Africa Oil Corp (TSX:AOI) announced a substantial advancement in its Prime Oil & Gas Ltd. amalgamation timeline, targeting Q1 2025, significantly ahead of the initial Q3 2025 projection.
The expedited timeline is expected to support AOC's enhanced shareholder return program, pending board approvals.
The company also highlighted progress in its exploration portfolio, completing a farm-down agreement for Block 3B/4B in South Africa’s Orange Basin, enabling exploratory drilling in 2025.
Africa Oil retains a 17% direct stake in the block, which holds high exploration potential.
"We have made excellent progress towards closing the transaction to consolidate all of Prime in Africa Oil,” CEO Roger Tucker told shareholders in a statement. “We are significantly ahead of the original timeline.”
Financially, Africa Oil recorded improved production and cash flow metrics for Q3 2024. The company reported average daily working interest production from Prime at 17,900 barrels of oil equivalent per day (boepd), a 13% increase from the previous quarter. Cash flow from operations totaled $68.2 million in Q3, raising full-year cash flow guidance to $260 million.
The company ended Q3 with a cash balance of $136.1 million and no debt, a decrease from $232 million at the end of 2023, attributed to share buybacks, dividends, and strategic investments, including increased shareholding in Impact Oil and Gas Ltd to 32.4%.
Africa Oil has since exercised an option to acquire additional Impact shares, boosting its stake to approximately 39.5% and strengthening its influence over key assets in the prolific Venus oil field.
In other key results, Prime reported Q3 net entitlement production of 20,600 boepd and increased revenues by $65.7 million year-over-year. Despite this, Prime’s gross profit declined to $97.5 million due to higher costs and tax changes. A significant $305 million non-cash impairment was recorded, reflecting share price fluctuations impacting the fair value of Africa Oil’s stake in Prime.
Africa Oil’s strategic reorganization with BTG (LSE:BTG) Pactual Oil & Gas remains on track, with Q1 2025 targeted for completion. This reorganization is expected to enhance operational scale, reserve holdings, and capital access for Africa Oil.