Value driven growth
Annual Report and
Financial Statements 2023
www.afentraplc.com
Overview
Introduction and Highlights
2023 Summary
Purpose
Afentra’s Approach
Chairman’s Statement
Strategic Report
Market Review
Chief Executive Statement
Business Model
Asset Summary
Sustainability
Business Risk
Our Stakeholders
Financial Review
Corporate Governance
Board of Directors
Statement of
Corporate Governance
Audit Committee Report
Nominations Committee
Remuneration Committee Report
Extractive Industries
Transparency Initiative
Directors’ Report
Statement of Directors’
Responsibilities
18
22
26
28
42
54
58
60
66
68
71
73
74
84
85
87
2
4
8
10
12
Group Accounts
Independent Auditors’ Report
90
Consolidated Statement of
Comprehensive Income
Consolidated Statement of
Financial Position
Consolidated Statement of
Changes In Equity
Consolidated Statement of
Cash Flows
Company Statement of
Financial Position
Company Statement of
Changes In Equity
100
101
102
103
104
105
Notes to the Financial Statements 106
Appendices
Definitions and Glossary of Terms
134
Professional Advisors
137
1
Afentra plc (‘Afentra’ or the ‘Company’),
together with its subsidiary undertakings
(the ‘Group’), is an upstream oil and gas
Company listed on the AIM market of the
London Stock Exchange (AIM: AET).
Value driven growth
It has indeed been a transformational year for Afentra with the completion of its first
two acquisitions from INA (May 2023) and Sonangol (December 2023) resulting in the
Company, at year end, holding material non-operating interests in Block 3/05 (18%), in
Block 3/05A (5.33%) and in Block 23 (40%) located offshore Angola. A key part of the
Sonangol acquisition was the successful negotiation with the Angolan Government to
approve the extension of the Block 3/05 licence to 2040 and improve fiscal terms to the
production sharing agreement (‘PSA’), encouraging future investment in the block.
Post period, the Company having received approval
from the Angolan Government, has completed the
acquisition of a further 12% non-operated interest
in Block 3/05 and 16% non-operated interest in
Block 3/05A from Azule Energy Angola Production
B.V. (‘Azule’). This results in Afentra’s non-operated
interests increasing to 30% in Block 3/05 and 21.33%
in Block 3/05A. In addition, post period, the Angolan
Government declared the Punja Development Area
in Block 3/05A a marginal discovery with improved
fiscal terms now applicable increasing the potential for
future development.
The successful completion of these transactions
provides the Company with material proven reserves,
robust production and cash flow, and significant
upside potential from a high-quality asset base. The
Block 3/05 licence extension and the favourable
improvement of the fiscal terms underpins our
confidence in Angola as an attractive investment
environment, where we can maximise the value of
these high-quality assets over the long-term.
Following a year of material strategic and operational
progress detailed in this report, Afentra is well
2Afentra plc Annual Report and Financial Statements 2023 positioned to deliver its ambitious growth strategy
while delivering the broad stakeholder benefits and
value around which Afentra was formed.
The discourse on the Energy Transition, and how
it can be achieved in an equitable and responsible
way, continues to evolve. Geopolitical and economic
headwinds in 2023 continued to focus policymakers’
decision making towards energy security and
affordability balanced with sustainability. There is
a growing recognition that African countries must
be able to continue to benefit from the revenues
generated from their hydrocarbon industries so that
they can fund their socioeconomic development,
and long-term Energy Transition, while also meeting
strong domestic energy demand.
African governments, such as in Angola, are
responding accordingly as they seek to encourage
foreign investment and welcome ambitious
independents by improving fiscal terms and
extending licences to create stable operating
environments for investment. In addition to this
positive investment climate, an industrial transition
is anticipated to continue to gather pace as
International Oil Companies (‘IOCs’), that have
been active in offshore and onshore Africa for
decades, follow a trend established in other mature
hydrocarbon basins, like the North Sea in the 1990s,
by exiting non-core assets as they seek more
significant reserves in new projects.
This presents an opportunity for independents
like Afentra as a credible counterparty for IOCs
to divest the assets and to deliver value creation
for all stakeholders, supporting the responsible
management of assets, optimising production while
reducing environmental impacts and supporting a
responsible Energy Transition.
Strategic Report3OverviewCorporate GovernanceGroup Accounts 2023 Summary
Strategic
• Afentra completed the acquisitions from INA (May 2023)
• Publication of the Admission Document on 18 September
2023 lifted the suspension of shares in Afentra only 9 weeks
after the announcement of the transactions. Shareholder
approval was received on 5 October 2023.
• Key stakeholder engagement across Governmental,
Regulatory authorities and industry counterparties
underscores Afentra’s confidence in Angola as an attractive
operating and investment jurisdiction.
• Efforts to efficiently screen and evaluate compelling M&A
opportunities in line with the Company strategy continued.
• The Board was further strengthened through the
appointment of Thierry Tanoh as an Independent Non-
Executive Director and Chairman of the Audit Committee.
and Sonangol (December 2023) of non-operated interests
in Block 3/05 and Block 3/05A located offshore Angola in
the Lower Congo Basin, resulting in the Company at year end
holding 18% and 5.33% respectively in these two licences.
• Afentra announced on 19 July 2023 it had signed a Sale and
Purchase Agreement (‘SPA’) with Azule to acquire a further
12% non-operated interest of Block 3/05 and 16% non-
operated interest of Block 3/05A.
• An Executive Decree was published on 17 May 2023
formally approving the extension of the term of the Block
3/05 PSA to 31 December 2040.
• A subsequent Executive Decree was published on 4
October 2023 formally approving the revised fiscal terms,
which have been independently assessed to enhance the
economics on Block 3/05 and will apply to the Block 3/05
PSA for the remainder of its term.
•
In accordance with Rule 14 of the AIM Rules, the Company’s
ordinary shares were suspended from trading on AIM from 19
July 2023 as the Azule acquisition and amended Sonangol
acquisition constituted a reverse takeover (‘RTO’).
4Afentra plc Annual Report and Financial Statements 2023 Financial
• Cash resources at year end 2023 of $19.6 million (2022:
• Asset level cashflow generation related to 30% equity in
$30.6 million), which includes restricted funds of $4.9 million
(2022: $10.2 million).
Block 3/05 in 2023 was $67.4 million at an average weighted
sales price of $90/bbl.
• Reserve Based Lending Facility at year end of $31.7 million
• Mauritius Commercial Bank became a lender to the
resulting in year end net debt of $12.3 million.
• The Company sold its first cargo of 300,000 bbls of
crude oil in August 2023, comprising crude oil stock and
subsequent production from the INA Acquisition. The sales
price inclusive of the Brent premium was $88/bbl, generating
pre-tax sales of $26.4 million net to Afentra.
• Crude oil stock as at year end 2023 of approximately
300,000 bbls1.
Company by entering both the reserve base lending (‘RBL’)
and working capital facilities. Trafigura retains an interest in
the RBL facility and will continue as an offtake provider.
• The Group remains fully carried for Odewayne operations in
Somaliland (Third and the Fourth Periods of the PSA).
Cash resources at 31 December 2023
Pre-tax sales at 31 December 2023
$19.6 million
(2022: $30.6 million)
$26.4 million
(2022: Nil)
1 Crude oil entitlement
Strategic Report5OverviewCorporate GovernanceGroup Accounts 2023 Summary
Operations
• Average 2023 gross production on Block 3/05 and Block
3/05A was 20,180 bopd representing an 8% increase from
2022 gross production rates of 18,700 bopd.
• On Block 3/05, two successful light well intervention (‘LWI’)
campaigns were carried out in 2023, involving 30 wells. This
involved successfully re-entering wells to carry out matrix and
tubing washes, perform water shut offs and re-perforations.
These well interventions resulted in incremental production
increases, leading to an average monthly gross production
exceeding 23,000 bopd in December (December 2023 net
production exceeded 6,5001 bopd ) and have demonstrated
the benefits of low-cost well interventions.
•
Investment in upgrades to the water injection system have
doubled injection rates since 2022 on Block 3/05, with
December rates reaching ~42,000 barrels water injection
per day (‘bwipd’) and further significant improvements are
expected in 2024. The improved water injection is expected
to positively impact oil production in the medium term as the
reservoir pressure increases.
• Production was restored at the Gazela field on Block 3/05A
in March and averaged 1,300 bopd, gross, through 2023.
• Progressed future investment options to unlock the
significant resource base which include the installation of
electric submersible pumps (‘ESPs’), heavy workovers, infill
drilling and development of Block 3/05A discoveries.
• Drone surveys to identify fugitive emissions and assist in
quantifying flaring were carried out in November 2023 over
the Block 3/05 infrastructure. This forms part of a holistic
gas management program to identify, measure and reduce
GHG emissions.
• A full competent persons report (’CPR’) was completed as part
of the re-admission of the enlarged group to trading on AIM
with an effective date of 30 June 2023 and published in the
Company’s admission document. Based on this report, reserves
replacement in the first half of 2023 has been in excess of 150%.
1 Net average December combined production exit rate from Block 3/05 and 3/05A post completion of the Azule Acquisition.
6Afentra plc Annual Report and Financial Statements 2023 Post year end
• Afentra submitted bids, as a non-operating partner, for
•
Blocks KON15 (1,000 km2) and KON19 (900 km2) located in
the Kwanza onshore Basin and has since been informed that
it has been selected as the preferred bidder for 45% equity
in both Blocks.
•
•
•
•
•
In February 2024, the Company sold its first 2024 cargo of
450,000 bbls of crude oil. The sales price inclusive of the
Brent premium was $85/bbl, generating pre-tax sales of
$38.2 million to Afentra.
In March 2024, Afentra with its partners agreed and initialed
the PSA for the onshore Block KON19 with Agência Nacional
de Petróleo, Gás e Biocombustíveis (‘ANPG’) and now await
the formal Government approval.
In March 2024, Afentra announced that it had received
approval from the Angolan Competition Authority for the
acquisition from Azule of a 12% non-operating interest
in Block 3/05 and a 16% non-operating interest in Block
3/05A, offshore Angola.
In April 2024, Afentra announced that it had received approval
from the Angolan Government for the Azule Acquisition.
In April 2024, Afentra announced that the Government of
Angola had declared the Punja Development Area in Block
3/05A a marginal discovery with improved fiscal terms now
applicable for the remainder of its term.
In May 2024, Afentra announced the completion of the
Azule acquisition resulting in Afentra holding non-operated
interests of 30% in Block 3/05 and 21.33% in Block 3/05A,
including the following completion settlement figures:
• Net completion payment of $28.4 million, with Afentra
inheriting crude oil stock of c.480,000 bbls.
• Net completion payment to be funded by $4.9 million
held in escrow, $17.0 million from the agreed RBL and
$6.5 million from cash resources.
• Further contingent payments payable to Azule include
up to $14.0 million over two years for Block 3/05
(subject to oil price thresholds) and up to $15.0 million
(for future developments, subject to oil price thresholds
and production hurdles in Block 3/05A).
• Following the Azule acquisition, the total RBL drawn
is $47.3 million, the total working capital facility drawn
is $13.7 million, and the cash balance is $14.8 million,
resulting in a net debt of approximately $46.2 million.
• After completing the Azule acquisition, the company
holds a stock of c. 840,000 bbls1, that can be valued at
$63.0 million (based on $75 per barrel) on a pre-tax basis.
• The company expects to sell its next cargo of crude oil
(around 450,000 bbls) in June 2024.
• Mauritius Commercial Bank continues as the lender to
the company. Trafigura retains an interest in the RBL
facility and will continue as offtake provider.
Stock held following completion of the Azule acquisition
Pre-tax sales year to date
c.840,000 bbls1
1 Crude oil stock entitlement
$38.2 million
Strategic Report7OverviewCorporate GovernanceGroup Accounts Purpose
Effecting sustainable change
Our purpose remains to support the African
Energy Transition as a responsible, well
managed independent, enabling the continued
economic and social development of African
economies and bridging the gap to other/
renewable forms of energy.
Our enabling role in this connected energy ecosystem is to access, redevelop and unleash the full potential
of existing producing fields or undeveloped discoveries that no longer fit the portfolios of major companies.
We will do this in a safe, responsible and sustainable manner. By investing in the region, empowering our
people and working with our partners, we can positively impact local economies and deliver significant
economic returns to all stakeholders.
Mission
Our mission is to be the trusted partner of both IOCs and host governments in the divestment of legacy
assets. By managing these assets responsibly, we turn these fields or discoveries into profitable assets
by applying focus, innovation, efficient operating practices and smart commercial arrangements. We use
our approach to unleash the full asset potential whilst also reducing carbon emissions, promoting growth
through employment and facilitating socio-economic development.
Defining legacy assets
Producing fields or undeveloped discoveries that:
• May no longer fit with a company’s strategy in Africa
• May need investment, regeneration or upgrading
• May be sub-economic for larger companies
8Afentra plc Annual Report and Financial Statements 2023 Our cultural framework
Afentra’s cultural framework outlines our core principles, philosophies and values that guide our behaviours
and enables us to drive our business forward and deliver on our purpose.
Principles
Values
Approach
Impact
These define our core beliefs
that connect and resonate
strongly with the personal
values of the Afentra team and
those that work alongside us:
These build on our principles
and define how we all behave.
They describe qualities we
always strive for and consider
as the right way to do things:
This defines our core
operating philosophy and
business approach and is
heavily influenced by our
principles and values:
Afentra’s positive impact will
be driven by these principles,
values and approach:
Be respectful
Be transparent
Be inclusive
Be authentic
Inspire
Bring passion and energy
to engage and inspire those
around us.
Collaborate
Openly share knowledge
between teams and
individuals.
Enquire
Think creatively and
constructively challenge
the status quo.
Innovate
Be courageous, ambitious,
navigate risk, try, learn and
improve.
Think long-term
Work towards the long-term
sustainability of the business.
One team
Dynamic, committed
and responsible.
Positive difference
Changing things for the better,
leaving a positive legacy.
Enduring value
Delivering enduring value for
all investors and stakeholders.
Create solutions
Encourage innovation and
seek out opportunity.
Leverage learning
Diverse and inclusive
approach that values each
others ability and expertise.
Focused and nimble
Stay agile, lean and
non-hierachical.
Our framework provides a strong foundation that supports our vision, guides our behaviours and influences
the impact we make on the world around us.
Strategic Report9OverviewCorporate GovernanceGroup Accounts
Afentra’s Approach
Supporting the exit strategies of
IOCs/NOCs, ensuring responsible
transition for host governments
Afentra’s objective is to turn legacy producing fields and discovered resources
into profitable assets for Afentra and all of our stakeholders.
We target high quality assets that have
stability of earnings and implement
best in class fit-for-purpose margin
enhancing operating techniques.
With the ESG agenda embedded
in our mindset, we have a business
model tailored to generate significant
long-term value for all stakeholders.
With significant technical expertise,
we serve as a strong credible partner
whether through operated or
non-operated interests.
Committed to shareholder returns
within a responsible ESG framework.
Credible counterparty with access to capital
and proven operator experience.
Track record of responsible approach and
partnership with host countries.
Ability to add value through transfer of expertise to build
collaborative partnerships with local industry stakeholders.
Supporting the economic and environmental
objectives of our host governments.
10Afentra plc Annual Report and Financial Statements 2023 Once established in core target markets, Afentra seeks to leverage its deep
technical expertise to support local industry through collaborative partnership
to optimise operations and reduce emissions.
International Oil Companies
• Safe, efficient and smooth transfer
of assets
• Trusted counterparty with financial
and operating capacity
• Experienced partner acceptable to
host governments
Stakeholder objectives
Host Governments/National
Oil Companies
• Commitment to positive socio-
economic and environmental
outcomes
• Responsible stewardship and
investment in assets
• Continued benefit of O&G
revenues to support longer-term
sustainable transition
Asset
e
u
a
v
l
Quality production assets and
discovered resources with
potential to realise upside and
deliver material cashflow.
Strategic Report11OverviewCorporate GovernanceGroup Accounts Chairman’s Statement
An operationally focused business
Jeffrey MacDonald, Chairman
Dear Shareholders
I am pleased to report on another year of significant strategic progress for Afentra as it completed its inaugural
acquisitions in Angola. The completion of the INA and Sonangol transactions during 2023, and then post period
the completion of the Azule transaction, represented strategic milestones for Afentra given the commercial
impact and symbolism of the Company becoming an oil and gas producer for the first time.
Having signed the initial SPAs with Sonangol and INA in April and July 2022 respectively, it was a patient wait
to complete these complex transactions. The complexity of the deals was increased by an amendment to
the Sonangol transaction and the transformative Azule deal announced in July last year. With all three deals
completed this increases Afentra’s exposure to these high-quality assets in both Block 3/05 and Block 3/05A.
Since inception in 2021, Afentra has quickly established itself as
an ambitious African focused independent with a strong profile
and a reputation as a credible counterparty for divesting NOCs
and IOCs. This is of course a cornerstone of our strategy as we
seek to deliver Afentra’s ambition of building a material business
underpinned by a significant reserve base and a material
production profile into the future.
We are pleased with our progress towards those longer-term
ambitions as, through these initial transactions, we have built
a foundation underpinned by a solid portfolio of assets and a
strong cash flow profile from which we can take the Company
to the next level. We have obtained a foothold within Angola,
a country which is a core market with a very significant oil &
gas industry and a supportive fiscal and political backdrop.
We have already witnessed first-hand the ambitions of the
Angolan Government to encourage investment into the
upstream industry through their pragmatic and collaborative
approach to the enhanced fiscal terms and licence extension
of Block 3/05.
12Afentra plc Annual Report and Financial Statements 2023 “The ability of our team to leverage its strong technical expertise to identify
hidden value is another critical aspect of Afentra’s strategy.”
More recently following our initial entry into Angola, we have
been exposed to further compelling and complementary
opportunities such as the onshore licences on which we
have been selected as a preferred bidder post year end. We
believe Afentra will continue to grow its profile as an important
independent producer and partner within the Angolan industry
for years to come as we seek to leverage our early mover
advantage in this opportunity rich market.
In Sonangol, the Angolan national oil company and Operator
of Block 3/05 and 3/05A, we have aligned ourselves with a
capable Operator, and we have a shared vision of the upside
that can be realised from this asset base through a focused
technical approach. Though these initial transactions are non-
operated interests, Afentra has already been able to bring value
and technical insights to the partnership as we seek to optimise
production and enhance the environmental profile of Block
3/05 and 3/05A over time. We are already engaged on several
initiatives and insights developed by our technical team as we
awaited completion of the transactions.
Adding Stakeholder value
Afentra’s strategy remains unchanged from the time of our
inception, and we continue to see significant opportunity for
the Company to acquire high-quality mid-later life assets that
result from a nascent and accelerating industry transition. With
commodity prices trading in a healthy and relatively stable
bracket with an average price of Brent at $83/bbl through 2023,
we believe the market backdrop is favourable for the delivery
of our growth strategy, with pricing being at a level where both
counterparties in a transaction can achieve their value objectives.
Afentra’s approach to value creation is unwavering and can
clearly be demonstrated by the commercial attractiveness of
the three deals that we have done to date. This focus on value
driven growth is an essential aspect of our strategy and is the
lens through which we assess all business development.
The ability of our team to leverage its strong technical
expertise to identify hidden value is another critical aspect
of Afentra’s strategy.
