Africa Oil Corp (TSX:AOI) CEO Roger Tucker has reflected on 2024 as a “transformative year” for the company as it has executed several strategic initiatives to strengthen the business.
The company’s proposed reorganization, expected to be completed by March 7, 2025, is set to double reserves and production while granting direct control over Prime’s cash flows.
“This transformational milestone will significantly enhance our scale, financial strength, and ability to deliver meaningful shareholder value,” Tucker said in a statement.
The company also strengthened its position in the Namibian Orange Basin by increasing its stake in Impact Oil & Gas to 39.5% from 31.1%, investing approximately $88.6 million.
“The enlarged Africa Oil will benefit from robust long-term free cash flows and a strong balance sheet with low leverage,” the CEO said.
“We will have direct interests in producing assets in Nigeria, complemented by funded development and exploration projects in the prolific Orange Basin.”
Africa Oil and Prime ended 2024 with a combined cash balance of $460.9 million, with Prime generating $267.8 million in operational cash flow.
Prime reported a $318.7 million profit in Q4 2024, a $477.3 million improvement from a $158.6 million loss in Q4 2023, driven by increased operating income under the Securitization Agreement and lower impairments.
Prime’s working interest production averaged 17,000 boepd, with lifting entitlement production at 19,400 boepd, close to the company’s mid-range guidance.
Reserves remained stable, with a 101% 1P replacement rate and a 77% 2P replacement rate.
After-tax NPV10 valuations stood at $624 million for 1P and $1.064 billion for 2P reserves.
In 2024, Africa Oil returned $67.9 million to shareholders through dividends and buybacks, marking its highest-ever capital return.
Following the reorganization, the company plans to increase its annual base dividend to at least $100 million ($0.15 per share), tripling the current level. A first quarterly dividend of $25 million ($0.037 per share) is also planned upon completion, subject to approvals.
Tucker said: “These pillars position us to implement steady and predictable shareholder returns and to pursue new growth opportunities focused on producing assets in a disciplined manner."
2025 outlook
Africa Oil intends to provide management guidance for 2025 once the proposed reorganization is completed on March 7.
During 2025, Africa Oil remains focused on advancing key projects. The Venus oil field in Namibia's Block 2913B is progressing toward a final investment decision in H1 2026, with expected production of 150,000 bopd.
Exploration efforts in the Orange Basin continue, with the Marula-1X well spudded in February 2025 and the Olympe prospect set for drilling by year-end. The recent Tamboti-1X well encountered 85m of net black oil pay, with further analysis ongoing.
A strategic farm-down agreement ensures Africa Oil’s continued participation in these assets without upfront costs, allowing capital to be directed toward other growth opportunities.
In Nigeria, Prime’s key deepwater fields Agbami, Egina, and Akpo performed as expected in 2024, with drilling programs resuming in 2025 to support future production.
The Egina field exceeded its production plan, while new wells at Akpo helped offset natural declines. Seismic acquisition and planning efforts are underway for additional infill drilling and near-field exploration.
The Preowei Field development remains under review for cost optimization ahead of a final investment decision.
In South Africa, Africa Oil completed a farm-down agreement with TotalEnergies and QatarEnergy, retaining an 18% interest in Block 3B/4B, where the first exploration well is expected in 2026.