Q3 2021 Africa Oil Corp Earnings Call
Hello, everyone. My name is Mary and I'll be your conference operator today.
At this time I would like to welcome everyone to the Africa on third quarter 2021 themselves call and webcast. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer session. If you'd like to ask a question. During this time simply press Star then the number one on your telephone keypad.
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I would now like to pass the meeting to Mr. Shane Amini.
Africa oils Investor Relations Uncommercial manager. Please go ahead Mr. Manny.
Thank you operator.
On behalf of management. Thank you for joining us today for Africa, Oil's first quarter, 'twenty or 'twenty one results cool.
I'm joined today, with our President and Chief Executive Officer, Chief Hill.
Financial Officer Pascal <unk>.
<unk> presidents all production Craig nights.
Vice Presidents also ESG Amy bike.
Pascal will present, the quarter's highlights and business outlook before we go into the Q&A session.
I would like to remind everyone that remarks made during this session are subject to forward looking statements, which involve significant risk factors and assumptions and have been fully described in the company's continuous disclosure reports.
Information discussed is made as of today's date and time and ethical oil assumes no obligation to update or revise this information.
Like new events or circumstances.
As required by law.
The Companys complete financial statements and related MD&A are available on the company's website and on SEDAR.
Keith Please go ahead.
Alright.
Thanks for joining everyone.
Obviously, we're going to start with our favorite asset which is Nigeria.
It seems to be the gift that keeps on giving.
So we had another solid performance out of Nigeria, Yeah year to date dividends are up to a $160 million. We received another $112 5 billion this quarter.
We're actually a very flush with cash and in Nigeria, we have almost $500 million.
In cash.
And the company there and we sold two more cargo so literally about $600 million in Nigeria, including our AR securitization agreement so.
We're quite happy with the performance.
<unk> also done a significant amount of delevering.
De levering, we paid down 91% of our corporate debt and 44% of the <unk>.
I'm that Danny.
January 'twenty, when we get when we have.
Cynthia.
So we actually have a positive net cash position now we are looking at there may be a possible.
Another dividend before the end of the year, if we do receive that dividend will actually be a completely debt free at the corporate level.
So we have been looking to restructure our balance sheet, a little bit yeah. We do have an amortizing debt that we'd like to push out a bit. So we did sign a.
Trade financing deal for $150 million that has a seven year term are very similar terms to the RVO.
We are in the process of upsizing that to 300 million I think thats going to not only give us.
Yeah.
A longer payback period, but will give us some dry powder to do some of the things that we'll talk about a bit later.
Our cash position.
We also have the Nigeria NPA after about 12 years assigned into law by the President in August.
And it looks like it's very positive for the industry I think there's quite a bit of incentives there too.
The economics for offshore projects as a decrease in tax there is a royalty holiday for new fields of which our Jena qualifies and our prior way development.
I think probably the biggest thing for US is it looks like you have a pathway to early conversion of those licenses.
Thanks.
The ideal of that of course is that once we extend those licenses we can actually.
Redo our RVO debt.
Again, a much stronger.
Short term balance sheet too.
We're seeing some of our objectives.
So again production guidance I think we've been right around the high end of the range I think we slipped a little bit under the range.
Net production, but we're still above the range on entitlement. So I think for guidance for the year, we're going to be in a very.
Strong positioned to hit our guidance targets.
The.
Have reached all the OPEC restrictions all the Gina.
Producing pretty much on track.
Track I.
I think we did defer some capex last year I think we're looking at potentially.
We're getting some good wells drilled so we're hoping to see.
Certainly arrest the decline of the coming off the 200000 barrels a day, but possibly even though add some production.
The wells come on stream.
Again, our cash flow has been.
Really good I mean, there is a $305 million component of the Bobby security deposit in here.
Even without that we've hit the lower end of our guidance for the year as of this quarter. So I think.
Again, we've got the buy more cargoes to sell this year. So I think we're going to see.
Year end.
<unk> are very strong.
I think.
That's going to give us some opportunities to do some additional things that I think are our shareholders have been waiting for a while and we're very clear to us.
Florida.
So with that I'll.
<unk>.
Turn it over to <unk>.