Strategic Report13OverviewCorporate GovernanceGroup Accounts Chairman’s Statement
continued
The assets that we are targeting are typified by upside that
can be realised through a technical approach. Block 3/05
is a case in point, being a high-quality asset that has been
in production for many years, yet still has material proven
reserves and resources that can be exploited for many years
to come – as reflected by the licence extension to 2040
announced in May 2023. The implementation of initiatives
to optimise production and extend the productive life of
the asset is already yielding clear results and validates the
technical due diligence undertaken before acquiring our
interest in the asset through three separate transactions.
Our ambition to enhance the environmental performance of
any asset in which we have an interest is also a key element to
our strategy given our purpose to deliver sustainable change. As
a mature oil asset, Block 3/05 provides scope for us to have a
positive impact on the emissions profile. One of the core areas
of our technical focus has been to conduct feasibility studies on
initiatives to reduce or eliminate gas flaring and we are currently
tabling these plans with our partners who are aligned on the
ambition to enhance the sustainability performance of the
assets over time.
A rapidly evolving business
We position sustainability at the very heart of our business
and place a great emphasis on each aspect of ESG. While
we recognise that the ESG pendulum has swung to a more
pragmatic place given the growing emphasis on global Energy
Security and the structural and economic challenges of an
accelerated Energy Transition, we do not intend to reduce
our emphasis on this issue. Afentra will continue to champion
the need for a Just Transition in Africa and we look forward
to playing our role in that theme through the positive socio-
economic impact of our activities across the continent.
As the business evolves and grows, so too do our internal
processes and Governance framework. Afentra is still a small
E&P company, however, we adopt the mentality of a significantly
larger organisation in many of the things that we do. The
appointment of Thierry Tanoh as an Independent Non-Executive
Director and Chairman of the Audit Committee during the period
was another demonstration of our intent to have high calibre
Directors given his previous roles as Minster for Energy in Cote
d’Ivoire and senior roles at IFC. This appointment also reflects
Afentra’s commitment to Governance as we ensure we maintain
the appropriate level of experience and independence on the
Board to act on behalf of our shareholders.
I believe that a key point of difference for Afentra versus
companies of a similar size is the quality and reputation of
our management team. It is through them that we are able to
identify and convert compelling opportunities and transact
with the biggest players in the industry. It is for this reason
that the Board recognises the requirement to ensure they
are appropriately incentivised to deliver the strategy and
value for the benefit of the Company’s shareholders. It is in
that context that we put in place the Founder Share Plan
(‘FSP’) with the support of shareholders at the 2022 AGM.
This plan was designed to fully align the Executive Team with
shareholders and reward them based on value creation. I am
14Afentra plc Annual Report and Financial Statements 2023 pleased to say that the value created to date for shareholders
has been significant and that the Executive Team, at the first
measurement date which occurred on the 16 March 2024, have
been rewarded under the FSP.
We are using our seat at the table of this high-quality asset base
to provide insights as we seek to positively influence the financial
and environmental performance of all these assets for the benefit
of all stakeholders.
Whilst the remaining upside available to the Executive Team
under this plan is limited the retention period of 50% of the
award ensures significant incentive for further value growth
through the remainder of the plan which ends on 16 March
2026. As you will read in the remuneration report we have also
put in place a new Long Term Incentive Plan which will continue
on from the FSP in 2027 as we seek to appropriately incentivise
the Executive Team to maintain their focus on long-term
value creation. Further, to reflect the collaborative effort of
the whole team and the active role they have played to date,
and the significant amounts of time they will dedicate to the
continued success of the Company, the remuneration report
also proposes market value options for the Non-Executive
Directors. The Board has considered the proposals put forth
in the remuneration report carefully and concludes that they
are appropriate to incentivise continued growth momentum on
behalf of all shareholders.
Long-term sustainable value
To conclude, this has been a truly transformative period that has
resulted from several years of focused commercial discipline to
identify and progress these inaugural deals in Angola. Following
completion of the INA and Sonangol deals, and post period, the
completion of the Azule Acquisition, the Company will have
transformed itself into a more operationally focused business.
The industry backdrop remains favourable for the delivery of
our growth ambitions and we now have a strong foundation
from which we believe we can achieve our greater objectives.
All that remains is for me to thank our Executive Team for
their diligent efforts through the period which has transformed
the business outlook. We would also like to thank the relevant
authorities and partners in Angola for their engagement as
they have welcomed Afentra into the country and assets. And
finally, I would like to thank our shareholders for their patience
and support through the challenging regulatory processes
associated with these transactions. Your company is now
extremely well positioned to deliver long-term sustainable value
while achieving the wider stakeholder benefits that define our
company’s purpose.
Jeffrey MacDonald
Chairman
30 May 2024
Strategic Report15OverviewCorporate GovernanceGroup Accounts Strategic Report
Year ended 31 December 2023
16TitleSub TitleAfentra plc Annual Report and Financial Statements 2023 17Strategic ReportOverviewCorporate GovernanceGroup Accounts Market Review
Introduction
Since Afentra’s inception, we have observed a material
shift in the discourse surrounding a Just Energy
Transition, to include the consideration of socio-
economic issues along with environmental ones.
This was demonstrated most recently at COP28
(Dubai), late 2023, with the importance of a Just
Transition more centrally placed in the discussions
and outcomes. The final consensus agreement
provided tangible support for African countries to
design and implement their own Just Transition
strategies, allowing them to set their own priorities
when implementing an Energy Transition strategy that
benefits their specific development needs.
While achieving a Just Transition is a concern and
challenge for all governments, it is of particular
importance for developing African countries that
rely heavily upon oil and gas revenues to support
their budgets and social-economic development.
With global oil and gas demand forecast to remain
robust for the foreseeable future, Africa should
be able to continue to utilise and benefit from the
revenues derived from its natural resources, while
developed countries continue to roll out low carbon
energy solutions.
Afentra, as a responsible independent with significant
industry experience, aims to support the optimal and
responsible utilisation of Africa’s natural resources,
while working hard to implement strategies to reduce
the emissions from field infrastructure.
18Afentra plc Annual Report and Financial Statements 2023 “While achieving a Just Transition is a concern and challenge for all governments, it
is of particular importance for developing African countries that rely heavily upon oil
and gas revenues to support their budgets and social-economic development.”
19Strategic ReportOverviewCorporate GovernanceGroup Accounts Market Review
An attractive and stable investment
environment in Angola
Global Markets
Through 2023, the average price for Brent crude stood at
$83/bbl (2022: $101/bbl), with a number of geopolitical and
economic factors affecting the price throughout the year. The
upward price pressure that came from geopolitical tensions in
Ukraine and the Middle East were countered by robust US shale
oil production (averaging a record ~13.3 million barrels in 2023),
coupled with economic weakness in China and the continued
impacts of inflation in almost all economies. In addition, OPEC
continued production cuts that were initiated in late 2022 in
an effort to support prices, which ultimately resulted in Angola
voluntarily suspending its membership of the group, citing the
restrictive quota limits hindering its plans to boost production.
Demand for oil and gas has remained robust given its critical
role in the global energy mix and its ubiquitous use in a wide
range of industries and end-products. It is expected that
despite the contribution from renewables continuing to
increase there will continue to be a significant demand for
hydrocarbons with Wood Mackenzie predicting oil demand
to increase from current levels of c.103 million bopd to
c.108 million bbl/d by 2030. This continued demand for
hydrocarbons contrasts with decades of underinvestment in
the oil and gas industry which is likely to result in a significant
supply gap of c.22 million bopd in the coming years.
This robust demand signal is being met by a resurgence of
investment in the Atlantic margins of South America and
West Africa, with a move by IOCs to explore and develop
new deep and ultra-deep-water resources. This is part of an
industry transition that has been developing over the past
couple of years and is expected to gather pace increasing
the opportunity for independents like Afentra to be a credible
counterparty to acquire divested interests in non-core fields
as IOC’s continue to rationalise their oil & gas portfolios.
Africa
Africa’s importance in the global energy and natural resource
landscape cannot be overlooked as it holds a significant
proportion of the world’s critical mineral resources.
Harnessing these resources for sustainable development
requires concerted efforts to overcome numerous obstacles
such as aged and inadequate infrastructure and a legacy of
limited investment. For many African nations, reliant upon oil
and gas revenues while also facing challenges such as energy
poverty, achieving a Just Energy Transition means ensuring
a responsible use of their natural resources to generate
revenues to fund their socioeconomic development.
“Strategic partnerships between
governments, international
organisations, and the private sector
are crucial for unlocking the continent’s
vast energy potential and accelerating
the transition towards a sustainable
future in a fair and responsible manner.”
As observed by the IEA Africa Energy Outlook 2022: “nearly
600 million people, or 43% of the total population, have
no access to electricity”, Solving this imbalance, or energy
poverty, requires a fair and orderly Energy Transition. To
address this challenge, it is crucial that Africa be allowed
to continue to benefit from oil and gas as a source of much
needed revenues for its immediate Energy Security, while
developed richer countries should lead the way in diversifying
their energy mix toward low carbon solutions.
Strategic partnerships between governments, international
organisations, and the private sector are crucial for unlocking
20Afentra plc Annual Report and Financial Statements 2023 the continent’s vast energy potential and accelerating the
transition towards a sustainable future in a fair and responsible
manner. Afentra is positioned to support Africa through its own
Energy Transition, by leveraging our deep technical expertise in
operating fields in the most efficient way, reducing emissions to
a minimum and maximising value for all stakeholders.
Angola
In 2023, Angola recorded an average production rate of 1.1
million bopd making it the second largest producer in sub-
Saharan Africa after Nigeria. Oil and gas remains a major
contributor to the Angolan economy, accounting for circa
30% of GDP, meaning that the industry continues to be an
integral part of the Angolan economy. Looking ahead ANPG,
Angola’s state-owned Regulator, forecast growth in the
Angolan oil and gas industry estimating that up to $71 billion
will be invested over the next five years. Continuing a trend
that has seen $50 billion invested since 2019.
Angola average production rate 2023
1.1 million bopd
Angolan oil and gas investments over next five years
$71 billion
Notably in December 2023, Angola withdrew from the OPEC
group of countries, releasing it from the obligation of quotas
which were expected to have restricted production to levels
below the country’s actual capacity and growth potential.
The country’s departure, having been a member for 16
years, marked a significant strategic shift for Angola and a
statement of its ambition to raise oil and gas production to
drive GDP for the benefit of its citizens. Over the past couple
of years, the country has taken proactive steps through
reforms and supportive measures to provide an attractive
and stable investment environment, while also taking steps to
lower emissions from production activities.
This proactive approach was demonstrated by the extension
of the Block 3/05 licence term to 31 December 2040 with
improved fiscal terms that enhanced the economics of the Block
significantly and post year end the improved fiscal terms for
the Punja Development Area. These pragmatic and supportive
steps have translated into reduced investment risk which has
resulted in a deepening commitment by IOCs and independents.
For Afentra, the proactive approach in Angola strengthens our
confidence that we have entered a supportive market with a firm
understanding of the need for a stable fiscal environment, and
a recognition of the important role that companies like ours can
play in delivering a responsible Energy Transition.
In line with our ongoing commitment to be a supportive and
collaborative partner to the oil and gas sector in Angola,
Afentra submitted applications for two onshore blocks
(KON15 and KON19) in the recent onshore bid round.
Onshore activity in the Kwanza basin where the Blocks are
located declined and ceased during the instability caused
by the Angolan civil war but is now being revisited due to
the significant untapped resource potential. Afentra has
since been chosen as a non-operated preferred bidder to
join the national oil company Sonangol in Block KON15, and
local independent ACREP in Block KON19. This presents
an opportunity for the Company to play a meaningful role
in the development of Angola’s onshore resource potential
and to help enhance the capabilities within the local industry
ecosystem, for the benefit of the country and its people.
21Strategic ReportOverviewCorporate GovernanceGroup Accounts Chief Executive’s Statement
Value driven growth
Paul McDade, Chief Executive Officer
Dear Shareholders,
I am delighted to provide the following statement that corresponds to what has been a transformative period
for the Company as it completed its first two transactions, formalising its entry into Angola and the partnership
on the high-quality Block 3/05, and post period completed a deal with Azule that provides further exposure to
Block 3/05 as well as a meaningful interest in Block 3/05A.
This past year, Afentra has evolved into a Company with an
operational focus underpinned by robust production, proven
reserves, strong operating free cash flow and a solid foothold
in an established country that provides scope for more growth
opportunities in Angola and beyond.
Afentra ends the year as a Company with December net
production in excess of 6,500 bopd1, 2P net reserves of
32 mmbbls2 and a strong growth platform from which to achieve
its longer-term growth ambitions. It was also a year in which we
were able to demonstrate the commercial attractiveness of the
transactions that we have delivered with the final completion
statements for INA and Sonangol deals showing the strong cash
generation of these interests from the respective effective dates.
Strategic progress
While these initial deals have been transformative for the
Company, they also represent initial stepping stones to our
longer-term growth ambitions as we seek to build a multi-
jurisdictional business of scale in our target markets in Africa.
The market drivers for Afentra’s purpose continue to intensify
as global nations seek energy security and the African
continent continues to echo its right for a Just Transition that
balances the socio-economic impact of Energy Transition
alongside the environmental focus that underpins the Global
Energy Transition. While the pace of the industry transition we
envisaged is a little slower than anticipated due to sustained
high commodity prices and lack of credible counterparties like
Afentra, that transition is occurring and will only accelerate over
the coming years.
The establishment of Afentra as a proven and credible
counterparty with the technical and commercial acumen to
transact with IOCs/NOCs and bring value adding industry
expertise to any partnership is a message that we have
successfully promoted through the industry since inception.
Our brand and profile is now well established in our target
markets which we believe will ensure we get sight of many growth
opportunities to consider alongside the opportunities that we are
identifying and progressing through direct engagement.
1 Net average December combined production exit rate from Block 3/05 and 3/05A post completion of the Azule Acquisition.
2 Net 2P Reserves post completion of the Azule Acquisition based CPR by ERCe effective 30 June 2023 with subtraction of 2H net production of 1.1 mmbbls.
Block 3/05A Reserve base is not included.
22Afentra plc Annual Report and Financial Statements 2023 “By entering Angola’s industry, Afentra has made a pledge to play a long-term
role in delivering its duties for the benefit of the country and its people.”
The strategic priority for Afentra is always value over growth.
The Company wants to establish scale, however, it will do so in a
strategic and responsible way, by delivering value accretive and
strategically complementary deals that demonstrate commercial
discipline and support our long-term growth objectives. In this
regard, we take a very prudent approach to growing the business
in terms of only progressing opportunities that we feel tick all the
boxes of our strict criteria assessment, and ensuring these can
be delivered in a way that maintains a strong balance sheet and
delivers long-term value to our shareholders.
All the transactions delivered to date have been crafted with this
disciplined focus in mind and the value aspect is always critical.
Certainly, the initial deals we have delivered have been complex
and required a great deal of discipline and flexibility to get them
over the line. This is best reflected in the Azule deal which
resulted in an amendment to the previously announced Sonangol
deal to ensure the appropriate balance of interests on the assets
going forward. While this resulted in longer completion times than
we might have hoped for and a second suspension to trading on
AIM given it was classified as a Reverse Takeover transaction,
more importantly it enabled us to structure deals in a competitive
manner that ensured strong partner alignment which is a critical
aspect for the successful delivery of the forward strategy for the
benefit of all stakeholders.
It is pleasing to see our unwavering focus on value creation
reflected in the market valuation of the business through the
course of the year, especially in the context that this initial
growth has been delivered without the issuance of new equity
and all while retaining a solid balance sheet with liquidity and a
strong cash flow profile.
We hope to maintain this growth trajectory as we demonstrate
to investors the strength of that free cash flow relative to our
market capitalisation and the considerable upside that we hope
to realise from this high-quality portfolio alongside our partners.
23Strategic ReportOverviewCorporate GovernanceGroup Accounts Chief Executive’s Statement
continued
Angola and beyond
Through Afentra’s initial transactions, the Group is now
established in a mature market with a plethora of growth
opportunities. Indeed, since our entry into Angola, we have
discovered that there are more compelling opportunities
across the full spectrum of the industry, from mature offshore
producing fields to the relatively untapped low-cost onshore
exploration concessions.
Since our entry we have also witnessed first-hand a well-
functioning operating jurisdiction overseen by a Government
that is responding to the market factors of today to deliver the
long-term socio-economic and environmental requirements for
the benefits of the country and its citizens.
The enhancement of the fiscal terms and associated
licence extension of Block 3/05 demonstrate the pragmatic
approach of the relevant authorities in Angola recognising the
collaborative approach required between Governments and
industry to encourage long-term investment into the industry for
the benefit of all stakeholders.
Afentra places a lot of value on the strength of partnership
alignment and collaboration and recognises that it is crucial
for the progression of any project or industry. Certainly,
over the course of many meetings with the Ministry and
Regulators in Angola, we have gained a firm grasp of their
objectives, requirements and vision for their industry, and
we in turn have outlined the ways in which we can help them
achieve those outcomes and the role that we see Afentra
playing in Angola.
By entering Angola’s industry, Afentra has made a pledge to
play a long-term role in delivering its duties for the benefit of the
country and its people. We have demonstrated our suitability
as a partner by aligning ourselves with the full spectrum of the
industry from Sonangol, the National Oil Company, through to
smaller local companies. The opportunity set for Afentra to
acquire operated and non-operated interests in quality assets
in various stages of the development cycle provide a significant
runway for Afentra to build a meaningful business in country and
play an important role in delivering the industry transition that
continues to be in the early stages.
It was in that regard that Afentra participated in the Angolan
Onshore Bid Round, submitting bids for Blocks KON15 and
KON19, located in the Kwanza onshore Basin, as a non-
operating partner. We were subsequently selected in early
2024 as preferred bidder alongside ACREP, a local Operator
with the requisite capabilities to make a suitable partner for
Afentra in KON19 and with Sonangol in KON15. While this kind
of earlier-stage onshore licence is not the typical opportunity
that forms our strategic focus, the sub-surface opportunity
is highly compelling, with Blocks lying adjacent to both legacy
oil fields that are currently being appraised for potential
re-development and existing infrastructure allowing rapid
commercialisation. Furthermore, Afentra’s participation in this
process alongside local players continues to demonstrate its
commitment to the Angolan industry and this commitment
has been rewarded by being selected as preferred bidder for
our preferred blocks and we are currently engaged with the
Regulators to negotiate the licence terms.
Following completion of the INA and Sonangol transactions in
2023, Afentra now has a seat at the partner table and is actively
providing its technical insights. This approach is a critical aspect
to Afentra’s growth strategy, especially when taking on non-
operated positions, and ensures the Company can leverage its
considerable technical and operational expertise to help the
assets realise their full potential for the benefit of all partners and
wider stakeholders.
Beyond Angola, Afentra continues to explore growth
opportunities in target countries where we see market
fundamentals that mirror our strategic objectives. Our entry
into Angola through various deals has enabled us to assemble
a diverse portfolio of production and development assets.
The rapid build-up of a phased portfolio of activities is a good
template that we would look to replicate with any new country
entries in the future underpinned by our core strategic criteria in
terms of value accretion, materiality and stakeholder alignment.
24Afentra plc Annual Report and Financial Statements 2023 Operations summary
The performance of Blocks 3/05 and 3/05A through the year
validates Afentra’s technical assessment of the upside potential
in these assets and gives great confidence in the ability of the
partnership to realise that value over time.
>23,000 bopd
Block 3/05 gross production in December 2023
As detailed in the Operational Review, the intervention
programme is resulting in production optimisation and showing
the effectiveness of the work programme that was rolled out last
year, with 30 successful light well interventions completed in
2023, and a similar number of interventions planned for this fiscal
year. With gross production of over 23,000 bopd in December,
and a spot day rate in excess of 25,000 bopd, the Block 3/05
asset is clearly responding well to the production optimisation
initiatives and we look forward to a continuation of that program
through this year.
