Africa Oil Corp (TSX:AOI) – which will shortly be renamed Meren Energy – today delivered “a solid set of results”, that’s according to stockbroker Peel Hunt which has now repeated a ‘Buy’ rating.
The company, in its first quarter trading statement, highlighted that it was “significantly transformed” during the period in terms of scale and structure.
The acquisition and consolidation of Prime was completed on 19 March.
For the quarter, meanwhile, it reported net income of $50.9 million ($0.11 per share).
Consolidated guidance for 2025 anticipates 28,000 to 33,000 barrels oil equivalent per day of production and 32,000 to 37,000 barrels oil equivalent of ‘entitlement’ production.
In the first quarter, it achieved 33,400 and 37,700 barrels respectively. The company ended the quarter with $428.4 million of cash, and $191.6 million of debt.
And, it is to pay $25 million of interim dividends for the quarter ($0.0371 per share) payable on 11 June.
Peel Hunt analyst Sam Wahab described the Prime deal as “leading to a step-change in the business outlook”.
Wahab, in a note, added: “We model the consolidation leading to group cumulative 2025-27E FCF doubling to US$733 million, enabling the company to fulfil its commitment to raise the annual shareholder dividend 4x from c.US$25 million to a base of US$100 million.
The stockbroker’s ‘Buy’ recommendation comes with a price target (pitched at 30 Swedish Krona) that implies nearly 3-times upside to the current level.
In Toronto, meanwhile, Africa Oil stock was up 1.9% on Thursday changing hands at $1.88.
Rebranding to become Meren
Africa Oil also today announced it will change its name to Meren Energy Inc, as it emerges from a phase of transformation.
‘Meren’ is an old nautical term that refers to the mooring of a vessel as it docks, and is tied to maritime legends who ‘set sail in pursuit of new worlds’.
And, the company says the new name mirrors its “stability anchored by a diverse portfolio, strong cash flow profile and proven ability to work side by side with industry leaders on world-class assets”.
CEO Roger Tucker, meanwhile, told investors that the recent deal completion “felt like the natural catalyst to rebrand”.
He said: “Over the last couple of years, we have worked diligently to enhance our investment proposition by simplifying the structure of the business and gaining more direct interests in our large-scale and high-netback assets in deepwater Nigeria.
“The business model has also evolved considerably over the past few years; moving away from being exploration led to being a full-cycle E&P underpinned by strong cash flow generation that supports our commitment to meaningful shareholder returns."
The company noted that its strategic objectives remain the same – namely, to drive long-term value through its existing portfolio and deliver ‘compelling’ shareholder returns.
It plans it will continue to grow as a leading independent E&P, and will “judiciously consider” strategic acquisitions (producing assets in its targeted markets).