Oh, I'm sorry, the operational highlights so again.
People ask us about hedging.
Those of you, who know me I'm, a very big oil pool, and I hate hedging oil going forward, but obviously with the banks require us to be a little bit more aggressive on our hedging they are coming off of those requirements. So.
About of hedging we're doing next year, that's come down quite a bit we actually have no hedged cargoes. After April of 2022, So I think.
We are we are in a position where we've hedged a lot that we're going to be take care of all of our debt obligations, but we are seeing increased.
Exposure to a flat oil price.
The average share price we got.
Before lifting we did last quarter was $48 six.
$58 $6 per barrel that is creep will increase significantly in the fourth quarter and in the <unk>.
First half of bacteria were actually closer to $70 a barrel for most of our hedges.
But again unhedged after that Opex.
Opex continues to be very good we've actually had a decrease in opex.
Five $2.
BOE, which is a kind of a world class standards for assets like this.
Our Capex has gone up a little bit we did drill one well at Expo, which is just being put on production.
And I would see probably next year, we'll try to do a little catch up work ethic last two years, we've been kind of deferring some capex under the.
The COVID-19 under the OPEC and strength of the <unk>. So I think it's probably time to go back and spend a little money and make sure our assets are holding up.
Again.
Hedging.
We made an awful lot of money last year I think there was a $430 million gain to the IBD last year, we will give a little bit of it back this year, but I think we're trying to make sure. We've got good upside exposure to oil price next year.
So with that I will turn it over to Pascal that get them, our CFO to kind of walk through some of the financial highlights.
Thank you Keith.
But yeah as we mentioned this has been a very strong quarter from a financial perspective again, we've posted this quarter a net income of $58 million.
No.
And over nine months is 135 million underlying net income that we have posted this.
Sure.
This has been supported by very strong performance for them.
Uh huh.
Company Prime.
Which itself.
In our natural share.
The profits from our investment in joint venture of $71 million.
All of the nine months, it's one of the $8 million that we did.
We can post net to our 52% in prime.
And Prime performance has been very consistent since we have closed the acquisition.
This translates into a very stable net income on that which we've received around a 50 million dollar a quarter since we've closed the acquisition.
Only outlier in this bathroom instead in Q1 2020, when we are when we booked an exceptional impairment on Kenya.
With $16 million, but otherwise performance since we've closed the acquisition has been a very very stable and consistent.
And since we are we have closed the acquisition, we received $200 million off dividends last year.
You know again, we've received so far along just $60 million.
Each time, we've used part of the dividends to.
Repay Oh acquisition.
With BTG the initial 2015.
Absolutely.
Therefore today, we are standing on a almost 39 million I'm going off cash all of that.
Has been down to $23 million, so effectively on net cash.
<unk> position.
So going onto the next slides the main domain, even this quarter has been the the refinancing overall.
Assuming under our acquisition facility.
You will remember that we signed the agreement in May 2021, we have actually completed.
The refinancing in July we raised $160 million of commitments squeeze.
Banks, which became basically our relationship banks.
The new loan is a significant improvement in terms of pricing compared to the previous one.
In the first 12 months, its carrying LIBOR, plus 605%, which is a very competitive compared to the top chart.
Yes.
And the maturity has been extended to May 2024, since we have closed the acquisition and the refinancing in July.
We've repaid the new loan down to $293 million and we keep this $62 million undrawn.
The ability until May 2022.
In that respect we are in discussion with all five banks as a moment to extend this.
Visibility and also increase the.
Available amount above 62 million got around the intention here as it relates to create liquidity for the company.
And Oh standby line with these banks in order to.
Well.
Other purposes could be funding new acquisitions.
Moving on to next slide.
Coming back again on prime as very strong performance.
Is the EBITDA and cash flow from operations.
Two I think since we've closed the acquisition.
So that's 50%.
Prime's vehicles figures.
Again, the EBITDA has been a very consistent.
Between hallways between laundry than the 200 million.
Over the quarters.
So Indian.
First nine months of 2021.
It's almost $419 million on a net net to us that's a prime is booked as EBITDA Andrew in terms of cash flow from operations $466 million again, net net too I think.