As previously alluded to, Afentra seeks to play a proactive role
in partnerships in which it holds non-operated positions and,
since entering into the various SPAs, it has undertaken various
feasibility studies to enhance the emissions profile of the field
infrastructure. The enhancement of the environmental profile
of all assets in which Afentra has exposure is a key strategic
driver for the Company and we look forward to progressing our
proposed initiatives along with our existing partners in Angola.
Outlook
The Company has had an active start to the current fiscal year
as we progressed the Azule transaction which completed in May
2024, received improved fiscal terms for the Punja Development
Area in Block 3/05A and were selected as preferred bidder for
the two onshore concessions. As we progress through the year
the focus will be to support the Block 3/05 and Block 3/05A
partnership with the delivery of the work program planned for the
year which we expect to deliver further production optimisation
and deliver value through reserve replacement.
As a result of the ongoing work programme, we expect to deliver
strong free cash flow from our portfolio which will demonstrate
the transformative and value accretive nature of the
transactions that we closed in the last 12 months. We also look
forward to supporting the Operator with our proposed initiatives
and solutions that enhance the environmental profile of Block
3/05 as we seek to deliver that important aspect of our purpose
and strategic intent.
In parallel, we continue to progress the business development
opportunities that fit with our strategic ambition to build a
multi-jurisdictional African focused E&P company that is well
positioned to capitalise on opportunities that result from an
accelerating industry transition across the continent.
In summary, 2023 was a highly active and value enhancing period
for Afentra that provides a strong growth platform from which
we feel confident that we can deliver sustainable value for our
shareholders while delivering benefits for our wider stakeholders.
I’d like to conclude by thanking the Afentra team who have
worked tirelessly on all fronts to deliver the Company’s evolution,
the shareholders for their support and patience through the
complex regulatory processes required to complete these
initial transactions, and our stakeholders in Angola with whom
we have developed strong mutual respect and an effective
working relationship that we hope to build on further as we
demonstrate our investment into their energy sector and long
term commitment to the country.
We look forward to updating the market as appropriate as we
seek to deliver another year of growth and positive impact.
Paul McDade
Chief Executive Officer
30 May 2024
25Strategic ReportOverviewCorporate GovernanceGroup Accounts Business Model
Committed to investor and broad
stakeholder value creation
Our business model is designed to mitigate geological, political and financial risks to enable Afentra to deliver
sustainable returns to its shareholders in the form of capital appreciation and dividends when appropriate.
1. Assess and acquire
Legacy production assets and proven discovered
resources with material upside.
Our focus
Opportunities that:
Are value accretive (whether operated or non-operated
interests)
Generate robust cash flow
Have embedded growth opportunities
Are strategically complementary
2. Optimise and produce
Applying proven and innovative technologies to safely
optimise production, reduce emissions and lower running
cost of operations.
Our focus
Emissions reduction
Optimisation of facilities
Generation of healthy returns on investment
Performance transparency
3. Reinvest and extend
Reinvest in incremental activities and near field
developments to extend production and field life.
4. Retire and convert
Responsible stewardship of asset retirement whilst
seeking low carbon conversion opportunities.
Our focus
Infield, field extensions and undeveloped resource
investment opportunities
Funding further value accretive acquisitions
Workforce and community development
Acceleration of the de-carbonisation initiatives
Our focus
Responsible stewardship
Restoration of the natural environment
Safe decommissioning
Afentra’s model is directly aligned to the creation of shared value for all stakeholders. Our proposition will
increasingly meet the specific targets of the United Nations Sustainable Development Goals as we progress
from acquisition and development through to operatorship and production.
26Afentra plc Annual Report and Financial Statements 2023 Non-operated considerations
• Strategic alignment on asset outlook and sustainability
agenda.
• Only aligning with operators with proven capabilities.
• Materiality of interest to ensure relevance and influence.
• Ability to influence through leveraging of technical
expertise.
• Partner credibility and ability of all partners to fund
exposure to the work programme.
• Commitment to long-term presence in target countries
through industry participation and alignment with local
partners and other stakeholders.
Afentra’s value-add to operating partners
• Strong operating capabilities within the Group.
• Deep technical expertise across production, A&D and
exploration activities.
• Unwavering focus on a progressive sustainability agenda.
• Tier-one governmental and industry network
across Africa.
• Ability to undertake technical work and propose
operating initiatives and techniques designed to optimise
production, reduce emissions and extend asset-life.
Partnering for success
Afentra views developing successful and collaborative
partnerships as being a critical aspect to the delivery of its growth
strategy. Alongside the business model defined on the opposite
page, the quality, reputation and capabilities of the partners are all
key criteria considered within the business development strategy.
The right composition and balance of interests, including both
strong technical and commercial capabilities ensures alignment
to achieve all stakeholders’ common objectives.
While Afentra’s long-term strategy is to acquire operated
interests and leverage its deep technical expertise to optimise
performance and maximise value, the initial deals that have seen
Afentra enter Angola are all non-operated positions. When taking
on non-operated interests, it is essential that Afentra aligns with a
credible operator and obtains a meaningful interest in the venture
to ensure the ability to have sufficient influence on decision
making. Furthermore, Afentra will always adopt a technical led
approach that seeks to add value to the operator and wider
partnership that is supported by its own technical work in order
to present initiatives that maximise asset value, that can deliver
the objectives of optimising production by increasing recovery
factors and improving environmental performance.
Afentra’s strategy also focuses on obtaining a meaningful foothold
in any market in which it is active. By ensuring relevance and
building a strong profile as a credible player with a commitment to
the wider objectives of the host government and local industry,
Afentra is able to position itself as a counterparty of choice. This
in turn results in exposure to a wider range of opportunities as the
host government, NOC, regulators and local players recognise the
significant value that Afentra brings to any partnership.
27Strategic ReportOverviewCorporate GovernanceGroup Accounts Asset Summary
Material non-operated interests in Block
3/05 and Block 3/05A offshore Angola,
provide Afentra with a significant platform
for future growth with investment
Ian Cloke, Chief Operating Officer
Material interests in high quality assets
2023 was a transformative year for Afentra with
the Company formalising its entry into Angola
with the acquisitions of material non-operated
interests in the offshore Blocks 3/05 and 3/05A
from INA and Sonangol. The Blocks, located in the
southern Congo Basin are high quality, shallow
water, production assets with stable and robust
cash flows with significant growth potential from
production optimisation and near-field development
prospects. The result of completing these two deals
meant Afentra’s interests in Blocks 3/05 and 3/05A
at year end stood at 18% and 5.33% respectively.
Post period end, having received approval from the
Angolan Government the Company completed
the Azule Acquisition increasing its non-operated
interests in Blocks 3/05 and 3/05A to 30% and
21.33% respectively.
28TitleSub TitleAfentra plc Annual Report and Financial Statements 2023 29Strategic ReportOverviewCorporate GovernanceGroup Accounts Aset Summary
continued
2023 Gross Production
Gross 2P Reserves
20,180 bopd
(2022: 18,700 bbl/d)
106 mmbbls
(Reserves replacement 150%)
Supporting and working collaboratively within the JVs
The Blocks are operated under PSAs by two joint ventures
(JVs) with a common Operator, the national oil & gas company
Sonangol. Since 2022 the Afentra team has developed a close
working relationship with Sonangol and the JV partnerships,
actively contributing to all workshops, technical meetings and
operational meetings as well as conducting offshore site visits
to the extensive infrastructure located on Block 3/05. Our aim
is to work collaboratively and proactively with the JV and other
industry stakeholders in Angola, leveraging our deep industry
expertise to optimise production operations, re-develop the
asset, explore new development opportunities and reduce
emissions from the fields.
Production optimisation and increased reserves in 1H 2023
We were pleased to report that in 2023 field production in Blocks
3/05 and 3/05A increased by around 8% to an average of
20,180 bopd with an exit rate in December 2023 exceeding
23,000 bopd and peak rates of in excess of 25,000 bopd,
ahead of the budget of 18,500 bopd. This uplift in production
was achieved through a combination of an increased operational
uptime of 87% in 2023, the successful delivery of 30 light well
interventions (‘LWIs’) and increased water injection volumes.
The result of these efforts was reflected in gross 2P reserves for
Block 3/05 increasing to 110 mmbbls1 and a reserve replacement
ratio of in excess of 150% in the first half of 2023. These
reserves are from existing producing fields so do not rely upon
the construction of new infrastructure which limits incremental
emissions. In addition, the base opex associated with the assets
was $23/bbl, providing headroom for further opex to upgrade
infrastructure to extend field life and increase production.
Continued momentum to maximise the value of
the assets in 2024
Based on the success of the 2023 LWI program coupled with
activities to deliver steady and increasing water injection rates,
further investment will be made in 2024 toward production
optimisation. This investment will be focused on an additional
1 Gross 2P Reserves based on 30 June 2023 CPR by ERCe.
LWI program of 30 wells and further upgrades to the water
injection systems. Additional production enhancement is also
possible by utilising artificial lift solutions such as electrical
submersible pumps (‘ESPs’) and Afentra is taking the lead on
technical studies and making proposals to the joint venture
regarding its application in selected wells. Going forward infill
drilling, development of appraised discoveries and near field
exploration provide the opportunity to significantly increase
production in the medium term.
Long-term field life extension and focus on reduced emissions
The extension of the Block 3/05 licence through to 2040
alongside improved fiscal terms has supported the JV’s
decision to make further investments in the infrastructure
in order to extend the field life of the assets. The bi-annual
shutdown, which will take place in the second half of 2024,
will provide an opportunity to undertake maintenance and
upgrades on the field power systems. This is an important
initial step to upgrade the existing infrastructure to deliver safe,
secure and reliable production for a further 20 years, resulting in
long-term value for all stakeholders.
In 2023, $56 million (gross) was invested in life extension
activities with a further $97 million (gross) to be invested in 2024.
Afentra is pleased to report that early progress has been made
during 2023 on emissions management with the installation
of new reliable power generation capabilities enabling the
substitution of diesel with gas which has resulted in reduced
emissions. A drone survey was undertaken in November 2023
covering all of the Block 3/05 offshore infrastructure with
the objective to identify fugitive emissions and to assist in
quantifying flaring to better define the emissions profile of the
asset. In addition, emissions metering systems will be installed
during the bi-annual shutdown to establish an accurate baseline
to inform emission reduction initiatives going forward. This
forms part of a holistic gas management program to identify,
measure and reduce greenhouse gas (‘GHG’) emissions.
30Afentra plc Annual Report and Financial Statements 2023 Material near field development opportunities in Block 3/05A
In Block 3/05A the extended production test on Gaz-101
that began in March 2023 is set to continue, enabling further
definition of the development concept for the Caco-Gazela
discovery. The deployment of a downhole gauge is being used
to monitor the pressures which can then be used to interpret
connected oil volumes and assist in selecting the appropriate
development concept for the Caco-Gazela fault blocks.
In addition, post period following a request by the Block
3/05A partnership the Government of Angola have declared
the Punja Development Area located in Block 3/05A as a
marginal discovery. As a result, the applicable fiscal incentives
will be applied to this discovery, significantly enhancing the
commercial value of this potential development.
The existing Block 3/05 infrastructure provides the opportunity
for production growth potential through lower emission near
field tie-back developments. The JV partnership continues to
review a number of these opportunities working toward value
generating appraisal and development proposals.
Onshore blocks with low-cost development potential
Afentra submitted bids, as a non-operating partner, for onshore
Blocks KON15 (1,000 km2) and KON19 (900 km2) as part of
the 2nd Kwanza Licensing Round launched in 2023 by ANPG.
In early 2024, Afentra was chosen by ANPG as a preferred
bidder for 45% interest in both Blocks and is now engaging
with the respective Operators of KON15: national oil company
subsidiary, Sonangol P&P; and KON19, Angolan independent,
ACREP, to discuss the engagement with the relevant
authorities to negotiate the licence terms.
These two Blocks which are located adjacent to legacy fields
that are currently being re-developed, offer an excellent
opportunity to secure acreage over prospects that have
follow on potential within the prospective post-salt and pre-
salt formation plays in this area. Using legacy datasets these
prospects and leads can be readily explored or appraised, which
should lead to short cycle development opportunities to bring
on production within short timeframes.
These licences will expand Afentra’s footprint in this attractive
Angolan market by diversifying our portfolio which is principally
focused on low cost, long-life stable production and low-risk
development assets.
Value driven growth
In conclusion, Afentra has made substantial progress in
2023, securing material non-operated interests in two high-
quality assets, and demonstrating its commitment to working
collaboratively within its JV partnerships and with other industry
stakeholders. On Blocks 3/05 and 3/05A the successful light
well intervention project coupled with the increased reliability
of water injection during 2023 has resulted in a realisation
of the potential upside of the assets and over 150% reserve
replacement in the 1H of 2023. In 2024 the operational
activities and planning for future work programs will build on this
early success and lay the foundations for continued production
growth for many years ahead.
31Strategic ReportOverviewCorporate GovernanceGroup Accounts Asset Summary
Block 3/05
Long life material assets with significant remaining potential
Blocks 3/05 and 3/05A are located in the Lower Congo
Basin and consists of nine producing fields (Palanca, Impala,
Impala SE, Bufalo, Pacassa, Cobo-Pambi, Oomba and Gazela)
which all produce from the prolific fractured Albian Pinda
carbonate reservoir. The Blocks also contain the appraised but
undeveloped discoveries, Punja, Caco and Bufalo Norte. Total
oil in place across the Blocks is in excess of 3.5 Billion Barrels,
of which 1.35 billion barrels have been produced to date. The
fields, which are located in shallow water (40-100m) and 37km
from shore, were discovered by Elf Petroleum (now part of
TotalEnergies) in the early 1980s. Development was by fixed
platforms, with first oil in 1985, and through the successful
implementation of waterflooding to enhance recovery.
The national oil company Sonangol assumed Operatorship in
2005 and has since focused on sustaining production through
workovers and maintaining asset integrity. The asset has a
diverse portfolio of over 150 wells and currently produces from
around 40 production wells and has 16 active water injectors.
The facilities include 14 well-head and support platforms, four
processing platforms, a logistics and living quarter barge and 3
subsea wells. Oil is exported via the Palanca floating storage &
offloading (‘FSO’) vessel.
Increased Production
In 2023 full-field production (including Block 3/05A) increased
by around 8% to an average of 20,180 bopd with an exit rate
in December 2023 of greater than 23,000 bopd with peak
Block 3/05 and 3/05A licence map
32Afentra plc Annual Report and Financial Statements 2023 “Progress was made in 2023 on
understanding the carbon footprint of
the assets and ways to mitigate and
reduce the emissions.”
rates of in excess of 25,000 bopd, due to the combination of
increased operational uptime, a successful LWI campaign, and
increased water injection volumes.
The LWI campaign carried out during 2023 involved
successfully re-entering 30 wells to carry out matrix and tubing
washes, and to perform water shut offs and re-perforations.
The LWIs resulted in an average gain of around 140 bopd per
intervention with an average payback of less than 6 weeks. This
quickly realised incremental production clearly demonstrated
the benefits and potential that can be achieved through low
cost well interventions on these fields.
In addition, the investment in water injection upgrades has
doubled injection rates since 2022 with December 2023 rates
reaching ~42,000 bwipd with further significant improvements
expected in 2024. Growth in the volumes of water injected is
expected to positively impact oil production in the medium
term as reservoir pressure increases.
The result of these efforts was reflected in our 2P Gross
reserves increasing to 110 mmbbls as of 30 June 2023 and a
reserve replacement ratio of in excess of 150% in the first half
of 2023. These reserves are from existing producing fields so
do not rely upon the construction of new infrastructure which
limits incremental emissions. The base opex associated with
the assets is attractive at $23/bbl in 2023.
Strategy to identify, measure and reduce emissions
Progress was made in 2023 on understanding the carbon
footprint of the assets and ways to mitigate and reduce the
emissions culminating in a drone survey over the Block 3/05
infrastructure to carry out a detailed methane detection and
measurement inspection. The results of the drone survey
will inform the JV’s efforts to enhance the environmental
performance of the assets over time. An accurate flaring
emissions baseline dataset will be compiled once new metering
is installed across all of the platforms later in 2024.
Non-operated Interests
Both Block 3/05 and 3/05A are operated under PSAs. In 2023
the Block 3/05 PSA was extended to 2040 with enhanced
fiscal terms. The Block 3/05A PSA expires in 2035 having
commenced in 2015 and could be extended if production is
still ongoing. Post period end the Punja Development Area in
Block 3/05A fiscal terms were enhanced following its approval
as a marginal discovery by the Angolan Government. Both
Block 3/05 and 3/05A are operated through JV partnerships,
the interests following completion of the Azule Acquisition in
May 2024 are:
Block 3/05
Company
Sonangol (Operator)
Afentra
M&P
ETU Energias
NIS Naftagas
Block 3/05A
Company
Sonangol (Operator)
M&P
Afentra
ETU Energias
NIS Naftagas
Interest
36%
30%
20%
10%
4%
Interest
33.33%
26.67%
21.33%
13.33%
5.33%
Block 3/05 Average Production 2023
19,210 bbl/d
(2022: 18,700 bbl/d)
33Strategic ReportOverviewCorporate GovernanceGroup Accounts Asset Summary
Block 3/05 Work Programme
The approval of the licence extension of Block 3/05 until
2040, including improved fiscal terms, has unlocked
investment in field life extension to realise the additional
potential in the assets. This consists of increasing water
injection capabilities and other infrastructure upgrades
to enhance operational reliability and uptime, as well as
optimising production through targeted well interventions,
usage of artificial lift solutions, infill drilling and the
development of appraised discoveries.
Water injection and infrastructure upgrades to extend field life
During the history of the fields water injection has been
successfully implemented as an enhanced oil recovery (EOR)
technique across 7 of the 8 fields. Water injection reached
a peak rate of approx. 366,000 bwipd in November 1999.
Water injection slowed and ceased entirely during the oil
price downturn of 2015/16 due to a lack of investment. Water
injection recommenced in 2021 (although only intermittently).
In 2023, Sonangol successfully delivered infrastructure
upgrades and improvements that resulted in increased
uptime across the water injection system. Water injection
rates more than doubled year on year (averaging ~33,000
bwipd in 2023). The JV is targeting a further year-on-year
doubling of injected water in 2024 and medium term to
achieve in excess of 150,000 bwipd. This improved water
34TitleSub TitleAfentra plc Annual Report and Financial Statements 2023 4,000 bopd
2023 Production Uplift
injection is expected to positively impact oil production in
the medium term as the reservoir pressure increases. Later
in 2024 there will be a field wide shut down to allow further
field life extension upgrades including the installation of
upgraded metering capabilities.
Growing the asset whilst focusing on reducing emissions
As discussed, in the Sustainability section of the annual
report, we believe there are a large number of potential
opportunities for reducing the relative emissions intensity
and have worked with the Operator and JV partnership to
prioritise these. In Q1 2023, gas was substituted for diesel
with the installation of new power generation capabilities.
In Q2 2023, Afentra organised and led a gas management
discussion with the Operator who are now developing
further the implementation of a holistic gas management
program. In Q4 2023, a drone survey was completed to carry
out methane detection and measurement across the field
infrastructure. New flare metering will be installed as part of
the planned shutdown in the second half of 2024, increasing
the accuracy of emissions measurements so as to establish
an accurate baseline to use going forward. This all contributes
to Angola’s vision of zero flaring by 2030. This is challenging
for a mature asset with aging infrastructure, but Afentra and
the JV are firmly committed to a holistic gas management
program that targets tangible reductions in emissions.
