Afren increased its holding in First Hydrocarbon Nigeria (FHN) following the recent shareholder approval on the recommended acquisition of an additional interest in the company. Afren acquired an additional 23.3% beneficial interest in FHN.
The acquisition of an additional 33,966,333 shares, representing around 23.3% of the outstanding share capital of FHN, from a combination of Capital Alliance Energy Nigeria Ltd. (CAPE), Earl Act Global Investments Ltd., and other FHN shareholders (excluding any related parties), has been undertaken at an average price of $3.10 per share in cash (the ‘Further Acquisition’). Of the total consideration ($105.4 million) for the Further Acquisition, $22 million is payable on the first anniversary and $22 million on the second anniversary of the acquisition date, in each case to CAPE.
Afren has also entered into a Put/Call option with Earl Act Global Investments Ltd. for a further 18,299,993 million FHN shares (representing a further 12.5% of the outstanding share capital of FHN) at a price of $3.32 per share. These options may only be exercised after 24 months and for a period of six months thereafter.
In addition, as separately announced, all Afren PDMR holdings in FHN have been sold to CSL Stockbrokers (Nigeria), and the Afren PDMRs have undertaken to use the net proceeds to acquire Afren shares in the public markets.
FHN has a 45% interest in the OML 26 portfolio of assets onshore Nigeria. The portfolio of assets holds two producing fields, the Ogini and Isoko, with 2P oil reserves estimated at 134.6 mmboe and gross contingent resources estimated at 68.0 mmboe as of the end of 2012. OML 26 also has three proven but undeveloped fields with gross contingent resources estimated at 144 mmboe and a further 615 mmboe of gross unrisked prospective resources on the block across multiple prospects.
The current forward work program for FHN is expected to increase production from Ogini and Isoko to more than 40,000 bpd through a phased development process by 2015 and ultimately take production to 50,000 bpd. In addition, preparatory work is on-going for the appraisal program on the proved but undeveloped fields and exploration of the significant undrilled upside potential on the block.
Osman Shahenshah, chief executive of Afren commented “As previously highlighted, we are delighted to be increasing our indirect beneficial ownership of OML 26 onshore Nigeria and further simplifying the FHN shareholder base. Since FHN’s acquisition of a 45% interest in the OML 26 portfolio of assets, 2P reserves have increased by 231% to 134.6 million barrels, with significant undrilled upside remaining. The additional acquisition is significantly accretive to our shareholders and we look forward to working closely with NPDC to further increase production and undertake an extensive appraisal and exploration program on the portfolio.”
Information from Petroleum Africa was used in this report.