And today, including a security deposit Keith talked about.
Prime is sitting on a $245 million of cash net to net to us and so it's of course debt of $514 million.
That's the continued to rebound as Keith mentioned one measure.
So prime and this year has been to try to.
Slow down the amortization on the <unk> and the.
Pre close financing that just closed that launch at $50 million and as we increase next year to 300 million on the east.
As part of this.
Efforts to reschedule.
Payment of the <unk> and extended beyond the license renewal dates.
Keith over to you to explain the use of these free cash flows going forward.
Thanks, Pascal so yeah, obviously that's the.
The $1 billion billion.
Question is what are we going to do with all this money and I think.
There has been in the debate.
What should we be doing with this one I think the debate for the first two years there wasn't really much of a debate there was we needed to delever. This.
And pay off our debt so I think.
We're going to be in a very good position to do that and I think youll see by the end of 2023 will be almost debt free.
Not only in the company EBITDA.
And <unk> as well.
So I think the.
I think that we can tick that box. So the question is about what the excess cash we have.
Do we want to be looking at acquisition opportunities or do you want to be looking at shareholder returns and I think the good news for US is that we actually can do both.
<unk>.
Between the increased debt capacity, we have at our corporate facility.
Potential dividends and cash on hand at <unk> BV.
And the possibility of license renewal next year, both of our assets in Nigeria, I think theres going to be a lot of cash that we can use to grow the company.
Pick up hopefully another asset somewhat similar to the Nigerian asset we picked up but also I think it's kind of a time for us to look at shareholder returns.
We do have an early December will be meeting with our board I think there's still a lot of debate, whether we should be doing buybacks or dividends.
Barring something completely unforeseen between now and that I think is a very high probability that we will institute a shareholder return program of either dividends or share buybacks.
And I think I think the market.
Market for all of the message from the market that's fairly clear that.
I think by by showing the fiscal discipline to return some of that money to shareholders.
Specialty is if we can take advantage of what I still think there's a very good market.
Acquisitions, I think that would be.
Very good results.
So I will say that we are quite active on.
Looking at new acquisitions, we put in three bids on properties, we see our sweet spot really being West Africa offshore.
Mostly divestment from major oil companies, we're looking at producing cash flowing assets.
I do think we're in a very unique period, where we're going to actually have more.
Sellers than buyers.
I think we're not going to be out spending money buying things on high oil price.
Our plan is to use it.
<unk> $50 $55 oil price to do acquisitions.
I am right about oil prices going up, but what we can see a big windfall, but I think.
Having been in this business a long time I've seen I've seen the oil price go up and down we need to be buying things.
You can support on lower oil prices, but.
As I said before I do think we're looking at.
Supply driven price spike.
Think I predicted last year about this time.
I think we're seeing it come to fruition I think.
With all of the lack of investment I think we're going to see.
That trend of supply limitation continue.
So anyway, I think that the.
From a financial standpoint, I think we're in really good shape, we paid off our debt, we're going to be instituting a shareholder return program and we still have money for acquisition.
We still have some other exciting things.
All of you know that I'm explore grow next five.
And we do have.
Some very exciting exploration coming up.
I think the.
Well on the left there is the Venus well.
Drillship is sailing as we speak and will arrive on location next week.
It's a very deepwater well 3000 meters.
The rig is quite capable of it because it just drove the 3650 meter water depth, well <expletive> Valentine golar, which is the deepest well ever drilled in history. So.
What we like about this process.
<unk> is mostly the size. So this is the biggest prospect ever drill probably at 600 square kilometers that's got the amplitudes that fit the structure.
Nice.
<unk> response, we believe its oil.
Gas the real question is how thick and good reservoir quality, though.
We're going to know pretty soon this is about a 60 day, well and that we shouldn't be seeing results.
To tell people, it's by Christmas, but I think it's probably going to slip into the new year.
Again, this is probably the most exciting well being drilled in the world.
This year so.
Quite excited the well on the right.
<unk>.
To be we're still this is held through Africa energy or one of our portfolio companies I should mentioned here.
The Venus well is actually impact oil and gas which is another.
Our portfolio of companies.
We're still trying to get the rig sorted out for Africa.