35Strategic ReportOverviewCorporate GovernanceGroup Accounts Asset Summary
Block 3/05 Work Programme
Oil Rate kbopd
Total oil rate
Quarterly oil average
Unplanned downtime
30
20
10
30
Activities
~4,000 bbl/d
Production gain
~$15m
Cost
30
Further LWIs in 2024
1/2/23
1/4/23
1/6/23
1/8/23
1/10/23
1/12/23
1/2/24
1/4/24
Light Well Interventions
In 2023, an initial phase of 30 Light Well Interventions
(‘LWI’) were successfully completed. A further phase of
30 interventions commenced in September 2023 and are
ongoing. To date this LWI program has delivered on average
an additional 140 bopd per intervention at an average cost
of $420,000 each, delivering incremental production and
gross daily production rates exceeding 21,000 bopd during
the second half of 2023. At current oil prices these LWIs pay
back in less than 6 weeks. Gross production for the first four
months of 2024 has averaged 23,000 bopd.
Further opportunities have been screened and will be ranked
into future programs to sustain the base production. These
future LWIs will also include gas lift change out of selected wells
to further optimise production.
Gross Reserves and Resources (mmbbl)
180
0
2C Resources
2P Reserves
-5
+4
-6
2P + 2C =
157 mmbbl
42
115
2P + 2C =
151 mmbbl
43
108
2P + 2C =
154 mmbbl
44
-3
+5
+0.1
110
31/3/22
Production
Performance
Uplift
Rephasing
Projects
31/12/22
Production
Performance
Uplift
Rephasing
Projects
30/6/23
Additional
resource
projects
36Afentra plc Annual Report and Financial Statements 2023 ERC Equipoise Ltd (‘ERCE’) conducted an updated CPR
effective 30 June 2023, with the results illustrated in the
waterfall chart. Reserves replacement was in excess of 150%
in the first half of 2023. 2C Gross Resources were 44 mmbbls.
Gross Production through 2H of 2023 was a further 3.75
mmbbls leading to a Gross 2P of 106 mmbbls at year end 2023.
Production performance through 2H 2023 has been excellent
and this data has not been incorporated into an updated CPR
but will be added in the 2024 reserves updates.
Growing the base production
In 2024, planning continues on the next phase of activities
targeting continued production growth. This will consist of an
initial phase of installing artificial lift in the form of ESP’s and
heavy workovers with an investment decision in 2H 2024.
A further phase of investment will consist of infill wells and
development of appraised discoveries.
Oil Rate kbbl/d (Gross)
45
30
15
0
Satellite discoveries
Infill drilling
Well optimisation
Core production
2022
2024
2026
2028
2030
2032
Artificial Lift project and Heavy Workovers
The aim of the installation of artificial lift with ESPs in the initial
phase is to return production from shut-in wells that are unable
to flow naturally. More than 30 opportunities were screened
and 10 have been selected as tier 1 and 2 candidates. These
projects are not currently in the reserve base.
Block 3/05 development area
Heavy workovers, such as gas lift change out, will enable
additional existing well stock performance improvements.
Sidetracks of existing wells will target bypassed oil pay. These
activities are expected to grow near term production and will
add incremental reserves.
New Wells
Longer cycle potential associated with infill drilling campaigns
and access to shallower oil pools in the Labe and Malembo
reservoirs are under consideration to further grow production
and reserves. Over 20 opportunities have been identified
across Block 3/05. These consist of infill wells in fields to target
undrained fault compartments, development of appraised
discoveries and near field wildcat wells.
Infrastructure Led Exploration (ILX)
The JV partnership have identified a significant opportunity
adjacent to the Pacassa field. A well is being planned
which when drilled, if successful, will be brought on stream
immediately through the existing infrastructure. The JV
partnership are re-processing existing legacy seismic data with
the aim of identifying further targets and a modern 3D Seismic
acquisition program may be considered.
37Strategic ReportOverviewCorporate GovernanceGroup Accounts Asset Summary
Block 3/05A
Block 3/05A, which is located adjacent to Block 3/05,
contains the un-developed Punja, Caco and Gazela
discoveries with an estimated in place resource of 300
mmbbls (STOIIP). The gross 2C resources estimated by
Afentra is 33 mmbbls.
The Gazela field has been produced since 2015 by one well,
with approximately 2.4 mmbbls recovered prior to a wellbore
shutdown in 2017. Production was restored at the Gazela field
in March 2023 with the Gaz-101 well averaging gross 970 bopd
through 2023. Average production for January to March 2024
has been ~1,300 bopd. This extended production test will help
to establish the long-term resource potential and appropriate
development strategy. Development concepts for the Caco-
Gazela and Punja discoveries are being progressed with a focus
on balancing near term production growth, and the phasing of
investment, alongside maximising value.
The existing Block 3/05 infrastructure and synergies with
the application of fit for purpose technology provides the
opportunity for production growth potential via tie backs.
Our multi-disciplined team is taking a holistic view of Blocks
3/05A and 3/05 together, working with the Operator and
JV partnerships to progress these opportunities towards
value generating appraisal and development targets. Full field
“Full field production of these discoveries
could result in an incremental production
of ~10,000 bopd.”
production of these discoveries could result in an incremental
production of ~10,000 bopd, which could be handled by
leveraging the existing infrastructure.
Given the high gas oil ratio (‘GOR’) of the Punja field
reservoirs, an integrated gas management plan across
both Blocks 3/05A and 3/05 is essential to optimise the
responsible development of these oil and gas resources.
In line with our stated environmental commitments,
all alternatives to flaring excess gas from additional
developments will be evaluated with the JV before
proceeding to sanction future projects. There are a number
of zero routine flaring options that will be evaluated, including
commercial export of excess gas via the Angola LNG (‘ALNG’)
network which is located in close proximity to existing
infrastructure, or gas re-injection into existing field reservoirs.
At Punja, subsea and dry-tree platforms are being screened
to establish the appropriate development concept. Both
of these options will require further review and a potential
upgrade of the existing compression infrastructure.
38TitleSub TitleAfentra plc Annual Report and Financial Statements 2023 Block 3/05A STOIIP
300 mmbo
(1% recovery to date)
Block 3/05A future developments
39Strategic ReportOverviewCorporate GovernanceGroup Accounts Asset Summary
Angola and Somaliland
In Angola, Afentra also holds a 40% non-operated interest in Block 23, a deepwater exploration licence with a proven hydrocarbon
potential and no outstanding work commitment. Afentra also holds onshore Angola non-operated interests in two Blocks KON15 (45%)
and KON19 (45%). Post period the KON19 PSA has been agreed and initialled by all parties and now awaits Presidential Decree.
In Somaliland, the Company currently retains a 34% non-operated interest that is fully carried on the onshore Odewayne
exploration Block that is operated by Genel Energy.
Angola, Onshore Blocks KON15 and KON19
As part of a Public Tender process launched by ANPG,
Afentra submitted bids for Blocks KON15 (1,000 km2) and
KON19 (900 km2) located in the Kwanza onshore Basin and
post year end was informed that it has been selected as the
preferred bidder for 45% equity in both Blocks.
The onshore Kwanza basin, covering 25,000 km2 is an under-
exploited, over-looked proven hydrocarbon basin that has
numerous oil fields and discoveries dating back to 1955. The
basin produced over 15,000 bopd in the 1960’s and 1970’s from
post-salt traps. Onshore activity declined and ceased during
the instability of the Angolan civil war after which the focus
moved to offshore oil and gas field development.
Both KON15 and KON19 Blocks were high graded by Afentra
as they have good signs of a working petroleum system. They
contain wells that were drilled on salt structures with light oil
recovered to surface in one well and oil shows in others from
post and pre-salt reservoirs. The Blocks are adjacent to both
legacy oil fields that are currently being appraised for potential
re-development and existing infrastructure that will allow for
rapid commercialisation.
Miradouro da Lua cliff section: Late Miocene to
Pleistocene outcrops onshore Kwanza Basin.
Block KON-15
Company
Sonangol P&P (Operator)
Afentra
Currently unassigned
Block KON-19
Company
ACREP (Operator)
Afentra
Enagol
Interest
40%
45%
15%
Interest
45%
45%
10%
40Afentra plc Annual Report and Financial Statements 2023 Angola, Block 23
Block 23 is a 5,000 km2 exploration and appraisal Block
located in the Kwanza basin in water depths from 600 to 1,600
meters and has a proven working petroleum system. Whilst the
large Block is covered by modern 3D and 2D seismic data sets,
with no outstanding work commitments remaining, much of the
Block remains under-explored.
The Block contains the Azul oil discovery, the first deepwater
pre-salt discovery in the Kwanza basin. This discovery made in
carbonate reservoirs has oil in place of approx. 150 mmbbls and
tested at flow rates of approx. 3,000 - 4,000 bopd of light oil.
Block 23
Company
Sonangol (Operator)
Afentra
Interest
60%
40%
Somaliland, Odewayne Block
The onshore Odewayne Block in Somaliland is an unexplored
frontier acreage position covering 22,840km2 offering the
opportunity to explore an undrilled onshore rift basin in Africa.
During 2023 the Operator and Afentra collaborated to update
their understanding of the petroleum systems and undertook
satellite seep studies. Analysis of seeps and the Bahadhamal
water well have confirmed the presence of trace hydrocarbons
and that the upper Jurassic is the likely source rock and
potentially mature in the sub-surface. The next phase of
evaluation of this large licence is being considered to further
understand the petroleum system and exploration potential.
Odewayne Block
Company
Genel Energy Somaliland Limited (Operator)
Afentra (East Africa) Limited
Petrosoma Limited
Interest
50%
34%
16%
41Strategic ReportOverviewCorporate GovernanceGroup Accounts Sustainability
Afentra is committed to positive
socio-economic and environmental
outcomes, with the responsible
stewardship and investment in assets
Going beyond the mandatory requirements of an AIM listed company, the information incorporated within
this sustainability review is the result of the Company’s continued engagement with internal and external
stakeholders and is informed (but not compliant with) by the reporting guidelines of the Global Reporting
Initiative (‘GRI’), Sustainability Accounting Standards Board (‘SASB’) and the Task Force on Climate-related
Financial Disclosures (‘TCFD’).
Embedding ESG across our activities
Across the host countries in which we conduct our business,
we recognise and understand the need for a Just Energy
Transition by increasing socio-economic development whilst
lowering emissions and bridging the gap to renewable and low
carbon forms of energy. We continuously work with our Joint
Venture partners to find ways to reduce the environmental
impact of our operations and improve our ESG credentials
through responsible energy use.
In 2022 we shared the importance of shining an ESG lens on
M&A opportunity screening. This remains vital whilst reviewing
and maturing potential acquisitions. We continue to assess
opportunities on social and environmental factors, health
and safety and climate-related matters alongside technical,
operational and commercial aspects.
Building on the relationships established across the Joint
Venture, our team have continued to assess and understand
the ongoing emissions of Block 3/05 and Block 3/05A. An
integrated Emissions Reduction workstream was initiated
and led by Afentra, involving contributions across multiple
disciplines to frame a number of various scenarios. A high-
level review of asset emissions was undertaken and identified
flaring as the major contributing factor. Within the operations
multiple opportunities to reduce flaring including gas
recovery, utilisation and re-injection have been identified and
are now all under review.
42TitleSub TitleAfentra plc Annual Report and Financial Statements 2023 Assessing our impacts
Having completed both the INA and Sonangol transactions
during the course of 2023, we now have access to more
meaningful ESG data and are pleased to continue building the
ESG picture of our activities within this Annual Report.
Our intention was to share the key ESG metrics from our
Joint Venture operations in this year’s Annual Report. After
a thorough and collaborative evaluation of the current
metering system it was assessed that the flare volumes
being measured were not of sufficient accuracy to be used
for reporting purposes, and that an upgrade to the metering
equipment was required. Based on the results of this
assessment Afentra has worked closely with the Operator
to develop a significant flare-meter upgrade program for
the whole asset. The forward plan is that these meters will
be installed and operational by the end of 2024 allowing
a baseline understanding of flare rate, composition and
resulting emissions. The screening of other opportunities
for flare reduction has already been discussed amongst the
Joint Venture and plans to develop these will be prepared
throughout the course of 2024.
In addition, in Q4 2023, a comprehensive drone survey was
conducted over the Block 3/05 infrastructure to identify and
measure fugitive emissions. The results from this survey will
feed into a holistic gas emissions management program to
reduce GHG emissions from the infrastructure.
43Strategic ReportOverviewCorporate GovernanceGroup Accounts Sustainability
continued
Drone survey of GHG
emissions completed
Flare meter upgrade
programmme agreed for 2024
The wider HSE performance of our London-based team and
associated travel can be shared. Whilst of relatively low impact,
during the course of 2023, the Scope 2 emissions of our London
office focused on electricity used for heating and cooling and
recorded an annual power consumption of 44,139kWh which
equates to 9,931kg CO2e based on standard UK grid electricity
conversion factors. We continue to explore strategies and
initiatives to reduce energy consumption across our operations,
aiming for overall efficiency improvements within the business.
Travel remains a key contributor to our emissions and tracking
our corporate travel during the year generated 403,422kg CO2e
of emissions. Recognising this environmental impact, we are
actively seeking ways to offset its impact through a variety of
projects. With a firm footing in Angola, our focus is on identifying
such opportunities within our host country.
Through the course of 2023, we enhanced our approach to
managing the key health and safety risks across our activities
and have taken a proactive approach to managing these risks
ensuring they are understood and minimised. Our engagement
with the Operator on health and safety risks has developed
in a number of ways including our participation in a multi-day
leadership visit offshore to Block 3/05 to fully understand current
asset integrity and process safety fundamentals, developing the
operational aspects of the corporate risk register and carrying out
a review of key incidents reported over the year.
Growing our People
In line with the Company’s growth ambitions, during the course
of 2023 our workforce grew by over 10%, attracting high calibre
candidates across a variety of key roles. Diversity and inclusion
remain core values of the Company and, in addition to having
eight nationalities represented among our core staff, we have
also improved our gender equality over the year with 38% of
our staff being female and achieving a 33% representation of
females at Senior Management level.
and environmental projects for future investment. A number of
key projects have been identified which are now being thoroughly
assessed with the appropriate due diligence being carried out. As
a result, the Board has approved a budget for such projects to be
implemented in 2024. The expectation is that at least one key
project will have been selected and funded by the end of 2024.
In addition, our successful selection for Blocks KON19 and
KON15 is based on a defined Work Programme which includes
a commitment to make $100k investment per year (over the
5-year Licence Term) on social projects in each Block. Work has
already commenced with the relevant Operators and ANPG to
screen and rank potential projects during the course of 2024.
Operating with Integrity
In early 2024, we updated our Code of Ethics and Business
Conduct (‘Code’), demonstrating our ongoing commitment to
maintaining high governance standards. The Code contains our
Guiding Principles and describes the positive behaviors that we
expect from everyone involved in our business. Afentra maintains
a zero-tolerance approach to Anti-Bribery and Corruption (ABC),
and we had 100% completion by all employees and contractors
of our ABC training module in 2023. Afentra continues to work
hard to maintain our standards of governance and in 2023 we
strengthened our board with the appointment of Thierry Tanoh
as an Independent Non-Executive Director and Chairman of the
Audit Committee. This was another demonstration of our intent
to have high calibre Directors given his previous roles as Minister
for Energy in Cote d’Ivoire and senior roles at IFC. We continued
to review our policies and procedures all of which were updated
in 2023 as part of the RTO process and further improved at the
start of 2024.
The Board has continued to look into the merits of becoming a
corporate signatory to EITI since transparency is at the heart of
the Company.
Making a meaningful contribution
Throughout 2023, in line with our commitment to improve
lives and increase socioeconomic development within Angolan
communities, Afentra reviewed and scoped high-impact social
Ian Cloke
Chief Operating Officer
30 May 2024
44TitleSub TitleAfentra plc Annual Report and Financial Statements 2023 Our ESG Approach
Working
Safely
Environmental
Stewardship
Cultural
Framework
Partners
for success
At Afentra, we believe that
ensuring the health, safety
and security of employees,
contractors and local
communities is at the heart of
our business.
We demonstrate the correct
behaviours to inspire
everyone associated with our
activities to achieve a safe
and healthy workplace.
We have a motivated team
who take responsibility for the
company H&S performance.
We encourage everyone at
Afentra to be aware of their
individual responsibilities
and to take the appropriate
actions if they feel there is an
unacceptable risk.
We plan and prepare for
potential emergencies.
Engagement and dialogue with
local stakeholders to ensure
that, as far as possible, projects
benefit both the Group and
the communities in which the
project is located and will do
this in a safe, responsible and
sustainable manner.
By investing in the region,
empowering our people and
working with our partners
we can positively impact
local economies and deliver
significant economic
returns to all stakeholders.
We will work with our host
communities to develop
impactful opportunities in
support of a Just Transition.
We work to assess the risk of
human and labour rights to
our activities and have taken
steps to ensure that underage,
forced or bonded labour has
no place in Afentra’s business
or supply chain.
We recognise that oil and gas
activities are often associated
with environmental impacts
and intensive resource use.
We believe it is right to reduce
the environmental impact
of our activities and are
committed to responsible
environmental stewardship
for the benefit of future
generations.
We are committed to taking full
responsibility for any impact
we generate and continually
look for opportunities to have
a positive impact on the
environment.
We recognise the significant
challenge presented by climate
change and support the Paris
Agreement goal to limit the
global average temperature
below 2°C compared to pre-
industrial levels.
We are committed to
supporting a sustainable
energy transition by minimising
our scope 1 and 2 greenhouse
gas emissions and seeking
innovative ways to meet this
global target at a local level.
We seek to draw on the
talent of all our people and
stakeholders recognising that a
diverse range of backgrounds
and experiences are
fundamental to delivering value
for all investor and stakeholders.
We will be open, honest and
transparent in engaging with
our people, and provide a fair
working environment free
from discrimination.
We take a zero-tolerance
approach to bribery and
corruption and we conduct
our business honestly, fairly
and transparently.
We maintain zero tolerance of
tax evasion and the facilitation
of tax evasion and we are
committed to maintaining
effective systems and controls
to ensure this cannot take
place in our business.
We seek to operate in a fair
and transparent way with our
contractors and suppliers and
work with business partners
who share our approach.
We are committed to
maintaining the highest
standards of integrity,
transparency and business
conduct.
45Strategic ReportOverviewCorporate GovernanceGroup Accounts Sustainability
continued
Our process for responsbile asset management
Vision – Mission – Values – Principles and Policies
Assess
In selecting the right asset, we:
Engage with operators that share our high values/standards
Follow our cultural framework of principles, values, approach and impact
Carry out thorough due diligence on the health, safety and environment of potential options
Engage openly and transparently to deliver the best value for all stakeholders
Plan and Prioritise
Upon engagement, determine:
Opportunity roadmap for emissions reduction projects
Set goals and interim milestones for both flare and methane reduction
Training and competence of staff
Set KPIs to manage the HSE performance
Execute
We will deliver by:
Actively engaging with our partners to seek continuous improvement in our HSE performance
Ranking high impact projects proposed for execution
Enabling investment into decarbonisation projects
Providing proactive performance and activity oversight
46Afentra plc Annual Report and Financial Statements 2023
Responsibility In Action
Spotlight on Offshore Safety Operations
Following a comprehensive internal review of the HSE
performance on Block 3/05, Afentra conducted an
additional review of all incidents reported during the year
with additional focus on those registering as having a higher
potential for escalation. Continuing with our transparency,
the output from this review including the key areas of
risk was shared with the Operator and followed up with
an offshore site visit by senior Afentra personnel. This
had a positive impact on the operations and helped to
demonstrate our proactive and collaborative approach
with the Operator and set the scene for how we choose to
engage as a non-operating partner.
