Africa Oil Corp (TSX:AOI). has announced its financial and operating results for the third quarter ended September 30, 2022, which included a record realised oil price at Prime in which it has a 50% shareholding.
The company said Prime achieved an average realized oil price of $101.5 a barrel, the highest quarterly average since the acquisition of a shareholding in Prime, compared to the average Bloomberg Dated Brent price of $99.1 a barrel for 3Q 2022. The rise was partly due to the application of its revised crude marketing strategy.
"We have continued to deliver on our commitment to shareholder capital returns with the launch of our share buyback program in third quarter 2022. Together with our dividend policy, from the start of the year through to November 11, 2022, we have returned almost $60 million to our shareholders whilst growing our cash position," Africa Oil president and CEO Keith Hill said in a statement.
“This has been made possible by the robust performance of our Nigerian assets that provide us with high quality and long life production and cash flows. We can look forward to potentially high impact catalysts in the next few months, including the results of Gazania-1 exploration well, and the Venus appraisal program. Africa Oil has an attractive full-cycle opportunity set for sustainable shareholder value growth and a bright future."
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Prime's 3Q 2022 average daily working interest (W.I.) production was 22,100 barrels of oil equivalent per day (boepd) and economic entitlement production was 25,200 boepd, net to Africa Oil's 50% shareholding in Prime. These compare to the 3Q 2021 average daily W.I. production of 27,500 boepd and economic entitlement production of 30,100 boepd.
The full-year production outlook remains within the management guidance range for both W.I. production of 22,500-25,500 boepd and economic entitlement production of 23,000-27,000 boepd, the company said.
Africa Oil said it recognized a total operating income of $76.5 million and a net income of $70.6 million during the third quarter of 2022. The operating income primarily relates to the company's share of profit from its investments in Prime amounting to $78.4 million.
The company ended the 3Q 2022 with cash of $207.3 million in comparison to cash of $58.9 million at the end of 2021. It has no outstanding debt. During the 3Q, Prime distributed one dividend of $100.0 million with a net payment to Africa Oil of $50.0 million, related to its 50% shareholding interest. Year to date, Africa Oil has received a total of $250.0 million in dividends from Prime, including $37.5 million received in October 2022. Since the acquisition of a 50% shareholding in Prime in January 2020 for $519.5 million, the company has received 15 dividends from Prime for a total amount of $650.0 million.
Share buyback
Africa Oil said its strong balance sheet and a positive business outlook, underpinned by Prime's cashflows, have supported its shareholder capital return programs. The company launched a share buyback program in September 2022 to repurchase its common shares through the facilities of the TSX, Nasdaq Stockholm and/or alternative Canadian trading systems.
From September 27, 2022, through to November 11, 2022, a total of 15,757,710 Africa Oil common shares have been repurchased, at a total cost of $35.8 million, including including fees, and 13,599,620 shares have been canceled.
An annual dividend of $0.05 per share was declared in February 2022. The first installment of $0.025 was paid in March 2022, and the second installment of $0.025 was paid in September 2022 for a total distribution of $23.8 million. This is in line with the minimum annual dividend target, the company said.
From the start of the year through to November 11, 2022, the company has returned a total of $59.5 million to the shareholders through its share buyback program and dividend policy.
Contact the author at jon.hopkins@proactiveinvestors.com