The drill it this year, but I think it looks like it may slip into <unk>.
Next year, but again nice rift basin.
Really nice prospect and I think both of those are really kind of game changer for us.
Venezuela is a legitimate multibillion barrel prospects I think.
If successful it could have a very significant impact on the company.
But don't forget about Kenya for those of you who have been with the company a long time that was that was where we started.
After I'd say 10 years of hard work not only we found oil, but I think we've got a project that actually makes sense now I think we're very aligned with our partners.
So in total we're also aligned with the government and I think we're seeing quite a bit of interest in this project now so I think.
There's no guarantees that we will find the strategic partner, we are looking at that too.
To be in a position to execute this project, but I can tell you that there's quite a bit of interest here.
All right.
We are going to be in a position to submit our final field development plan to the government by the end of the year and I think if we can bring in the strategic partner I think you'll see this project, which is taking a lot longer than all of us would like finally getting off the ground that moving forward.
So I think those of you who have been through the journey with us.
It started as a kind of a rank exploration Wildcats company in East Africa, We had some good success and got a development project. We are fortunate enough to bring in a couple of good partners. Some books all the partners came a large chunk of money that we were able to parlay into a field in Nigeria.
Great production and cash flow.
And also to pay for.
The base amount for our exploration portfolio of companies.
I think now we're a very much of a full cycle exploration company exploration production development company.
I think.
Yes.
We see this as kind of the first step we still want to grow we still want to get bigger.
Got 30000 barrels a day and almost a 100 million barrels of reserves.
And we've got great projects I think if you look at the Opex on Nigeria, It's one of the lowest one of the.
We produced almost 25% of Nigeria is oil from our pre oilfields of these these are top notch fields, Kenya is going to be also a very good project.
I think we are.
One is that it has is that it's.
Got a lot of renewable energy or Abbott. So we're seeing we're looking at is that being a very low carbon.
Intensive.
Of development and we have we are onboard with the.
New ESG directives, and we have pledged said, we have a plan to be carbon neutral by 2025.
I think youll see us.
And putting some of those projects. We've got two projects that we're actively working on now to actually do some of the carbon offsetting we need to.
<unk> gave that carbon neutral.
Target I think you will keep an eye for those next year I think that that's going to be an important part of all of our business.
The oil and gas business.
So I think Thats, all I had to say.
I'll, let you read through the reader advisory in the.
I think I'll turn it back to Shane.
Can the answer some questions.
Thank you Keith.
<unk>.
Mary you, perhaps you could.
Give the instructions for people to submit questions on the conference call.
Yes, a question, which you wish to ask a question at this time over the phone. Please signal by pressing star one on your telephone keypad MPS ensured unique function. Your telephone is switched off to allow your signal to each equipment.
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We can now take our first question caller. Your line is open. Please go ahead.
Good morning, and good afternoon.
At $65 oil.
My name is Thomas Adam.
$65 oil.
Prime net present value at a 10% discount rate is roughly $2 billion.
$600 million in Africa energy, depending on assumptions, let's say for simplicity $400 million.
Africa oil has total enterprise value of just north of $1 billion, thus hassle, producing NPV 10, and one third of the NPV.
My first question is.
Is there such an M&A transaction available in the market today at one third of enterprise value to NPV 10, after tax which would be required to be as attractive as share repurchases.
And my second question is.
The parent has $40 million of cash.
Im not aware of whether the board has authorized or <unk> approved a normal course issuer bid.
Why not commence a buyback immediately.
View of a dividend is the most tax efficient return of capital and most likely the highest return on capital.
Thank you.
Yes.
I appreciate that question and it's a question I've talked to many people.
Everyone has their own opinion on this subject, there's pros and cons to vote.
Sure sure buyback is something we don't need to go.
Go through many approvals with the TFS X, it's something that we basically do a filing and we can do relatively quickly and that is.
One of the things we will be considering in December.
So the.
The $40 million, we have in the bank now we do have some things we need to spend that on.
In the short term, but.
We hear loud and clear the shareholders, saying they want some of that money back.
Some of the downsides of the share buyback gets that.
It tends to decrease liquidity so for some shareholders liquidity is an important issue. So if we're going into the market and buying up kind of the free float.