Operational Health & Safety
Maintaining Excellence: A Robust Health and Safety
System for Safe Production and Asset Integrity
As a result of this review we found:
• An effective health and safety system monitoring
standard industry benchmarks (TRIF & LTI).
• A multi-year asset integrity plan in place with key
LifeEx project kicked off in 2023.
• A positive historical HSE performance.
• The assets continue to deliver zero Lost Time Incidents
(LTIs) with none recorded for over 1500 days.
• A strong focus on maintaining asset uptime to deliver
long term integrity and safe production.
Environmental Management
Driving Environmental Stewardship: Achievements
and Ambitions for Sustainable Operations
We worked with the Operator and partners to assess the
present Health & Safety and Environment indicators at the
assets and recommendations for further improvement:
• The assets are maintaining high standards recording
another 12 month period with zero spills (>1bbl).
• The oil in water (OIW) discharge averaged 24ppm
throughout 2023 which was higher than the 19ppm
recorded in 2022, corresponding with a significantly
increased liquid production. A future project has
been identified to address improvements in the
produced water handling system, which will bring
OIW discharge down, at higher liquid rates.
• Flare metering upgrades are planned for 2024,
allowing baseline flare calibration; a significant first
step in achieving zero routine flaring by 2030.
• An extensive methane leak detection survey was
carried out across the asset using innovative drone
technology to establish methane baseline data.
• Multiple workstreams have been identified to improve
gas utilisation and reduce emissions within the asset.
47Strategic ReportOverviewCorporate GovernanceGroup Accounts Sustainability
continued
Environmental transparency and emissions reduction strategies
Building on our initial broader assessment in 2022, last
year we focused on refining and defining specific areas for
improvement across the Angolan assets. In Q2 2023, Afentra
proactively engaged with the Joint Venture to build on the
previous work and to ensure that the emissions reduction
agenda was clearly established and that all parties were
engaging in the process to ensure sufficient resourcing for the
expected activities. The Afentra team remained central to
this initiative and engaged across the Joint Venture, building
momentum and delivering a range of tangible solutions. Whilst
it is acknowledged that we need to encourage this positive
change, moving forward we remain confident that the skillsets
within Afentra can continue to enhance partner engagement
to bring a successful and meaningful emissions reduction
strategy into reality.
An integrated gas management plan has been instigated and,
although at an early stage, this plan strives to bring together
multiple cross-function workstreams to generate a holistic vision
for emissions reduction across Block 3/05 and Block 3/05A.
Activity
Reservoir
pressure
Establish baseline
flare and fugitive
methane
Optimisation and
efficiencies
Ultimate
re-purposing
2023
2024
2025
2026
2027
2028
Ongoing sustained water injection to maintain reservoir pressure
Flare meter
installation
Drone
survey
Annual
repeat
Annual
repeat
Annual
repeat
Annual
repeat
Revamping
Optimisation Phase #1
Optimisation Phase #2
Ongoing gas utilisation efficiencies
Gas export/re-injection
feasibility study
FID & detailed engineering
commercial & legal framework
Project execution
100%
y
t
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i
i
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o
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t
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2024 Baseline Emissions Intensity
Methane
emission
reductions
Revamping and
optimisation
Confidence in
underlying
baseline
emissions profile
(Q4 2024)
Ongoing gas
utilisation
efficiencies,
impact of water
injection
Gas re-injection
or export to
ALNG
48Afentra plc Annual Report and Financial Statements 2023
Establishing a reliable baseline
A key first step in our emissions reduction journey is to
definitively measure the baseline emissions coming from our
facilities including fuel, flare, fugitive emissions and venting.
During the course of 2023, it was recognised that the existing
flare measurement system is not able to deliver the data and
key measurements that we require to set this baseline and
to demonstrate subsequent improvements. Through active
discussion and a fully aligned approach within the Joint Venture,
support was given for an upgrade project to improve the flare
measurement system so that the asset will have a full flare meter
capability in order to capture real-time flare data. This project has
already commenced with the procurement of the required ultra-
sonic meters and planning is underway to install this equipment
during the full field shut down in Q3 2024. This will be a major
milestone in fully understanding our flare rates, composition and
flare distribution across the various platforms within the asset.
s e x p o r t
g e x i s t i n g
t r o u t e
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Reliable power
generation
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m anagement pla
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and storage in
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t
Emissions reductions
Emissions reductions
opportunities
opportunities
Fugitive
leak detection
b l e
ti o
c
n
a
S u s t a i n
w a t e r i n j e
Short term
Medium term
Long term
In conjunction with the flare meter upgrade project, fugitive
methane leaks throughout the offshore plant were recognised
as another source of emissions. In November 2023, the asset
used innovative drone technology to conduct a baseline survey
across Palanca, Pacassa, and Cobo sectors measuring CO2 and
CH4 emissions. Data gathered from over 50 flights has led to
a comprehensive and quantifiable baseline dataset, providing
insight into specific areas for improvements and focusing the
Operator’s work programmes in 2024 and beyond.
Sustained water Injection
Water injection rates have more than doubled year on year
(averaging 33,000 bwipd in 2023), with further gains delivered
in early 2024 and targeting in excess of 150,000 bwipd. This
improved water injection is anticipated to positively impact oil
production in the medium term as reservoir pressure increases.
Additionally, sustained high water injection rates will help
maintain reservoir pressure and reduce the Gas Oil Ratio (GOR)
which is one of the most effective tools available for reducing
gas production. Furthermore, the Operator has recognised the
need to maintain the integrity of water injection wells, flowlines
and lift pumps and this proactive approach is also subject to a
significant work program in 2024.
The enhanced fluid offtake rates observed across the asset
in 2023 has tested the limits of the current produced water
treatment system. Oil in water (OIW) metrics have been
reviewed with an additional produced water treatment project
approved in the 2024 budget. This refurbishment project will
bring the asset’s water discharge down as the Operator seeks to
improve upon the recognised 30ppm target.
In addition, the Joint Venture is also investing in improving
offshore waste management. A major upgrade project at both
Cobo and Palanca is well underway to reduce sewage discharge
to the ocean with completion scheduled for the end of 2024.
49Strategic ReportOverviewCorporate GovernanceGroup Accounts
Sustainability
continued
Optimisation and efficiencies
Having successfully extended the Block 3/05 production
licence to 2040, the Operator undertook a full scope asset
integrity review in order to identify areas of focus for the multi-
week, full field shut-down planned for Q3 2024. At the same
time, a long-term project to update and modernise the offshore
installations is underway. Initiated in Q4 2023, this project will
run for 3 years and its impact will be to extend the life of the
existing infrastructure and deliver long-term reliable uptime.
This investment protects baseline production and allows the
Operator to continue to manage operations safely.
Throughout 2023, the Operator switched from utilising offshore
diesel for power generation, to using produced gas as the major
fuel source. Making efficient use of the produced gas is an
effective way to reduce flaring as well as optimising cost.
Enhanced oil production by deploying ESP technology has
been screened as an opportunity to increase fluid rates as
well as improve recovery. The secondary benefit of this ESP
program is to increase the power demand on the generators
and consequently increase gas utilisation. This increased power
demand and gas usage delivers a significant reduction in gas
volume sent to flare.
Ultimate re-purposing
An integrated workstream has been initiated in order to scope
the possibilities of utilising the current flare gas volumes in
a more resourceful manner. Once flare gas volumes can be
calibrated, this will help to form the basis of design for a future
potential gas re-injection or gas export project.
50Afentra plc Annual Report and Financial Statements 2023 Climate risk and resilience
We are committed to the energy sector and building a resilient
business that meets the varying requirements and expectations
of our stakeholders. Acutely aware of the need to support the
responsible development of hydrocarbon assets, our strategy
is to decarbonise energy production, in collaboration with our
partners, and in balance with the socioeconomic requirements
of host countries.
In 2023, Afentra reviewed the recommendations set out by the
TCFD and began the process to embed the recommendations
as appropriate for a business of its size and position.
We will continue to mature our position (and work towards
compliance) on all four pillars and 11 recommendations of the
TCFD during 2024.
Oversight
The analysis of climate-related risks has been integrated into
the Group’s existing risk management framework. As such, our
leadership team has primary responsibility for monitoring and
managing climate-related risks and opportunities.
Our leadership considers all ESG issues when reviewing and
guiding strategy, major plans of action and risk management
policies, as well as when overseeing major capital expenditures,
and acquisitions. Examples of specific actions taken by our
leadership and operationally focused teams can be seen in the
examples on page 47.
Assessing climate risk and resilience
As part of our due diligence process to acquire interests in the
Sonangol operated assets, offshore Angola, we commissioned
the development of a comprehensive ESG due diligence report,
comprising environmental, health and safety, supply chain and
climate-related analysis.
The purpose of the Climate Change Risk Assessment
(CCRA), prepared in accordance with the requirements of the
Equator Principles (2019) and IFC’s Performance Standards
on Environmental and Social Sustainability (2012), was to
undertake a preliminary assessment of the climate related risks
to Sonangol’s upstream oil and gas operations.
The assessment utilised two IPCC scenarios for analysis. These
forecast changes in Angola’s climate in the near term (2021-
2040) and medium term (2041-2060), and under two climate
scenarios, namely SSP1-1.9 (best case) and SSP5-8 (worst case).
The transition to a lower carbon economy poses several risks
to Sonangol’s operations with respect to potential changes
in legislation and policy, markets, and technologies. At the
same time, this low carbon economy will also give rise to new
opportunities with respect to resource efficiencies and new
product/service offerings. During the year, Afentra supported
Sonangol on numerous fronts, which are captured within
the “Driving Environmental Stewardship: Achievements and
Ambitions for Sustainable Operations” section above.
The Board is periodically informed of changes to Afentra’s risk
profile by the leadership team, which includes the assessment
of climate related risk, and together agree that climate related
risks have the potential to materially impact the financial
performance of Afentra over the short, medium and long-term
(considered 10+ years).
Transition and physical risk
The Energy Transition is and will continue to impact the Oil and
Gas industry and change the environment in which we operate.
The impact of these changes depends on many variables, many
of which remain uncertain and continue to shift in response to
globally significant events, not least military conflict.
Details of this assessment and the Group’s approach to the
management of risk are set out on pages 54 - 56.
Our evaluation of potential risks is described below and relates
to the Angola assets only,
51Strategic ReportOverviewCorporate GovernanceGroup Accounts Sustainability
continued
In line with TCFD recommendations, potential risks are divided into:
• Transition risks driven by the world’s transition to a lower-carbon economy
• Physical risks driven by the physical impacts of climate change
Physical
Category
Risk driver
Risk
Acute
Increasing
frequency and
intensity of
storm surges
together with
rising sea
levels.
Risk of damage to surface facilities and
infrastructure, including processing/wellhead
platforms, floating storage and offloading (FSO)
facility, wells and pipelines. Such damage could
cause:
• Fatalties and injuries to personnel
• Environmental spills and contamination
• Disruption in production and revenue losses
• Reuptational damage
• Litigation
Chronic
Rising mean
temperatures
and increasing
number of very
hot days.
Risk of workers suffering from heat stress, leading
to reduced productivity, and in extreme cases, an
increase in heat-related morbidity.
Mitigations
Work with our operator to:
• Develop and implement an early warning
system to allow for early detection of
storm surges.
• Update existing emergency response plans
to include storm surges.
• Revisit the maintenance schedules to
ensure key equipment is maintained and
available.
• Ensure that rising sea levels are taken into
account in the design of new infrastructure/
upgrades of existing infrastructure.
• Develop and implement an awareness
programme to raise awareness about the
dangers of heat stress and the importance
of staying well hydrated.
• Ensure adequate provision of potable water
particularly during hot periods.
Transitional
Category
Risk driver
Risk
Mitigations
Policy and
legal
Pricing of GHG
emissions
and enhanced
emissions
reporting
obligations.
With growing international pressure and heightened
focus on methane emissions, the recent outcomes
of COP are signalling significant shifts in the
sustainability landscape. The European Union (EU)
is making waves by acknowledging and addressing
methane emissions as a crucial aspect of climate
action. Their proposed methane framework is
poised to set new standards and expectations for
emission reduction efforts globally. Moreover, as
carbon taxes gain momentum and are expected
to impact industries well into the 2030s, there is a
growing anticipation of increased operating costs for
countries like Angola, should they introduce pricing
of greenhouse gas emissions and adopt enhanced
emissions-reporting obligations.
• Closely monitor promulgation of new
climate legislation and policies.
• Actively engage in the law- and policy-
making processes to ensure that potential
impacts on O&G sector are taken into
consideration. Engagement can be
through industry organisations.
52TitleSub TitleAfentra plc Annual Report and Financial Statements 2023 Policy and
legal
Exposure to
litigation.
Market
Increased cost
of production.
Technology Substitution
of existing
products
with lower
emissions
options.
Changing
customer
behaviour.
Market
With growing global awareness of climate change
and increasing discontent with major contributors
to climate change, there is a risk of increased
climate related litigation, leading to increased
operating costs.
Risk of increased output requirements (e.g., zero
flaring of associated gas), leading to increased
production costs.
Risk of write-offs or early retirement of existing
assets producing carbon intensive products (e.g.,
crude oil) with the transition to products (e.g., natural
gas) with lower emissions and repricing of fossil fuel
assets, potentially making these assets loss leading.
Risk of reduced demand for carbon intensive
products (e.g., crude oil) in the medium- to
long-term, in line with the IEA’s projections, with a
change in consumer preferences that may lead to
revenue losses.
• Develop and implement a formal GHG
management plan with reduction targets
and roadmap for achieving these targets.
• Develop and implement an economically
viable roadmap for achieving their
commitment of net-zero routine flaring
by 2030.
•
•
Incorporate risks associated with
transition to lower carbon products
and repricing of fossil fuel assets into
decision making processes with respect
to investments in new assets or extending
the life of existing assets producing
carbon-intensive products.
Incorporate risks associated with
transition to lower carbon products
and repricing of fossil fuel assets into
decision making processes with respect
to investments in new assets or extending
the life of existing assets producing
carbon-intensive products.
Opportunities
We believe the Energy Transition presents opportunities and if managed well we believe these opportunities can materially benefit
Afentra, its partners and host communities.
Opportunities
Type
Resource
efficiency
Category
Opportunity
More efficient production
processes.
Products and
services
Development and/or expansion
of low emission goods/services.
The implementation of energy and GHG reduction initiatives can lead to
more efficient production processes and reduced operating costs. This
can also lead to a reduction in liability if pricing of GHG emissions comes
into place.
Using existing assets producing carbon-intensive products (e.g., crude oil) to
pivot towards developing/expanding assets producing less carbon intensive
products (e.g., natural gas) in response to shifts in consumer preferences.
Products and
services
Products and
services
Development and/or expansion
of low emission goods/services.
With more stringent regulation of routine flaring, there is potential to
increase revenue from the monetisation of associated gas.
Development and/or expansion
of low emission goods/services.
The increase in demand for natural gas as a ‘transition fuel’, particularly among
developing countries, may lead to upward repricing of natural gas assets.
53Strategic ReportOverviewCorporate GovernanceGroup Accounts Business Risk
Managing and mitigating our
material issues
Principal business risks
The long-term success of Afentra depends on the ability to successfully acquire assets that align with the Group’s purpose and strategy
and to manage those assets responsibly and sustainably for the long term creating value for all stakeholders. In achieving that long-term
success, the Group is exposed to a number of risks and uncertainties which could have a material adverse impact on the delivery of
the strategy and the future business. The Board and Senior Executive Team recognise and fully understand the need to have a risk
identification, mitigation and management process in place to ensure that key risks to the business are discussed and documented, and
ultimately successfully managed, ensuring transparency of both content and process. The risk management process and risk register is
owned by the CFO and is reviewed regularly by the Executive Directors and the Audit Committee.
The risks to the Company’s business were refreshed during the year and reflect the completed and in progress acquisitions in Angola
and the knock-on impact to the organisation. As such, documented below are an updated set of principal risks and mitigations in relation
to the delivery of the Group strategy and purpose.
Category
Risk
Mitigation
Change
Strategic and
Economic
• Competition,
• Competitors have greater
financial and technical
resources.
barriers to entry
• Difficulty in capital raising for
• Country risk
• Pre-emptive
rights
• Climate change
new acquisitions and/or to fund
development activities.
• Adverse economic, geopolitical
or social instability, the
associated impacts and / or
sanctions imposed by host or
other governments.
• Governments or JV
counterparty exercise pre-
emptive rights over assets
and corporate acquisitions.
Climate change and the Energy
Transition is adding to market
volatility and could have a
negative impact on smaller
independent hydrocarbon E&P
companies.
• Through staff expertise, robust financial systems and
economic models, optimise deal evaluation and bid
processes to move quickly and competitively to value /
price the appropriate opportunities.
• Management has and maintains a proactive dialogue
with existing and prospective debt and equity investors,
and has a strong track record.
• The Board and management monitor and consider
political, regulatory, fiscal and social risks associated
with all target assets. Mitigate through proactive
relations with host governments, and JV partners, utilise
local advisors / expertise if required.
• Develop deeper understanding, and pro-active
relationships with key decision makers of branches of
governments and JV partners in targeted jurisdictions
to evaluate the risk of pre-emption ahead of material
deal expenses and deal time commitment.
• Climate related risks and opportunities (arising from a
Just Transition) are core to the company’s vision and
strategy and underpins all evaluation of potential assets
and markets.
►
54Afentra plc Annual Report and Financial Statements 2023 Category
Risk
Mitigation
Change
Operations – Non
Operated
•
• Health & Safety
• GHG Emissions
• Contractor
performance
Incidents occurring on oil &
gas facilities resulting in loss
of containment, production,
environmental damage and / or
personnel injuries.
• High levels of flaring results
in non-conformance to zero
flaring by 2030, reputational
damage and potential fines due
to breaching limits.
• Complexity around contractor
selection and performance
management on a large
development could result in
sub optimal outcomes resulting
in a loss of value.
Organisation
•
IT Systems
• Attracting,
retaining
sufficiently
skilled
personnel
• Risk of an IT systems failure
resulting in the loss of key
data or rendering the business
inoperable for a period, and / or a
cyber security threat manifesting
resulting in loss of data security
and potentially value.
• Failure to attract and hire the
requisite technical and functional
staff with the right experience
to support the firm as it grows,
resulting in operational, technical
and functional issues.
• Work with operators to understand / influence how
operational facilities are staffed with experienced
and fully trained personnel. Ensure through robust
communications with the operators expectations around
safety critical maintenance (undertaken when required
and not delayed), and risk assessment procedures and
practices, ensuring both are fully documented and
rigorously followed by requisite personnel. Look for
verification on facility site visits. Ensure operational risks
are covered by insurance where possible.
•
Influence operators to reduce flaring by the following:
Measure data to understand exact level of flaring; identify
potential solutions to deploy to reduce flaring from
incremental reductions to zero flaring; and influence
operator to deploy GHG reduction technologies.
• Share emissions reductions concepts with regulator to
influence operator.
• Support operators in contractor evaluation and selection
procedures, advise on best practices, jointly participate
in contractor performance management including KPI
selection and ongoing monitoring.
