Afren Reports on Operations, Finances for H1 2008

Afren plc has announced its interim results for the six months ended June 30, 2008 and an operational update to September 29, 2008.

Operational Highlights

  • The Okoro Setu development, offshore Nigeria, produced first oil on June 10, 2008. Production rates from the initial two wells are in excess of 7,000 barrels of oil per day.
  • The remaining three wells from an initial 5 well program have been successfully drilled and are ready for production.
  • The Company is currently drilling an additional 2 wells, beyond the original 5 well program, on the Okoro field, with per well rates that are expected to be comparable to the existing production wells.
  • Reservoir quality encountered on the Okoro field to date has been at the higher end of expectations.
  • Transformational acquisition-led growth with the addition of 8 assets across 4 West African countries, providing existing production, near-term development and high impact exploration.

Financial Highlights

  • Robust capital position, with over US $405 million of equity and debt financing secured:
  • Completion of US $236 million (before expenses) equity fund raising after placing 95 million ordinary shares in April 2008.
  • US $169 million debt facility secured for the acquisition in Cote d'Ivoire.
  • Cash balances at 30 June 2008 of US $269 million and net debt of US $13 million.
  • Net loss of US $26.8 million (1H 2007: US $10.2 million) for the period, reflecting the continued investment in personnel and business development to support growth plans.

H2 2008 Outlook

  • Stable production is expected from the Okoro field from the existing five-well base and two new wells are due online at the end of October.
  • Total production of in excess of 21,000 bopd expected from all 7 wells by November.
  • New opportunities in the field will be identified with a view to a second phase of operations at the appropriate time.
  • Appraisal drilling on the Ebok field in Nigeria scheduled from October 2008.
  • The Trident IV drilling rig was recently secured for a 2 well appraisal program commencing in early October.
  • Assuming a successful outcome to the appraisal phase, Afren expects to submit a Field Development Plan ("FDP") in the second quarter of 2009 with a view, subject to regulatory approvals and equipment availability, to commence development operations thereafter.
  • High impact exploration drilling to commence on the Keta Block, offshore Ghana, from November 2008.
  • The Transocean Deepwater Discovery Drill Ship has been contracted and the first well will be targeting the Cuda prospect, estimated by Afren to contain over 300 million barrels of oil.
  • Under final negotiations on farm-out process.

Osman Shahenshah, Afren Chief Executive, commented, "The first half of 2008 has been a period of tremendous progress for Afren. Operationally, the Company achieved the First Oil milestone from the Okoro Setu development within just 2 years from signing the initial agreement. This clearly demonstrates our ability not only to build an attractive portfolio of assets, but also to deliver demonstrable value through effective and rapid development of these assets.

"The Company has delivered transformational portfolio growth with the addition of 8 assets, including 3 new country entries. We continue to grow our partnerships in the region, having formed 2 additional partnerships with indigenous companies in Nigeria and solidified our strategic partnership with PETROCI in Cote d'Ivoire, as well as progressing our gas monetisation strategy with E.ON Ruhrgas and Electricite de France.

"We are in a strong financial position, which will be strengthened by our growing production base. As we look beyond First Oil, we will continue to develop the existing portfolio, maintain our active drilling program, and continue to explore NAV accretive asset and corporate transactions."

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