Leaving more of the long term shareholders that as an issue for some shareholders. There's also tax.
Reasons that some people prefer dividends some people prefer.
<unk> because of their individual taxes, but I think all of those things will take into account.
Your point about is there is there an acquisition, we can do which is more accretive.
The assets, we have we definitely take that into consideration when we're buying something if it's not.
Accretive to the value of the company.
Youre spot on we should be buying back our shares as opposed to going and spending that money out and buying something else.
Thank you just on the hedges you said you had six cargoes and are those aframax is or what is the total volume of oil.
Marilyn plus or minus.
1 million barrel cargoes, okay. Thank you.
And we can now take our next question with Robert.
Okay.
Caller. Your line is open. Please go ahead.
Hi, good assets.
From a rent com. Thank you for taking my questions.
Good.
So someone asking tuned in and then a follow up Keith.
Keith.
You bet.
Earlier today.
Rob.
The priority for <unk> to do some infill drilling as opposed to bringing colleagues to into the wholesale is that.
He is not.
Just because.
So it's hardly stinking.
Might be the bold step.
The best we can for the Dallas or is it more of a case of the.
The license or you can give us.
That's the first question.
So let me just pull Pascal I guess, just kind of what that was.
My borders.
For third quarter.
Talk to me about them, you kind of like a pay down pretty much thats, how did youll see some new facility and the old one in the same quarter. So im just wondering whats the possibility of converting.
Oliver as opposed to <unk>.
Just then on muscle firstly, just called <unk>.
Just a couple of quarters.
Thank you.
Okay.
So I'll take the first one and then pass on the Pascal So yes.
The use of Capex to grow production.
Added Gina and that's basically what we're talking about is trying to keep the Gina <unk> as full as possible.
The short term I, probably our best use of those funds is to go drill some.
And Bill Wells, So we can although it will be tied back immediately.
But in the medium term there is no doubt pray away, it's going to be vital to keep <unk> as full as possible. So I do think license extension would make it a lot easier.
To spend that money.
Look at the timeline will be out drilling wells, putting in putting in.
Sub surface facilities subsea facilities.
Just about the time of our license.
Buyer, so we'll feel a lot more comfortable and I think some of our partners in particular might feel a bit more comfortable if we got that license extension. So that were guaranteed that everything we're spending up greatly.
We get to see the benefit of that.
I think I think we have we have deferred a bit of capex and I think if I had to pick a little better care of these deals we are looking to shoot for the year we.
We've just finished for the Athena, we're looking to shoot for the bombing.
Probably next year, I think youll see a spending somebody to try to keep these vessels vessels as full as possible. That's really the key we've got three Fps that it was about 200000 barrel a day capacity.
Not only pre away, but some of the other satellite fields I think thats.
Near field opportunity, what they'd like to call adapted barrels. So I think there's going to be very important to us getting.
Getting even more value out of Nigeria.
I'll turn it over to Pascal for the second question.
Sure.
Exactly correct on the way, we repay the facilities so.
And the end of June we had two loans $123 million outstanding under the BTG loans when we close.
July we received another $25 million that we apply it immediately to repay the new loan down to $98 million.
And in September we received another 75 under gained the full 75 were applied to the repayment of the new facility down to 23 million.
Must be kept.
Really ability under the $160 million. So we've just canceled basically $98 million and.
$62 million remains available so regarding your question, whether it would be just makes sense to transform this facility into our CFO.
Kind of a terminal.
That's a good question.
We wanted to keep the.
I'm sure as simple as possible and of course, all banks were keen twice to repay the facility. Each time, we were receiving a dividend.
There was no need for a while.
Regional activity basically.
This is <unk>.
Availability of $62 million.
As I said we are.
We plan to increase the availability to keep it as a liquidity antelope potentially for future acquisitions in the future, but again the intention is if we do all of that visibility, let's say in the next 12 months.
We intend to repay it as soon as possible so.
Two factors.
That's it's not really moving facilities at the moment.
<unk> make a difference because our intention has always been to.
Fast trying to repayment of all debt tender as Keith mentioned today, we have $23 million available.