• A DRP and BCP was developed in 2023 and is reviewed
every six months to ensure relevance to maintain business
critical functions.
• All legacy seismic data backed up and stored offsite. Any
future seismic data will be held on our Nutanix system and
utilise the same DR system as the Nutanix clusters.
• Non seismic data is backed up daily and stored both on site
and off site.
• We have a hosted exchange service from Microsoft, the
SLA for downtime on exchange and SharePoint aims to be
less than 45 minutes per month. All incoming and outgoing
email are archived in an immutable form, providing some
protection from Ransomware, Phishing and Malware.
• Additional experienced staff were recruited during 2023,
so the Company has the requisite skills and experience to
meet the requirements of 2024 post acquisitions.
• Personnel requirements are assessed regularly, and plans
are in place to ensure business continuity can continue in
the event of a shortage of requisite skills.
• Local market conditions are continually monitored to
ensure a competitive salary, bonus and training framework
is in place to retain and attract new staff when required.
▲
►
55Strategic ReportOverviewCorporate GovernanceGroup Accounts Business Risk
continued
Category
Financial
• Commodity
(oil) Price risk
• Counterparty
default
• Bribery &
Failure to
prevent bribery
Risk
Mitigation
Change
• Volatile commodity prices (both
low or high) impacting buyer –
seller expectations, impacting
ability to acquire assets.
• Low commodity prices could
impact liquidity of the Company,
and have a negative impact
on ability to service debt and
generate positive cash flow.
• Risk of default of bank holding
deposits, off-taker of production,
contractor / supplier or JV
partner not fulfilling obligations.
• Risk that a partner, business
associate or an employee
may in the course of business,
offer to pay (or may previously
have offered to pay), bribes,
unjustifiable fees or gifts to
middlemen which could damage
Afentra’s reputation and result in
Afentra being in contravention
of laws that prohibit such action,
including the UK Bribery Act
2010, or which, by association,
may result in reputational
damage to the Compan .
• The Company will only bid on assets priced within the
group’s financial framework which will include mixtures
of debt and equity capital raises. Key economic KPIs
will need to be achievable to enable asset bids to be
approved for progression via the Board. The Company is
managing its exposure to fluctuating oil price via a Board
approved hedging program.
• Monitor public announcements and any publicly
available documents / reports for indicators of
financial distress prior to agreeing to future financial
commitments.
• Conduct full financial and legal due-diligence along
with obtaining representations where relevant prior to
entering any new JV or partner relationships.
►
• Conduct robust due diligence of counter-party,
consider use of insurance cover.
• Group policy, as stated in the Handbook, is clear that
Afentra does not and will not participate in such practices.
• The Group developed and implemented an Anti-Bribery
system, a key provision of which is ensuring that any
partner or affiliate of a partner maintains a robust anti-
bribery compliance environment.
• The Group provides training for its employees and
contractors on an annual basis with 100% compliance.
• All contracts, purchase orders and service orders
contain business ethics provisions.
▲ Increased ▼ Decreased ► Unchanged
56Afentra plc Annual Report and Financial Statements 2023 Internal control
The Directors are responsible for establishing and maintaining the Group and the Company’s systems of internal control including
financial and compliance controls and risk management. These are designed to safeguard the assets of the Group and to ensure the
reliability of financial information for both internal use and external publication.
The Group’s internal control procedures include Board approval for all significant expenditure. All major expenditures require either
senior management or Board approval at the appropriate stages of each transaction. A system of regular reporting of the state of
the Group’s financial affairs provides appropriate information to management to facilitate control. The Board reviews, identifies,
evaluates and manages the significant risks that face the Group.
Any systems of internal control can only provide reasonable, and not absolute, assurance that material financial irregularities will be
detected or that the risk of failure to achieve business objectives is eliminated. The Directors, having reviewed the effectiveness
of the system of internal financial, operational and compliance controls and risk management, consider that the system of internal
control operated effectively throughout the financial year and up to the date the financial statements were signed.
The Audit Committee, on an annual basis, reviews the need for an internal audit function. Given the nature of the Company’s
business and assets, the current internal control procedures in place and the size of the Company, the Board are satisfied that an
internal audit function is unnecessary at this time but will review the position in 2024.
57Strategic ReportOverviewCorporate GovernanceGroup Accounts Our Stakeholders
Engaging with our key audiences
Section 172 Statement
A director of a company must act in a way they consider, in
good faith, would be most likely to promote the success of the
Company for the benefit of its members as a whole, and in doing
so have regard (amongst other matters) to the following factors:
• The likely consequences of any decision in the long-term;
Our stakeholder engagement
The Board identifies a number of key stakeholders of the
Company: JV partners; regulators and government partners;
communities where our assets are located; shareholders; and
our employees. During the year the Company actively engaged
with its identified key stakeholders.
•
•
•
•
•
the interests of the Company’s employees;
the need to foster the Company’s business relationships
with suppliers, customers and others;
the impact of the Company’s operations on the community
and the environment;
the desirability of the company maintaining a reputation for
high standards of business conduct; and
the need to act fairly between members of the Company
as a whole.
The Board has regard to the provisions of s.172 of the
Companies Act 2006 in carrying out their duties and have
regard to the matters set out in s.172 (a) – (f) in the decisions
taken during the year ended 31 December 2023.
The Company is committed to engaging positively with the
communities in which our assets are located and looks to
support those communities impacted by our operations.
As set out on pages 28 - 41 with respect to its business and
operations in Angola the Company has worked closely with
Sonangol and relevant Angolan Governmental and Regulatory
agencies at all levels during 2023. The Company will continue
to engage with the Operator and other Governmental
agencies in relation to its existing operations and new business
opportunities, and its future participation in the Angolan
onshore Block KON15 and KON19 licences.
The Company has a small team of employees and consultants
based in the UK and Africa, all of whom have direct contact
with either the COO or CFO who engage directly with the
58Afentra plc Annual Report and Financial Statements 2023 workforce, a benefit of the current size of the Company. Board
meetings are held in the UK office where several employees and
consultants are invited to join the meeting from time to time.
The Board has day-to-day business interactions with various
employees of the Group, so they receive direct employee
feedback and engagement.
The Directors regularly engage with investors via the AGM
and at other times during the year. Continued access to
the capital markets is key to the success of the Company’s
M&A strategy and so the management team and the Board
work to ensure that the Company’s investors have a sound
understanding of the Company’s strategy and ambitions, how
this may be implemented and how the Company’s decisions
and principal business activities support its long-term strategy.
Investors’ views and those of other stakeholders, are sought
by the Directors to guide the Company’s strategy and its M&A
activities. This activity and engagement will continue in 2024.
The Company’s M&A strategy has become more targeted
towards seeking assets in specific jurisdictions, as discussed in
the Chairman’s and CEO’s statements.
Principal decisions during 2023
The approval to proceed with the proposed Azule Acquisition
in Angola on Blocks 3/05 and 3/05A and the reduction of the
Sonangol transaction interest from 20% to 14% were critical
Board decisions taken during the year. Further decisions made
by the Board related to other M&A opportunities and the
Company’s participation in the 2023 Angolan onshore licence
bid round. These were reviewed during the year, and discussed
through the lens of strategic fit, long term value accretion, and
sustainability (including understanding the potential impact
on communities and the environment). In 2024, in line with its
long-term strategy, the Board will continue to review a range of
upstream opportunities in Angola and West Africa more broadly,
including potential M&A opportunities, new licence opportunities
and strategic fit partnering and joint venture opportunities.
59Strategic ReportOverviewCorporate GovernanceGroup Accounts Financial Review
Deal completions and revenue
generation highlight a successful year
2023 was a year of financial transformation for Afentra. We
completed our two inaugural transactions in Angola and also
successfully executed our first crude oil lifting generating $26.4
million of revenue in Q3. These were major milestones for the
Company which help to solidify our position in Angola and
demonstrate the successful progress of our strategy to deliver
sustainable shareholder returns. In addition, post period, having
received approval from the Angolan Government, the Company
completed the Azule acquisition transaction (our third in
Angola) in May 2024.
With regards to Company debt financing, we effectively utilised
and managed our debt facilities, meeting all required covenants
and completing on the INA and Sonangol transactions with an
aggregate debt to equity split of 63%/37% resulting in a year
end debt position of $31.7 million and a net debt position of
$12.3 million.
We also entered into our first hedge arrangement in December
2023 purchasing a $70/bbl floor for the 70% (315 kbbls) of
the February 2024 crude oil lifting at a cost of $1.50 per bbl
to secure downside protection at the time of relatively high
volatility observed in the markets.
For 2024, our focus on M&A remains unchanged as we continue
to seek to build our portfolio via value accretive opportunities, in
Angola, as well as in other jurisdictions in the West Africa region.
From an asset perspective, our second crude oil lifting (450
kbbls) on Block 3/05 in February generated $38.2 million
of revenue. We will continue to strive to be a proactive and
collaborative non-operating partner in the Angolan Blocks 3/05
and 3/05A, bringing forward our technical and commercial
expertise to safely and efficiently deliver cash returns and
investment opportunities, as well as ensuring that value is
protected, all executed within a sound internal control framework.
Financing highlights
Key Terms:
RBL, $34.8 million Financing drawn to fund INA and Sonangol
asset acquisitions.
• 5-year tenor effective from May 2023
• 8% margin over 3-month SOFR (‘Secured Overnight
Financing Rate’)
• Semi-annual linear amortisations
• The key financial covenant for the RBL is the ratio of Net
Debt to EBITDA (less than 3:1)
Key Terms:
Working Capital, up to $30 million revolving facility:
• 5-year tenor effective from May 2023
• 4.75% margin over 1-month SOFR
• Repayable with proceeds from liftings
60TitleSub TitleAfentra plc Annual Report and Financial Statements 2023 Anastasia Deulina, Chief Financial Officer
Selected financial data
2023
2022
2023 revenue of $26.4 million (2022: nil) consisted of 1 lifting
from Block 3/05 of 300kbbls at a realised price of $88.0/bbl.
Sales volume
Realised oil price
Total revenue
(kbbls)
($/bbl)
$ million
Year-end cash net to the Group $ million
Restricted funds
Borrowings
Net debt
Adjusted EBITDAX1
Loss after tax
Year end share price
$ million
$ million
$ million
$ million
$ million
Pence
300.0
88.0
26.4
14.7
4.9
(31.7)
(12.3)
11.1
(2.7)
37.0
-
-
-
20.4
10.2
-
-
(5.2)
(9.1)
26.4
Non-IFRS measures
The Group uses certain measures of performance that are not
specifically defined under IFRS or other generally accepted
accounting principles. These non-IFRS measures can include
capital investment, debt and adjusted EBITDAX.
Income Statement
2023 production from Afentra’s interests in Blocks 3/05 and
3/05A, post the completion of INA and Sonangol transactions,
averaged 3,509 bopd (2022: nil).
Cost of sales during the year totalled $12.6 million (2022: nil), a full
reconciliation is provided in the notes to the accounts (Note 4).
The profit from operations for 2023 was $2.4 million (2022: loss
$9.0 million) as a result of the inaugural lifting in August 2023.
During the year, net administrative expenditure increased to
$11.5 million (2022: $9.0 million) predominantly as a result of
exceptional (one off) costs associated with the RTO process
($1.6 million in the period) and an increase in staff costs and
share based payment charges ($1.8 million).
In 2023, a portion of the Group’s staff costs and associated
overheads have been expensed as pre-licence expenditure ($4.8
million), or capitalised/recharged ($34k) where they are directly
assigned to capital projects. This totalled $4.8 million in the year
(2022: $3.1 million) reflecting continuing M&A project activity.
Finance income was received (interest on deposits) in the year
of $240k (2022: $86k). Finance costs increased during 2023
to $3.5 million (2022: $197k), primarily due to the operation of
RBL and WC facilities. A full reconciliation is provided in the
notes to the accounts (Note 7).
1 Total depletion in 2023 is the depletion charged to profit and loss ($845k) and absorbed in inventory ($1,755k).
61Strategic ReportOverviewCorporate GovernanceGroup Accounts Financial Review
continued
The loss for the year was $2.7 million (2022: loss $9.1 million):
Loss for the year 2022
Increase in revenue
Increase in cost of sales
Increase in G&A and pre-licence costs
Increase in finance expense
Increase in tax expense
Loss for the year 2023
$ million
(9.1)
26.4
(12.6)
(2.5)
(3.2)
(1.8)
(2.7)
Group adjusted EBITDAX totalled $11.1 million (2022: $5.2
million loss):
Loss after tax
Net finance costs
Depletion and depreciation1
Pre-licence costs
Share-based payment charge
Taxation
Total EBITDAX (Adjusted)
2023
$ million
2022
$ million
(2.7)
3.3
2.9
4.8
1.0
1.8
11.1
(9.1)
0.1
0.2
3.5
-
-
(5.2)
Statement of financial position
At the end of 2023, Non-current assets totaled $174.0 million
(2022: $21.9 million), the increase entirely related to the
acquisition of the Company’s interests in Block 3/05, Block
3/05A and Block 23 (detailed in Notes 10, 11 and 12).
At the end of 2023, Current assets stood at $36.7 million (2022:
$31.0 million) including; inventories of $13.4 million (2022: $nil),
cash and cash equivalents of $14.7 million (2022: $20.4 million),
restricted funds of $4.9 million (2022: $10.2 million) and trade
and other receivables of $3.6 million (2022: $419k).
At the end of 2023, Current liabilities were $38.8 million (2022:
$2.9 million) including borrowings of $6.8 million (2022: $ nil),
contingent consideration of $4.6 million (2022: $ nil) and trade
and other payables of $27.3 million (2022: $2.7 million). The
increase in trade and other payables is related to the Company’s
share of Joint Venture working capital items (Block 3/05 and
Block 3/05A).
At the end of 2023, Non-current liabilities were $123.8 million
(2022: $160k) including borrowings of $25.0 million (2022: $
nil) and contingent consideration/provisions of $98.9 million
(2022: $33k), (detailed in Notes 20 and 22).
The basic and diluted loss per share was 1.2 cents per share
(2022: loss 4.1 cents per share). No dividend is proposed to be
paid for the year ended 31 December 2023 (2022: $nil).
Group net assets at the end of 2023 totalled $48.0 million (2022
$49.8 million). Movements in the component parts of Group net
assets are predominantly as a result from the acquisitions made
in 2023 and the associated movements in assets, liabilities and
1 Total depletion in 2023 is the depletion charged to profit and loss ($845k) and absorbed in inventory ($1,755k).
62TitleSub TitleAfentra plc Annual Report and Financial Statements 2023 debt. Increases versus 2022 balances in both non-current assets
($152.3 million) and current assets ($29.5 million) are offset by
corresponding increases in non-current liabilities ($123.8 million)
and current liabilities ($53.3 million) resulting in an overall $1.8
million decrease in Group net assets in 2023 vs 2022.
Cash flow
Net cash inflow from operating activities totalled $12.3 million
(2022: outflow $6.7 million), the increase predominantly due
to the acquisitions of Block 3/05 and Block 3/05A and the
revenue from the Company’s first lifting.
Net cash used in investing activities totalled $45.9 million
(2022: $10.3 million) the increase predominantly due to the
acquisitions of Block 3/05 and Block 3/05A.
Net cash generated in financing activities totalled $28.0 million
(2022: used $225k) primarily as a result of the net drawdowns
on debt facilities.
During the year there were minimal cash investments on the
Odewayne Block in Somaliland due to the Group’s interest being
fully carried by Genel Energy Somaliland Limited for its share of
the costs during the Third and Fourth Periods of the PSA.
Cautionary statement
This financial report contains certain forward-looking
statements that are subject to the usual risk factors and
uncertainties associated with the oil and gas exploration
and production business. Whilst the Directors believe the
expectation reflected herein to be reasonable in light of the
information available up to the time of their approval of this
report, the actual outcome may be materially different owing to
factors either beyond the Group’s control or otherwise within
the Group’s control but, for example, owing to a change of plan
or strategy. Accordingly, no reliance may be placed on the
forward-looking statements.
Anastasia Deulina
Chief Financial Officer
30 May 2024
The Strategic Report was approved by the Board of Directors
and sighned on its behalh by:
Accounting Standards
The Group has reported its 2023 and 2022 full year accounts
in accordance with UK adopted international accounting
standards.
Paul McDade
Chief Executive Officer
30 May 2024
63Strategic ReportOverviewCorporate GovernanceGroup Accounts Corporate Governance
Year ended 31 December 2023
64Afentra plc Annual Report and Financial Statements 2023 65Strategic ReportOverviewCorporate GovernanceGroup Accounts Board of Directors
Executive team
Paul McDade
Chief Executive Officer
Ian Cloke
Chief Operating Officer
Anastasia Deulina
Chief Financial Officer
A Petroleum engineer with over 35 years
within the international oil & gas business
has provided Paul with a rich and diverse
set of relevant experiences. From his early
international experience in challenging
operational, social, security and safety
environments, to his 19 years as COO and
then CEO of Tullow Oil, he has essential
first-hand experience of what is required
to build a successful African-focused,
responsible oil & gas company.
His strong focus on delivering
stakeholder value, shared prosperity,
environmental performance and
strong governance, coupled with his
understanding of the role that oil and gas
must play in both the global and African
Energy Transitions, makes him the ideal
leader to deliver Afentra’s ambitious
growth strategy, a company that will
have stakeholder objectives and ESG
embedded at its core.
A Geoscientist with over 25 years of
international oil & gas experience and
a proven track record of deploying
innovative technologies across global
upstream projects that positively impact
operational, technical and commercial
results for the benefit of all stakeholders.
As EVP at Tullow Oil, he led multi-cultural
and diverse teams focused on safely
improving production and operations at
pace across Africa and South America,
effectively managing risk and social-
environmental sensitivities whilst
embedding strong financial discipline.
He has first-hand experience in making a
difference in countries having discovered
and successfully delivered commercial
oil & gas in Uganda, Kenya and Guyana
amongst others. Having lived and travelled
throughout Africa, he has enjoyed the
full spectrum of life and business on the
continent, making him an ideal founding
partner and COO of Afentra.
Anastasia’s multicultural upbringing
and over 20 years of working in the
energy sector within global, multinational
investment banks, private equity and
corporates has given her extensive
experience in strategy development, deal
origination, structuring and execution,
M&A and business transformation.
Her primary focus is always on driving
sustainable business growth that has a
visible positive impact on the bottom-
line. This, along with her significant prior
Board experience, both as a NED and
committee member, and her strong global
business development and financial
network means that Anastasia provides
expert leadership as Afentra’s CFO.
66Afentra plc Annual Report and Financial Statements 2023 Non-executive team
Jeffrey MacDonald
Independent non-executive Chairman
Thierry Tanoh
Independent non-executive Director
Gavin Wilson
Independent non-executive Director
Jeffrey MacDonald was a former
managing director with private equity
firm, First Reserve, with responsibility
for investment origination, structuring,
execution, monitoring and exit strategy,
with particular emphasis on the oil &
gas sector.
Thierry Tanoh is the former CEO
of EcoBank Group, a pan-African
banking conglomerate with banking
operations in 33 African countries, and
subsequently Minister for Oil, Energy
and Renewables for the Republic of
Cote d’Ivoire between 2017-2018.
Gavin Wilson has held the position
of Investment Director at Meridian
Capital Limited, a Hong Kong based
international investment firm, for over a
decade, managing an oil & gas portfolio
focused on world-class assets in
emerging markets.
