Afren Announces Proposed Placing to Raise $125MM
Afren has announced its intention to place approximately $125 million worth of new Ordinary Shares, with both new and existing institutional shareholders (the "Placing Shares").
The Placing is being conducted, subject to the satisfaction of certain conditions, through an accelerated book-building process to be carried out by Merrill Lynch International ("Merrill Lynch") who is acting as sole bookrunner in relation to the Placing. Jefferies International Limited ("Jefferies") and Morgan Stanley Securities Limited ("Morgan Stanley") are acting as co-lead managers in relation to the Placing. The identity of Placees and the basis of the allocations are at the discretion of Afren and Merrill Lynch. The number of Placing Shares and the price at which the Placing Shares are to be placed (the "Placing Price") will be agreed by Afren with the Managers at the close of the book-building process. Details of the number of Placing Shares and the Placing Price will be announced as soon as practicable after the close of the book-building process.
The Placing Shares will be issued credited as fully paid and will rank pari passu with existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid on or in respect of such shares after the date of issue of the Placing Shares. The Placing will be made on a non-preemptive basis.
The Company will apply for admission of the Placing Shares to trading on the AIM market of the London Stock Exchange ("Admission"). It is expected that Admission will take place and that trading will commence on 5 May 2009.
The Placing is conditional upon, inter alia, Admission becoming effective and upon the passing of the resolutions (without amendment) at the GM scheduled for 1 May 2009. The Placing is also conditional on the placing agreement made between the Company, Merrill Lynch, Jefferies and Morgan Stanley not being terminated. It is anticipated that the settlement date will be 5 May 2009.
The Appendix to this announcement (which forms part of this announcement) sets out the terms and conditions of the Placing.
Background to the Placing
In 2007, Afren put in place the drilling capability, financing structure, development plan and the production capacity for the Okoro Setu Project. In 2008, Afren's strong operational performance continued with First Oil achieved at the Okoro Setu Project in Nigeria. In addition, Afren acquired Devon Energy's assets in Côte d'Ivoire and Ghana and completed the farm-in and appraisal of the Ebok field in Nigeria.
Afren is currently producing circa 26,000 barrels of oil per day from the Okoro field in Nigeria and the CI-11 block in Côte d'Ivoire, representing a 47% outperformance to guidance on Okoro and a 10% increase in production on CI-11 since Afren assumed operatorship.
Afren recently announced the successful outcome of the Ebok field appraisal. An independent assessment of the in place oil and recoverable oil reserves from the Ebok field by Netherland, Sewell & Associates, Inc. ("NSAI"), post drilling of the Ebok-4 appraisal well, has preliminarily confirmed a P50 STOIIP of 148 mmbbls oil for the FB1 and FB-2 areas of the field. Recoverable reserves have been calculated at 41.2 mmbbls. NSAI has further assigned 14 mmbbls oil of resources to the FB-1 and FB-2 field area. An additional 21 mmbbls oil of contingent reserves and 33 mmbbls prospective resources have been assigned to other areas of the field including the Ebok West and Ebok North Fault Blocks.
Together with the development of the Ebok field in Nigeria, Afren has significant visible production growth of up to 65,000 boepd (working interest) from its existing asset base alone by the end of 2010.
Use of Proceeds
Production from the Ebok field of 15,000 to 25,000 bopd is expected in early 2010 from an Early Production System ("EPS"), rising to 35,000 to 50,000 bopd by the end of 2010, from full field development.
Afren believes that it is now appropriate to increase its equity capital base and strengthen the balance sheet to finance the EPS of the exciting Ebok development. It is intended that Phase Two of the Ebok development will be financed out of internally generated cash flow.
Move up to the Main Market
Afren also re-confirms that it intends to apply for a primary listing of its ordinary shares on the Official List and to trading on the London Stock Exchange's main market for listed securities.
It is expected that the cancellation of trading in the Ordinary Shares on AIM will take place at the same time as the Ordinary Shares are admitted to the Official List and begin trading on the London Stock Exchange's main market for listed securities, subject to the receipt of the necessary approvals from the UK Listing Authority and the London Stock Exchange.
Osman Shahenshah, Chief Executive of Afren, said, "Afren has established a robust foundation and achieved very strong growth to date. From an initial production base of 15,000 to 25,000 bopd in early 2010, a full field development of Ebok is expected to produce up to 50,000 bopd. Combined with the Placing announced today, an exit production rate of 65,000 boepd by the end of 2010, Afren will continue its growth trajectory from a position of financial and significant operational strength."
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