Prime is expected to distribute to another dividend cover in these months of December and in that case, the outstanding $23 million would be repaid in full immediately. So that's why I think we want to stick to that sort of mechanics, we the whole on the.
Onto liquidity at home, but immediately when we receive.
Hong Kong, we apply.
The maximum amount we can through the repayment of this not seasonal.
Okay. Thank you.
So lumpy.
So.
Very strong shingles, the DPF, which I believe was concluded a couple.
A weeks ago.
I was wondering.
Has there been any kind of like.
Sure.
Updates are presumably just structure must be very disruptive for the.
So the conversations with the license renewal so any color there would be would be quite helpful.
Yes, I think we're still kind of feeling our way around the new structure and I think.
The Nigerian government as well, obviously with MPC now basically becoming a standalone company.
DPR.
Different responsibilities.
I think it's going to take a little while for us to understand exactly how.
How did you, but now we do have shell at South <unk> just extended their license. So there is kind of a blueprint of how we go about it.
So I think that there are there are some.
Some issues around when you actually convert to the PAA and.
Extend your licenses so each block has its own little <unk>.
Some issues and each partner has their own issues. So I think it'll take a little while we're kind of looking for mid year to get an extension on both of those licenses, but there definitely are a few things that we can meet that need to make sure.
I'll, let the lineup on both of those block before we go ahead.
<unk>.
Get the extension of those licenses.
Okay. Thank you.
And once again it is star one if you wish to ask a question.
We can take our next question now call. Your line is open. Please go ahead.
Okay.
Yes.
Hi, Good afternoon, James Hosie from Barclays. Just a couple from me Keith you mentioned buying assets at a price that makes sense at 50% to $55 a barrel, but predicting a commodity price spike SR. There for a sense of urgency. If you get some deals done now are you seeing any signs that sellers price expectations are rising.
And my other question just on your comment about carbon neutrality by 2025.
Just wondering to what extent you can reduce your emissions with operational improvements rather been offsets and if you're able to quantify the cost of achieving that 2025 target with offsets. Thanks.
Well I guess.
The first question again.
I was thinking about yes, good question.
Okay.
Sorry, yes.
Your comments about buying assets at a price that makes sense to say $55 a barrel.
Thanks, Mike.
Well the answer to that is if the majors are willing to sell them at that price, whereas we're quite keen to buy them I think since oil prices come up.
Yes.
It may cost us a little harder, but I think that it would have a year ago.
We have put those some bids and then one thing we have done in our bids is actually put some contingent payment for oil price. So in other words, we're not kind of expecting the majors too.
Sure.
Take all of the oil price upside away.
But we're not also expecting us to take all of the oil price risk. So.
One thing that seems to be acceptable sub to some of the sellers as we share some of that upside so.
For sake of argument if oil stays at 65 ROE stays at 75.
There is a contingent payments to be made there on top of that.
And as far as our ESG, yes, we are.
Are quite committed to do that.
Really three components that you are trying to do you are trying to avoid.
Doing anything that to have a.
Our cotwo footprint. So for Amp for example, like in Kenya, where the design phase we will not be flaring gas. We hope we will be re injecting gas or we will be using it for fuel.
A little as possible, but we'll also be using renewable energy. So the first is to avoid a second is to reduce and I think right now about 25% of our CFO.
Footprint comes from flaring gas at a bombing.
This is a big thing for us and that's a big thing for Chevron in Ecuador, as well, we want to get that flaring down to a minimum orchard zero and that Bobby and I think there are a number of ways from power generation to venting declaring that.
Reduce those that footprint.
Youre going to end up with something I don't think that's where the kind of a third part of that which is basically that the offsetting.
We're not we're not in the.
We don't have the idea that we should just be going out and buying offset because I think.
That market is volatile and I think they're going to be huge competition for these offsets as some of the top 26.
Guys I had the principles become enacted so we much better like the idea that we're actually going to go out and start creating our own offices and I think for a living.
Being in Kenya is one of our main countries. We've got two projects in Canada that we're doing just that.
There's opportunities to kind of do a socially good project, but also that has some.
From great carbon offset opportunities. So we've looked at the cost of these things.
Can you design.