Before joining First Reserve, he was
a founder and CEO of Caledonia Oil
& Gas Ltd., a U.K. based exploration
and production firm, and a founding
member and managing director of
Highland Energy Ltd. Most recently he
held the position of Interim CEO and,
prior to that, Non-Executive Director, of
Kris Energy.
Prior to assuming his role at EcoBank,
Thierry spent 18 years at International
Finance Corporation (IFC), including
roles as Vice-President within the
Senior Executive Team and a member
of IFC’s credit committee based in
Washington, and as Director of Sub-
Saharan Africa based in Johannesburg.
Mr. Wilson founded and managed, for over
seven years, two successful investment
funds - RAB Energy and RAB Octane.
Previously he was Managing Partner
of Canaccord Capital London’s Oil &
Gas division, responsible for Sales and
Corporate Broking/Finance.
67Strategic ReportOverviewCorporate GovernanceGroup Accounts Statement of Corporate Governance
Afentra’s business includes a strategic objective of responsibly supporting host-countries’ efforts to progress the
energy transition on the African continent and through this, to deliver positive outcomes for all stakeholders. Our
purpose is to support the African Energy Transition as an experienced, responsible, well managed independent,
enabling the continued economic and social development of African economies and bridging the gap to other/
renewable forms of energy. We aim to be the trusted partner of IOCs, NOCs and host governments in Africa in
the divestment of legacy assets.
Our approach is to manage assets responsibly, achieving the full
asset potential whilst also reducing carbon emissions. We aim
to achieve this using the robust ESG principles embedded in
the core fabric of our business model and operating structure.
The Board has been appointed to lead the Company to achieve
our purpose and to work with the management team to set out
our culture and ensure we succeed in our mission.
The Company follows the principles of best practice set out
in the Quoted Companies Alliance Governance Code (the
‘QCA Code’). The appropriate Corporate Governance Code
will remain under review as the Company grows and evolves.
Following the appointment of the new Board and Executive
Team in 2021, the Company has continued to develop its
corporate governance and is satisfied with the structure now in
place. Our governance structure will continue to evolve as the
Company develops and grows and we will ensure stakeholders
remain informed through regulatory announcements and
updates on our website.
Corporate culture
Afentra is building its business on a strong ESG foundation,
and the core elements of those principles are embedded in
our strategy and business model. Our vision is to establish the
Company as a leading pan-African operator with an unwavering
commitment to operational excellence, environmental
stewardship, transparent governance, positive socio-economic
impact, and strong sustainable shareholder returns. Oil and
gas remain important in the energy mix and as IOCs change
their business models with a view to developing a lower-carbon
footprint, these underlying hydrocarbon assets must continue
producing to meet local and global demand, enable an effective
Energy Transition and allow the host countries to benefit from
the revenues they generate. Afentra seeks to be a credible
acquirer of these assets, enabling IOCs and host governments
to have confidence that such assets will be managed in a
responsible way, with strong environmental stewardship,
value creation and transparent governance ensuring we hold
ourselves to account as a best-in-class operator.
To implement our acquisition and growth strategy we have a
thorough due diligence process to scrutinise opportunities for
their suitability. Initial high-level screening covers subsurface,
operational, commercial and risk management before
progressing to a more detailed assessment of a potential target
asset against our acquisition criteria. The Board is focused on
reducing and managing identified risks rather than eliminating
all risk. Any acquisition of hydrocarbon assets inherently
includes technical, subsurface, operational, above ground and
commercial risks and the Board has regard to such risks within
its acquisition parameters. The Board seeks to eliminate HSSE
risks and reputational risk.
Board composition
The composition of the Board changed during 2023 with
the appointment of Thierry Tanoh as an Independent Non-
Executive Director. The remaining Board composition
was unchanged in the year and was and now is as follows:
Jeffrey MacDonald serving as Independent Non-Executive
Director and Chairman, Paul McDade Executive-Director
and CEO, Ian Cloke Executive Director and COO, Anastasia
68Afentra plc Annual Report and Financial Statements 2023 Deulina Executive Director and CFO and Gavin Wilson as
an Independent Non-Executive Director. The Directors
acknowledge that shareholder expectation is that at least
half of the Directors of the Board will be independent NEDs.
Composition of the various Board Committees is detailed on
pages 71 - 83.
Functioning of the Board
The Board is responsible to the shareholders for the proper
management of the Company. A Statement of Directors’
Responsibilities in respect of the Company’s financial
statements is set out on page 87.
Each Director takes their continuing professional development
seriously and undertakes training from relevant professional and
industry bodies in the form of attending seminars, conferences
and continual updates of knowledge and industry practice.
Each Director and the employees of the Company are required
to undertake Anti-Bribery and Corruption training on an annual
basis as well as regular updates on new and evolving areas of
governance and compliance.
The Directors have access to the Company’s other advisors
as required including legal advisors and auditors and have the
authority to obtain external advice as deemed necessary.
The Remuneration Committee has sought advice from FIT
Remuneration Consultants LLP (‘FIT Remuneration’) regarding
the Company’s remuneration policy as well as PWC and
further details regarding this can be found in the Remuneration
Committee’s report on pages 74 - 83. The Independent Non-
Executive Director and Chairman is available to all shareholders
and staff if they have concerns which, through the normal
channels of contact, have not been resolved or for which such
contact is inappropriate. The Company has not historically
detailed the roles of Chairman, Non-Executive Director and
Company Secretary however this will be reviewed going
forward. The CEO, CFO and COO have contractual obligations
to the Company.
Conflicts of interest
Whilst conflicts should be avoided, the Board acknowledges
that instances may arise where this is not always possible. In
such circumstances, Directors are required to comply with the
Company’s Conflicts of Interest Policy and applicable conflicts
provisions of the Articles of Association and in law, and to notify
the Chairman as soon as they are aware that a conflict may
arise or has arisen and the details of such conflict are recorded
by the Company and addressed and managed in line with the
relevant policy and the Articles of Association. If a Director
notifies the Board of an actual or potential conflict of interest
they may be, if requested by the Chairman, excluded from any
related discussion and/or receipt of information and will always
be excluded from any relevant formal decision.
Retirement and re-election
The Company’s Articles of Association require that each
Director (other than any Director appointed since the date of
the notice of Annual General Meeting for that year), retire and
stand for re-election at each Annual General Meeting. All new
Directors appointed since the previous Annual General Meeting
are required to stand for election at the following Annual
General Meeting.
69Strategic ReportOverviewCorporate GovernanceGroup Accounts Statement of Corporate Governance
continued
Meetings and time commitment of the Board
The Board and each of the Board Committees are provided
with timely and accurate information sufficiently ahead of each
scheduled Board and Committee meeting to enable Board
and Committee members to have sufficient time to review
and analyse the information provided. The Board meets at
least four times a year as and when necessary and in addition
holds ad hoc discussions between the Directors. The Audit
Committee meets at least once a year, the Remuneration
Committee and the Nominations Committee meet as required.
The Chief Executive, Chief Operating Officer and Chief
Financial Officer are Directors and hold full-time Executive
positions. Non-Executive Directors are expected to commit
sufficient time to ensure they are fully aware of the Company’s
affairs and it is expected that this time commitment will vary
over the course of their terms, with intensive periods requiring
significant director focus including with respect to their specific
responsibilities on Board Committees.
The following table summarises the number of Board and Board
Committee meetings held during the year ended 31 December
2023 and the attendance record of the individual Directors:
Number of meetings in year
Paul McDade
Ian Cloke
Anastasia Deulina
Jeffrey MacDonald
Thierry Tanoh
Gavin Wilson
Board
Meetings
Audit
Committee
Remuneration
Committee
Nominations
Committee
6
6
6
6
5
6
4
2
4
3
3
4
3
-
-
3
2
3
1
-
1
1
-
1
No formal Board performance evaluation took place in 2023, this will be reviewed during 2024.
Jeffrey MacDonald
Independent non-executive Chairman
30 May 2024
70Afentra plc Annual Report and Financial Statements 2023 Audit Committee Report
Members
This Committee currently comprises:
• Thierry Tanoh (Chairman)
• Gavin Wilson
Committee composition
The search to identify and appoint a further Non-Executive
Director who would also take over as Chair of the Audit
Committee was completed successfully during 2023. Thierry
Tanoh was appointed as a Non-Executive Director and Chair of
the Audit Committee on June 13, 2023. Anastasia Deulina (CFO)
has stepped down from being a member of the committee.
Thierry Tanoh brings extensive experience to his role as Audit
Committee Chair having served as a former CEO of EcoBank
Group, a pan-African banking conglomerate with banking
operations in 33 African countries, and subsequently Minister
for Oil, Energy and Renewables for the Republic of Cote
d’Ivoire between 2017-2018. Thierry also spent 18 years at the
International Finance Corporation (IFC), where he served as a
Vice-President within the Senior Executive Team, a member
of the IFC’s credit committee based in Washington, and as
Director of Sub-Saharan Africa based in Johannesburg.
Thierry is a Certified Public Accountant (CPA France).
The Audit Committee met four times during 2023. The
Auditors have unrestricted access to the Chairman of the
Audit Committee. Audit Committee meetings are attended
by the Auditors where and when appropriate and, by invitation,
the other Directors and senior management.
Summary of responsibilities:
• Monitoring the integrity of the Group’s financial statements,
including review of the financial statements of the Company
including its annual and half-yearly reports and any formal
announcements relating to its financial performance;
•
reviewing the effectiveness of the Group’s financial reporting,
internal control policies and procedures for the identification,
assessment and reporting of risk;
• monitoring the effectiveness of the internal control
environment;
• making recommendations to the Board on the appointment
of the Auditors;
• making a recommendation to the Board on Auditors’ fees;
• agreeing the scope of the Auditor’s annual audit programme
and reviewing the output;
• ensuring the independence of the Auditors is maintained;
• assessing the effectiveness of the audit process; and
• developing and implementing policy on the engagement of
the Auditors to supply non-audit services.
The Audit Committee has considered the Group’s internal control
and risk management policies and systems, their effectiveness
and the requirements for an internal audit function in the context
of the Group’s overall risk management system. The Committee
is satisfied that the Group does not currently require an internal
audit function, however, the Committee has decided it will
undertake a review of this position during 2024.
71Strategic ReportOverviewCorporate GovernanceGroup Accounts Audit Committee Report
continued
An essential part of the integrity of the financial statements
lies around the key assumptions and estimates or judgments
to be made. Key estimates reviewed by the Committee during
2023 included:
• Acquisition Accounting. Review of INA & Sonangol
acquisitions under IFRS3, determining that the transactions
are to be accounted for as an Asset Acquisition as opposed
to a Business Combination.
• Decommissioning. Recognition of a Decommissioning
Liability under IAS37.
• Pre-funded Asset. Accounting for Decommissioning pre-
fund under IFRIC 5 as a non-current asset.
• Revenue Recognition. Accounting for Revenue under IFRS 15.
• Contingent Liabilities. INA and Sonangol acquisitions
contingent liability provisions.
• Share Based Payments. IFRS2 valuations for conditional
Our Auditors, BDO LLP, have been in place since 2010. The
Committee notes that it is considered best practice for
companies to put the external audit contract out to tender
at least every ten years. In that regard during 2023 the Audit
Committee oversaw the issue and award of a tender for
External Audit Services to take effect from the audit of the
2024 financials. Eight companies were initially approached, with
four selected to bid. Two companies subsequently withdrew
from the process leaving two companies going forward.
Following presentations made to the Audit Committee by
the two companies concerned BDO LLP were subsequently
selected to continue as an External Auditor for a further three
years commencing from the 2024 financial audit. In line with
the audit profession’s own ethical guidance, the current audit
engagement partner rotated off the Company’s account on 31
December 2022, having served for a period of five years. The
Committee has recommended to the Board that shareholders
support the re-appointment of BDO LLP at the 2024 AGM.
awards granted under the Long Term Incentive and Founders
Share Plans.
Further disclosure relating to the Auditors is set out within the
Directors Report.
• Expected credit loss model prescribed by IFRS 9.
• Carry value of investments and impairment of assets (IFRS6,
Exploration for and Evaluation of Mineral Resources).
The Committee reviews key judgments prior to publication
of the financial statements, as well as considering significant
issues throughout the year. The Committee reviewed and was
satisfied that the judgments made by management contained
within the Report and Financial Statements are reasonable.
Details of fees payable to the Auditors are set out in Note 5.
Thierry Tanoh
Chairman of the Audit Committee
30 May 2024
72Afentra plc Annual Report and Financial Statements 2023 Nominations Committee
Members
This Committee currently comprises:
• Jeffrey MacDonald (Chairman)
• Gavin Wilson
• Paul McDade
Roles and responsibilities
The Committee is focused on ensuring that the composition
of the Board and Board Committees of the Company and
its balance is optimal in order to help the Company achieve
its vision and deliver its strategy to its stakeholders. The
Committee considers governance best practice taking account
of the stage of development of the Company.
Key responsibilities include:
• Reviewing the structure, size and composition of
the Board taking into account the skills, knowledge,
experience and diversity of the various Board members
and making recommendations to the Board regarding
potential changes;
• Considering succession planning for Directors and senior
management and identifying and nominating for approval
of the Board any candidates to fill Board vacancies as and
when they arise;
• Reviewing the leadership needs of the Group, both
Executive and Non-Executive, with a view to ensuring
that the Company can continue to deliver its strategy to
stakeholders;
Report on activities
The Nominations Committee resumed its search in 2023 to
identify and appoint a further Non-Executive Director who would
also take over as Chair of the Audit Committee. In this regard, the
engagement with Preng & Associates was continued and after a
successful search, a new shortlist of candidates were identified and
interviewed by the Committee. Following the interview process a
preferred candidate was identified and offered the position. Thierry
Tanoh accepted the offer and was appointed as a Non-Executive
Director and Chair of the Audit Committee on 13 June 2023.
Following the appointment of Thierry Tanoh the Nominations
Committee is satisfied that the composition of the Board is
appropriate for the Company at this stage of its development. The
Committee remains focused on ensuring that the composition and
balance of the Board continues to be optimal to help the Company
to deliver its strategy, including supporting the African Energy
Transition as a responsible, well managed independent oil and gas
development and production company. The Committee is pleased
with the new appointment and confident that it has strengthened
an already exceptional leadership team with a proven track
record of operational excellence, value creation and stakeholder
engagement in its core business areas.
As at the date of this report the Nominations Committee is
planning to review the succession plans for the Company to ensure
business continuity in the event of unforeseen changes such as
the loss of a Director or member of the senior management team.
A refreshed succession plan will be drafted for discussion at a
Nomination Committee meeting later in the year.
• Reviewing the time commitment required from Non-
Executive Directors;
Jeffrey MacDonald
Chairman of the Nominations Committee
• Appointing any external advisors to facilitate the search
for Board candidates or approving the use of open
advertising; and
30 May 2024
• Facilitating Board evaluation.
73Strategic ReportOverviewCorporate GovernanceGroup Accounts Remuneration Committee Report
• agreeing the policy on terms and conditions to be included
in service agreements for the Chairman, Executive
Directors, and other senior management, including
termination payments and compensation commitments,
where applicable; and
•
the approval of any employee incentive schemes and the
performance conditions to be used for such schemes
including share performance targets.
Advisors to the Committee
FIT Remuneration Consultants LLP (‘FIT’) was consulted
during 2023 in respect of the operation of the Remuneration
Policy. FIT is a member and signatory of the Remuneration
Consultants Group and voluntarily operates under the
Code of Conduct in relation to Executive remuneration
consulting in the UK, details of which can be found at
www.remunerationconsultantsgroup.com. In addition,
PricewaterhouseCoopers LLP (‘PwC’) continued to advise the
Committee on the structure and terms of the Founders Share
Plan (‘FSP’). Fees in relation to these services (FIT) amounted
to $6.6k in 2023.
This report presents:
• The Directors’ Remuneration Policy, which summarises
the Remuneration Policy which was originally introduced
by the Committee following the appointment of the
new Board in 2021 and which continues to evolve as the
Company grows; and
• The Annual Report on Remuneration, which details how
the Committee operated the Policy for 2023 and how it
intends to operate the Policy going forwards.
Members
This Committee currently comprises:
• Gavin Wilson (Chairman)
• Jeffrey MacDonald
• Thierry Tanoh
I am pleased to present the Remuneration Committee’s
report for 2023. The report sets out how the Board was paid
during the year ended 31 December 2023 and how it will
be remunerated to support the delivery of the Company’s
strategy and purpose during the year ending 31 December
2024 under our remuneration policy. The report also covers
the remuneration associated with the first vesting period of
the FSP nil cost share options.
Details of the Remuneration Committee and its operation
The Remuneration Committee makes recommendations to
the Board, within its agreed terms of reference, on the structure
and quantum of the remuneration packages for Executive
Directors and reviews the remuneration for senior management.
The Committee consists entirely of Non-Executive Directors
and, where appropriate, will invite other individuals such as the
Chief Executive, HR Manager and external advisors to attend
meetings to provide suitable context for its discussions. Only
members of the Committee participate in discussions and
reach conclusions on matters for which the Committee is
responsible. No member or attendee is authorised to participate
in matters relating to their own remuneration. Committee
composition will remain under review. The Company Secretary
acts as secretary to the Committee.
Summary of responsibilities:
• Recommending to the Board a remuneration policy for the
remuneration of the Chairman, Non- Executive Directors
and Executive Directors;
• within the agreed policy, determining individual
remuneration packages for the Executive Directors;
74Afentra plc Annual Report and Financial Statements 2023
Directors’ Remuneration Policy
The Remuneration Policy is designed to align with the Company’s strategy, purpose and vision and recognises the experience of the
leadership team which continues to lead the transformation of the Company and facilitate new opportunities for shareholders and
other stakeholders.
The current Remuneration Policy is set out below.
Base salary
Purpose and link to strategy
Detail of operation
To recruit and reward Executives
of the quality required and with
appropriate skills to manage
and develop the Company and
deliver the strategy.
• Base salary is normally reviewed annually taking into account the Executive Directors’
performance, individual responsibilities and experience.
• The Committee may use market data where appropriate and will also consider matters of
retention, motivation and economic climate as well as the challenges facing the business.
• The Committee will also consider pay increases awarded to the Company’s employees
when determining increases for the Executive Directors.
• There is no maximum opportunity.
Benefits
Purpose and link to strategy
Detail of operation
To provide appropriate levels of
benefits to Executives of the
quality required and appropriate
skills to manage and develop
the Company successfully.
• Benefits may include life assurance, travel insurance, income protection, subsidised gym
membership and private medical insurance (or associated cash plan which is subject to
an annual limit). Where appropriate some of these benefits are linked to base salary. Given
the international nature of the business, relocation and expatriate benefits and reimbursed
business expenses (including any tax liability) incurred when travelling overseas in
performance of duties may be provided.
• Where future staff are employed in international jurisdictions benefit packages will be
amended to fit local circumstances and market conditions.
• The maximum potential value is the cost of the provision of these benefits.
Pension
Purpose and link to strategy
Detail of operation
•
10% of salary (delivered as a pension and/or a cash allowance).
To provide appropriate
levels of pension provision
to Executives of the quality
required and appropriate skills
to manage and develop the
Company successfully.
75Strategic ReportOverviewCorporate GovernanceGroup Accounts Remuneration Committee Report
continued
Annual bonus
Purpose and link to strategy
Detail of operation
To incentivise and reward the
delivery of the Company’s
short-term strategic objectives.
• Maximum opportunity is up to 100% of salary p.a.
• Annual targets are normally set at the start of the relevant financial year (or shortly after a
new Executive joins the Board) based on financial, operational, strategic and/or personal
performance.
