drilled, several of which found light oil. Thewells were located, primarily for shallow reservoir targets, without the benefitof seismic data. A 950km 2D seismic data grid was acquired in 1971 thatidentified several attractive leads. Reprocessing of this data together withacquisition of new seismic and aeromagnetic data is expected to deliver a highquality exploration prospect portfolio. Under the PSA, there are three exploration periods. The first, for a period ofthree years, includes five commitment and two contingent wells and theacquisition of 500km of 2D seismic. The forward plan is to commence a 2D seismicprogramme to gather 650km of data in 2007, followed by the re-commencement ofexploration and appraisal drilling in 2008. Acquisition of Heritage Congo Limited Afren also announces that it has completed the acquisition of Heritage CongoLimited, providing the Company a 14% share of the La Noumbi permit. HeritageCongo Limited was the wholly owned subsidiary of Heritage Oil Corporation, whosecommon shares trade on the Toronto Stock Exchange under the symbol HOC. Thisfollows exercise of pre-emption rights by Maurel et Prom and Burren over theKouakouala A and Kouakouala B,C,D Joint Operating Agreements. The cashconsideration for the acquisition of Heritage Congo Limited has been revisedfrom US$28 million to US$21 million and the purchaser warrants reduced to1,500,000. The La Noumbi permit covers 2,830 km2 and lies adjacent to - and on trend with -the world class M'Boundi field. The acreage is under explored and no drillinghas taken place since 1992. The acreage contains one ready to drill prospect,Doungou (50-75 mmbbls), which is planned to be drilled early in 2007. The permitalso includes an existing discovery; the Tie-Tie well which was discovered in1982 and flowed 1,689 bopd. A new 500km 2D seismic programme is underway,targeted at existing leads and prospects, expected to result in additionalexploration drilling in early 2007. In addition to an exploration well on theDoungou prospect, six contingent wells are under consideration for drilling in2007. Under the terms of the Production Sharing Contract, three firm and threecontingent wells are required. The operator is Maurel et Prom (48.5%) and Burren(37.5%) is a partner. The transaction marked Afren's first targeted acquisition within the Vandji sandfairway that extents north into Gabon and south into Angola. Enquiries: Afren +44 20 7182 1800Brian O'Cathain [email protected] Shahenshah [email protected] Pelham Public Relations +44 020 7743 6673James Henderson [email protected] [email protected] Background information Afren Afren (www.afren.com) was founded in December 2004 by a management teamincluding Dr Rilwanu Lukman with the vision to become the leading pan Africanindependent Exploration and Production company. Since the Initial PublicOffering in March 2005, Afren has rapidly expanded its African portfolio acrossfive countries; Nigeria, Sao Tome and Principe, Gabon, Congo and Angola. TheGroup is expecting to produce 15 to 20,000 barrels per day by 2008 from itscurrent portfolio. Afren will continue to add to its diversified portfolio of near termdevelopments and high impact exploration licences with the overall objective ofcreating substantial shareholder value. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
AFR.L