All of the project cost to try to limit that.
But <unk>.
From there we were probably in the $20 to $30 billion gross.
So for the whole JV.
On the carbon offset obviously it matters.
The vessel and how much you want an offset but.
$5, a kilogram of cotwo compared to what we think might be 25 to $30.
The price of the offset we still think it's a very good bargain.
All right.
I think obviously this is one of the biggest challenges we're going to have as an industry with finding people willing to finance it.
The new.
Carbon neutral environment than I, do but I do think if youre if youre a good actor.
And the top.
25% or probably more likely the top 10% youre still going to be investable. Some people will elect not to invest in fossil fuels, but I think.
If youre doing it responsible.
Responsibly, I think theres still will be a market for our investors and.
In our space.
Yes, thank you completely great quite quick.
Okay.
I do appreciate the sante cost reference James.
Well wait to see what you say in December thank you.
Thanks.
So we have no further questions over the phones at this time.
Okay, we have a number of questions submitted.
Over the webcast.
Perhaps let's tackle one thats.
Parcel, what's the Pascal.
It is an important one pascal.
Africa oils contingent payment liability to Petrobras $418 million what is the status on this.
Yes, so as you know.
<unk>.
Not been any formal redetermination on the hotspot suspicion on that panel.
There is no deferred consideration payment triggered by the agreement Prime assigned Luisa.
Sure.
Paul.
And.
Follow on question related to this.
<unk> security deposits can you provide an up.
Dates.
<unk>.
This money most of the plans.
So thats I mean, thats a private agreement that's been signed between between short and long end Queena on crime as I mentioned.
Bye.
<unk> agreed to pay $305 million to prime.
As.
Two central basically on the amendments payments.
Due to the difference in the percentage.
What caused it to only announce so.
Prime is sitting on $305 million.
Deposit and.
Currently considering the best options.
Two of these deposits one option is of course to repay the <unk> deposit.
Prime is sticking with legal and tax advice on what they what they can actually do.
And actually advises parts Julien potent so.
Hopefully day down.
It's going to happen.
Pretty soon now.
Very good.
Changing.
Focus to Kenya Keith.
Keith one for you.
This is regarding the deal with mask. The question is is there any carry through that deal that can be used for the project moving forward.
I think the short answer is no I think there is a possibility there could be money that could be paid but.
To do that we would have a have to have a.
Resource growth that would be incredibly large.
So I think.
I don't believe that there is a.
Ah Patheon site to get that.
Certainly we are aware of it and to 1000 aware of it and that we will.
Having a good luck.
It has opened up until.
The point of FID.
But I think we still have time to investigate that.
I'd have to say, if we're going to get it we would have to be pretty much in excess of 1 billion barrels of reserves.
I think thats, probably fairly unlikely that happened between now.
Alright good.
Question you actually.
It's an interesting one Keith Wanda has been asked in the past.
And it's regarding Africa energy.
The question is is this the right time to bring Africa energy back into the bosom of Africa oil.
Especially with the progress on that.
11 would be 12 b.
Yes, I guess the short answer that is we we love the project and we think it's not only a good projects that takes a lot of boxes for us.
Great Operator, we've got a project that meets about ESG.
Takes a lot of boxes on that and you probably saw that.
And cop 26 nine.
<unk> nine 8 billion.
South Africa too.
The transition from coal to.
Cleaner fuel.
Thank.
There's a lot of momentum on this project I think whether it belongs in Africa energy or ethical oil I think we are in the lobbying group I'd like to see it stay in the group I think for the moment.
It's quite happy sitting in the Africa energy, but.
I think at some point, maybe a discussion could happen.
Would it be a better all that Africa oil but.
The important thing on that is.
We're very close to putting the petroleum right.
Application in and I think there is a very well thought out scheme by total, but I think you've seen a lot of press lately.
It's going to get phase, one production up and running.
The pivot quickly.
<unk>.
Modest costs.
I would defer to Africa energy on this and suggest you visit their website.
It's a product we really like it takes almost every box that we want.
It's a good return just got big upside.
Yes G friendly.
Hello.
And other months, where your case as well as asset acquisition opportunities are you also looking at corporate mergers.
Yes.
The type of companies.
Looking out.
Yes, I think that's getting into a little bit about.
Confidential area.
What I will say a few parameters we've looked at a lot of companies.
I don't think I want to do a company absorbing us.
<unk> is a much smaller company.
Get something that only has 45000 barrels a day.
It's a lot of work to do a deal like that.
That much game I think if we looked at something we'd be looking for a merger of equals.
We've looked at a number of companies.
<unk>.
Essentially it's a.
We're probably not going to be buying them for cash so our paper more valuable than their paper. So far I haven't found that many companies with papers more valuable than mine, but.
I do think there is a consolidation.
That's going to happen in our space.
I think.
There is there is a size of matters at some point I think once you get above a 1 billion market cap. Once you get about 2 billion market cap you do open up to a lot of new investors. So I would say right now we don't really have one right on our radar screen, but there are a number of suspects we're keeping our eye on.
Unfortunately.
Our shares have doubled in the last year.
Paper may be coming closer to that.
We used to use as currency, but I think the earlier question about is it better to go merger by what the company you buy our shares.
Right now I'd have to say probably buy our shares.
Printed a lot of new paper.
To do a merger.
And.
Shifting the focus to our and could see portfolio. The question is what is your long term strategy for your investment on equal Atlantic and I suppose we could extend that question to also cover impacts on Africa and Asia.
<unk> already touched on the.
Previous question.
Yes.
Echo.
Echo Atlantic.
The hottest best place in the World to look for hydrocarbons with Guyana, and they've got a nice position in Guyana.
They will be drilling wells, there I think.
And now our shaking slightly echo director.
We're hopeful that Theres, a well drilled there next year, we've got some very good looking prospects. There's a block right next door called Newco that.
I was looking to drill a well on as well. So we did drill some wells in the J block. Unfortunately, we did find oil, but we didn't find good reservoir for that oil. So I think we've got a lot of it we still think Gaiam has got a lot of growth. So that's a focus of backdrop.
It was also in Namibia and of course, and then maybe what the Orange Basin. We've got two very highly prolific wells about to come up there. So.
Not only our venous while the channel is drilling a well called the graph, while that's actually got two different play types and what we're doing.
We have a very good acreage position when you kind of take our whole portfolio companies together Africa oil has a block three before.
Africa.
Impact of course is to good blocks right in the heart of that trend.
Echo has blocks and then maybe just to the north of that so I think I think I think youll see that that area heat up if one of those two wells are successful.
Long term I think we'd have to think about what we want to do with our export exploration portfolio. We're not we're not a portfolio management company.
One point, we have to do one of three things either have to sell.
Sell our interest in them.
By the interest.
And absorb them.
Or we have to think about spinning off or doing like an exploration focus vehicles.
I think the key is let's drill a few of these wells first and see what we've got.
Obviously, the Venus well is going to be the shortest duration most critical one because.
And I think once we kind of see a re.
What the results of those are I do think there is a consolidation of those exploration portfolio of companies.
I think the.
The monetization.
As it is on the slate for.
2022, and I think some time in 2022, we will deal with the consolidating.
Consolidating those interests.
Let's go back to Pascal <unk>, one question regarding Kenya, and this has to do with the.
The historical ROI dental value in Kenya.
Which has already been states uncovered in our financial statements and MD&A. So Pascal. The question is is there scope for reversing this if things are actually moving forward and improving on that project.
Yes.
Indeed, I mean, we in pad two.
<unk> project by $355 million.
So it's now down to approximately $119 million.
Now, we'd probably be scope for <unk>.
We're seeing that impairment.
Due to fair amount of debt.
Okay are you seeing in Kenya matter.
We utilize at some points in which case, we would probably be recognized.
Russell.
It's not the intention at the moment at least until we have more clarity on them.
John I apologize.
Very good.
We have a number of other questions, but are mindful keeps that you've also got another commitment coming up.
At the end of this song so I suggest we conclude the call now and I can follow on those questions that we haven't had a chance to get on.
On a one on one basis.
So I'll hand back to Mary to conclude this call.
Thank you. This concludes today's call. Thank you all for your participation you may now disconnect.
[music].