• Any bonus payment is subject to the Company’s malus and claw-back policy.
Long-term incentives
Purpose and link to strategy
Detail of operation
To retain, incentivise and reward
the delivery of the Company’s
strategic objectives, and to
provide further alignment with
shareholders.
The Company operates the Founder Share Plan (‘FSP’) whereby:
• participation is limited to the founders (being those Executive Directors who have invested
their own funds in the Company’s shares);
• participants will share in the growth delivered by the Company above a threshold that the
Directors believe represents a challenging hurdle;
• malus and clawback provisions will apply.
Further details of the FSP are set out below.
•
In addition, a market standard Long-Term Incentive Plan (‘LTIP’) operates where awards may be
granted annually with vesting subject to continued service and the achievement of stretching
performance targets (whether share price based, financial, operational or strategic).
• The maximum annual LTIP opportunity is 200% of annual salary (increased from 100% of
salary to reflect the proposed switch from FSP to LTIP awards going forward as detailed in the
Annual Report on Remuneration).
•
In addition, an aggregate dilution limit operates whereby the Company may issue no more than
15% of its share capital within a ten-year period to satisfy awards to participants in the FSP,
LTIP and any other employee share plan.
Shareholding guideline
Purpose and link to strategy
Detail of operation
To align Executive and
shareholder interests.
• The Committee recognises the importance of Executive Directors aligning their interests
with shareholders through building up significant shareholdings in the Group. Executive
Directors are expected to buy, and/or retain all shares acquired on the vesting of share
awards (net of tax) until they reach a 100% of salary ownership guideline.
Non-executive Director fees
Purpose and link to strategy
Detail of operation
To attract and retain a high-
calibre Chairman and Non-
Executive Directors by offering
appropriate fees.
• The Chairman and Non-Executive Directors will receive an annual fee, normally reviewed
annually taking into account the Directors’ role, time commitment and comparator data
where relevant.
• Each Non-Executive Director is entitled to be reimbursed travel and business-associated
expenses (including any tax liability) incurred in the normal course of business.
•
Individuals are not eligible to participate in the Company’s pension arrangements or annual
bonus plan. However, as detailed in the Annual Report on Remuneration, a one-off grant of
market value options to the Chairman and Non-Executive Directors is proposed in 2024.
76Afentra plc Annual Report and Financial Statements 2023 The Founder Share Plan (‘FSP’)
The Company introduced an incentive arrangement for the founders of the Company, designed to incentivise participants to
deliver exceptional returns for shareholders over a five-year period. Under the FSP, participants are eligible to receive 15% of the
growth in returns of the Company from 16 March 2021 (being the date on which Paul McDade and Ian Cloke were appointed to
the Board), should a hurdle of doubling of the Total Shareholder Return (’TSR’) be met. For further capital raises that occur during
the performance period, additional tranches under the FSP will be created with their own threshold values, which will be calculated
with reference to the growth rates required for the initial award, as well as the time remaining to each of the measurement dates.
Additional tranches will follow the same timetable as the initial awards (i.e. performance will be measured on the same dates).
Not more than 10% of the Company’s issued ordinary share capital may be issued under the FSP and no more than 15% of the
Company’s issued share capital may be issued in aggregate under the FSP, LTIP and any other share plan of the Company.
Value delivered will be determined by stretching performance conditions as set out in the table below. A share price of £0.15
(being the share price at which new investors acquired their interest in the Company) is used to measure the level of return at each
measurement date. Testing of the level of return achieved will be at the end of years three, four and five from the 16 March 2021.
At each measurement date the value of the award will be driven by the return generated above the initial price of £0.15, being the
threshold value.
Measurement Date
Threshold Total Shareholder Return
Measurement Total Shareholder Return
First
Measurement Date
25.99% compound annual growth from the initial
price of £0.15 as at the First Measurement Date.
16 March 2024
Second
Measurement Date
16 March 2025
Third
Measurement Date
16 March 2026
The higher of:
•
•
18.92% compound annual growth from the initial
price of £0.15 as at the Second Measurement
Date; and
the highest previous measurement total
shareholder return which resulted in Conversion.
The higher of:
•
•
14.87% compound annual growth from the initial
price of £0.15 as at the Third Measurement
Date; and
the highest previous measurement total
shareholder return which resulted in Conversion.
Average of the market value for the Company’s
shares for the 30-day period ending on the
First Measurement Date plus the dividends
paid per share from 16 March 2021 to the First
Measurement Date.
Average of the market value for the Company’s
shares for the 30-day period ending on the
Second Measurement Date plus the dividends
paid per share from 16 March 2021 to the Second
Measurement Date.
Average of the market value for the Company’s
shares for the 30-day period ending on the
Third Measurement Date plus the dividends
paid per share from 16 March 2021 to the Third
Measurement Date.
If at the Measurement Dates in years three and/or four the threshold value has been reached, then nil cost options will be awarded
of which half will vest and can be exercised immediately. The remaining half will be deferred until the Measurement Date at year five.
All nil cost options awarded in respect of the Measurement Date at year five will vest immediately. Awards of all nil cost options will
be made after approval by the Remuneration Committee taking into account the overall performance of the Company during the
performance period.
77Strategic ReportOverviewCorporate GovernanceGroup Accounts Remuneration Committee Report
continued
FSP Awards (audited)
The following awards were made under the FSP, which were conditional upon the completion of a material acquisition. These are
expressed in each case as a percentage of the nil cost options to be awarded to the Executive Team in aggregate in the event that
the threshold conditions for the award of nil cost options is met:
Founder
Paul McDade
Ian Cloke
Anastasia Deulina
% Entitlement of
Total Allocation
41.5%
31.0%
27.5%
Service contracts and termination of employment
No Director currently has a notice period greater than 12 months and the service contract of the Executive Directors contain
no provision for pre-determined compensation on termination which exceeds 12 months’ salary and benefits. If an Executive
Director’s appointment is terminated within three months of a change of control of the Company, the relevant Executive Director
will be entitled to an amount equivalent to the gross value of (i) one year’s salary and other contractual benefits (save in respect of
holiday entitlement) and (ii) sixty-five per cent. (65%) of the annual bonus (if any) paid or to be paid to that Director in respect of the
financial year immediately preceding the financial year in which notice of termination was given to the Director, less any sums paid
to the Director by way of notice or payment in lieu of notice. Termination payments made to Directors on loss of office that are not
provided for within their service contracts are only made if the Committee considers them appropriate, has recommended them
to the Board and the Board has given its approval. A bonus payment will not normally be made to a Director under notice, although
there may be circumstances where one or more clear, specific and determinable KPIs have been achieved which justify a limited
bonus payment.
78Afentra plc Annual Report and Financial Statements 2023 Annual Report on Remuneration
Remuneration of Directors for the year ended 31 December 2023 (audited)
The table below reports single figure remuneration of the Directors received in 2023 and the prior year.
2023 Remuneration
Executive Directors:
Paul McDade
Ian Cloke
Anastasia Deulina
Non-executive Directors:
Jeffrey MacDonald
Gavin Wilson
Thierry Tanoh3
Fees and
basic salary
Bonus1
Defined
contribution
pension2
Benefits
in kind
Single figure
remuneration
Total 2023
£
£
£
£
£
367,500
367,500
299,250
299,250
299,250
299,250
36,750
29,925
29,925
96,000
45,000
29,077
-
-
-
-
-
-
10,196
8,121
8,341
-
-
-
781,946
636,546
636,766
96,000
45,000
29,077
Aggregate remuneration 2023 (£)
1,136,077
966,000
Aggregate remuneration 2023 (US$)
1,449,367
1,201,129
96,600
120,113
26,658
2,225,335
33,147
2,803,756
2022 Remuneration
Executive Directors:
Paul McDade
Ian Cloke
Anastasia Deulina
Non-executive Directors:
Jeffrey MacDonald
Gavin Wilson
Fees and
basic salary
Bonus4
Defined
contribution
pension2
Benefits
in kind
Single figure
remuneration
Total 2022
£
£
£
£
£
350,000
350,000
285,000
285,000
285,000
285,000
35,000
28,500
28,500
9,999
7,968
3,555
744,999
606,468
602,055
96,000
45,000
-
-
-
-
-
-
96,000
45,000
Aggregate remuneration 2022 (£)
1,061,000
920,000
Aggregate remuneration 2022 (US$)
1,310,891
1,107,588
92,000
113,730
21,522
2,094,522
26,606
2,558,815
1 Accrued in 2023, payment made in 2024.
2 Defined pension contributions paid as cash.
3 Appointed as non-executive Director June 2023.
4 Accrued in 2022, payment made in December 2023 (on the completion of the Sonangol acquisition).
79Strategic ReportOverviewCorporate GovernanceGroup Accounts Remuneration Committee Report
continued
Annual Bonus Awards for 2023
The annual bonus KPIs for 2023 were based on a combination of the continued delivery of the Company’s “buy and build” acquisition
strategy, Asset and ESG performance on Block 3/05 and 3/05A and the effective management of the 2023 corporate budget.
• Progress on Buy and Build strategy – The Company made significant progress on the buy and build strategy in 2023
completing the INA and Sonangol acquisitions in May and December respectfully and signing an SPA for the Azule transaction
for further equity in Blocks 3/05 and 3/05A in July. These deals are fully aligned with Afentra’s strategy of delivering value
accretive acquisitions that provide access to production assets that deliver material cashflow and have significant development
upside. The Azule Acquisition completed post period in May 2024.
• Asset and ESG performance – The Company’s participation as a non-operating partner has had an increasingly positive impact
on the performance of the Block 3/05 and 3/05A assets with the main outcome being production delivery at the top end of the
target range for FY 2023. On costs the focus has been on developing a solid and thorough understanding of the cost drivers and
working with the Operator to safely reduce this over time. On ESG performance our efforts have been on increasing the focus
on emissions, and implementing a plan to reduce, with tangible actions underway.
• 2023 budget – TThe underlying 2023 G&A costs were delivered within 1% of the budget agreed with the Board. In addition,
costs associated with our second RTO were delivered significantly below the costs associated with the first RTO in 2022.
The Remuneration Committee has considered the progress made against the three KPI’s set at the beginning of 2023 along with
overall corporate progress at Afentra over the year. Given the significant progress made on the buy and build strategy, this KPI is
considered to be met. Asset and ESG performance were considered strong, especially in the area of production delivery, whilst
corporate cost management also fully met expectations. Given the overall performance of the team versus the targets that were set
and the very significant progress the Company has made in 2023, the Executive Directors will receive the maximum annual bonus
of 100% of salary.
FSP share options granted in 2023 which vested in 2024 (audited)
After the Sonangol transaction was completed in December 2023, the material acquisition condition for granting FSP nil cost share
options was met. The table below sets out the resultant nil cost share options which vested on 16 March 2024.
Founder Share
Plan
Nil cost options
granted
Nil cost options
available to vest
Ordinary shares
received net of
tax
Percentage of
issued share
capital
Gross number of
unvested nil cost
options
Paul McDade
Ian Cloke
Anastasia Deulina
8,495,116
6,345,750
5,629,294
4,247,558
3,172,875
2,814,647
2,251,206
1,681,624
1,491,763
1.00%
0.74%
0.66%
4,247,558
3,172,875
2,814,647
The share price used to determine Nil cost options granted and available to vest was the average of the closing middle market
quotation of an ordinary share over the 30-day period ending immediately on the measurement date of 39.49p. The price used to
determine UK Income Tax and National Insurance was the closing price on March 15th of 39.25p.
80Afentra plc Annual Report and Financial Statements 2023 Implementation of the Remuneration Policy for 2024
A summary of how the Committee intends to operate the Policy for 2024 is set out below (with two material changes explained
beneath the table):
Base salary
Pension
Annual bonus
The Executive Directors received base salary increases of 4% from 1 January 2024 in line with the
average workforce increase. As such, the current salaries for Paul McDade, Ian Cloke and Anastasia
Deulina for 2024 are £382,200, £311,220 and £311,220 respectively.
10% of salary in line with the Remuneration Policy.
Annual Bonus will continue to be capped at 100% of base salary. Performance metrics will be based on
Business Development delivery (45%), Asset and ESG performance (45%) and G&A budget delivery
(10%). Unless considered commercially sensitive, the targets and performance against these targets will
be disclosed in the Remuneration report for the year ending 31 December 2024.
FSP
Awards have been made to the Executive Team under the FSP at the first measurement date as
detailed above. The FSP will continue to operate through to the final measurement date of March 2026.
Non-executive fees
The Non-Executive Chairman and Non-Executive Directors will receive the following fees for 2024:
Jeffrey McDonald £96,000, Gavin Wilson £55,000 (includes £10,000 for Chairmanship of the
Remuneration Committee) and Thierry Tanoh £55,000 (includes £10,000 for Chairmanship of the
Audit Committee).
In addition to the above, and following consultation with the Company’s NOMAD and major shareholders, two changes are proposed
in respect of the Executive Directors and Non-Executive Director remuneration in 2024 as explained below.
Executive Director – Long Term Incentives
Following a review of Executive Director long-term incentive provision to ensure individuals are appropriately incentivised over the
next three years to 2027 and thereafter, and noting that limited further awards likely to accrue under the current FSP in 2025 and
2026, the Committee has concluded that a more conventional LTIP should be operated for Executive Directors going forward.
The review was initiated following the current FSP reaching its first measurement date on 16 March 2024. Given the performance
of the share price over the last 3 years and the performance hurdle being met which required a doubling of total shareholder return,
15% of the growth in returns above the initial threshold value of 15p was awarded to the CEO, CFO and COO. This equated to
options being granted over c.9.0% of issued share capital, of which 50% vested on 16 March 2024 with the remainder vesting on 16
March 2026. The 50% which vested resulted in an issue of 5,424,593 new shares, equivalent to 2.4% of issued share capital net of
employment taxes which were paid by the Company on behalf of the individuals in cash. It is anticipated that when the remaining
options vest they will also result in an issue of around 2.4% of issued share capital giving a total of 4.8%. Absent capital raises in the
next circa two years, little additional value is expected to accrue at the second (March 2025) and final test date (March 2026) given
that the number of gross options already awarded, is 9.3% of issued share capital, being close to the cap of 10%.
The key terms for the proposed 2024 LTIP awards are as follows:
Award levels:
200% of salary for the CEO and 150% of salary each for the CFO and COO.
Vesting period:
Awards will vest three years from grant subject to performance and continued employment.
Performance targets:
0% of awards will vest for absolute TSR of 10% p.a. increasing pro-rata to 100% of awards vesting for
absolute TSR of 35% p.a. as measured over the three-years from grant.
81Strategic ReportOverviewCorporate GovernanceGroup Accounts Remuneration Committee Report
continued
Non-Executive Director – Market Value Options
Afentra’s success to date has been a collaborative effort of the whole team, including the Non- Executive Directors. The Executive
Management and staff will benefit from the share awards schemes however no such scheme was put in place for the Non-Executive
Directors. The growth potential of the Company over the next three years is significant and we look forward to a similar collaborative
team effort to deliver further success and value creation. In recognition of the Non-Executive Directors’ role to date and the
importance of their input over the next three years, it is proposed to put in place a one-off award of market value share options, to
continue to recognise the significant input of the Non-Executive Directors, both in respect of their time and experience and their
importance to the Company’s strategy over the next three years, over and above their annual fees.
As such, the Board wishes to grant the Non-Executive Directors a one-off award of market value share options in the 42-day window
following the publication of the 2023 results.
The key terms of the proposed Options are as follows:
• Jeffrey MacDonald, Thierry Tanoh and Gavin Wilson will each receive market value share options (’Options’) over 1,500,000
shares (i.e. 4.5m shares in total, which equates to c.2% of the Company’s current issued share capital).
• The exercise price of the Options will be based on the five-day average closing share price preceding the grant date. This means that
the Options will only provide a return for the Non-Executive Directors in respect of any future growth in the Company share price.
• Options will vest in a single tranche three years from grant, subject to continued service as a Director but no other performance
conditions other than the requirement to grow the share price to deliver value.
• Once vested, the Options will normally remain exercisable until the 10th anniversary of the grant.
• Options will normally lapse if a participant’s appointment as a Director ceases. However, in cases of death, injury, disability, ill-
health, retirement (with the consent of the Board), or in other circumstances at the Board’s discretion, a NED may be permitted
to retain their Option and it may vest at the normal vesting date with vesting normally subject to time pro-rating.
•
In the event of a takeover or similar corporate event, unvested Options will vest at the time of the event with vesting normally
subject to time pro-rating.
The Remuneration Committee will propose these changes (Executive Director Long Term Incentive Scheme and Non- Executive
Director Market Value Options ) to the Board for approval.
Statement of Directors interests (audited)
The current Directors’ beneficial interests in the issued share capital of the Company are as follows:
Ordinary shares of 10p each
30 May 2024
31 December 2023
31 December 2022
Executive Directors:
Paul McDade
Ian Cloke
Anastasia Deulina
Non-executive Directors:
Gavin Wilson
Jeffrey MacDonald
Thierry Tanoh
5,339,398
3,807,455
2,539,835
3,231,666
60,000
-
3,088,192
2,126,185
1,048,072
3,131,666
60,000
-
3,088,192
2,128,009
1,048,072
2,981,666
-
-
82Afentra plc Annual Report and Financial Statements 2023 The current Directors’ beneficial interests in unvested nil cost options are as follows:
Gross no. of unvested nil cost options
30 May 2024
31 December 2023
31 December 2022
Executive Directors:
Paul McDade
Ian Cloke
Anastasia Deulina
4,247,558
3,172,875
2,814,647
-
-
-
-
-
-
Beneficial shareholdings include the shareholdings of a Director’s spouse and infant children.
Directors’ and Officers’ liability insurance
The Company has granted an indemnity to its Directors (including subsidiary undertakings) under which the Company will, to
the maximum extent possible by law, indemnify them against all costs, charges, losses and liabilities incurred by them in the
performance of their duties.
The Company provides limited Directors’ and Officers’ liability insurance, at a cost of approximately $62.9k in 2023 (2022: $74.8k).
External directorships
None of the executive Directors receive fees in relation to directorships in other companies.
Gavin Wilson
Chairman of the Remuneration Committee
30 May 2024
83Strategic ReportOverviewCorporate GovernanceGroup Accounts Extractive Industries Transparency Initiative
In accordance with the Transparency Criteria as set out by the EITI, the following payments to government bodies have been made
during the year ended 31 December 2023:
Angola - Block3/05
Somaliland - Odewayne1
1 Payments made by Genel Energy. Afentra (East Africa) Ltd fully carried for its share of cost.
2023
$000
1,856
75
1,931
2022
$000
-
75
75
84Afentra plc Annual Report and Financial Statements 2023 Directors’ Report
The Directors present their Annual Report and Financial
Statements on the affairs of the Company and its subsidiaries,
together with the independent Auditors’ Report for the year
ended 31 December 2023.
Principal activity and business review
With West Africa as its geographic focus, the principal activities
of the Group and Company throughout the year were completion
of the Angolan INA and Sonangol asset transactions, and
becoming a valued and proactive non-operating partner on
the two acquired Blocks, 3/05 and 3/05A, as well as signing an
SPA for the purchase of Azule’s interests in Blocks 3/05 and
3/05A and identifying further upstream opportunities by way of
acquisition and obtaining upstream licence interests. The future
strategy and prospects for the Group are reviewed in detail in the
Chairman’s Statement, Chief Executive Officer’s Statement and
the Strategic Report section of this report.
The Group operates through subsidiary undertakings as
appropriate to the fiscal environment. Subsidiary undertakings of
the Group are set out in Note 13 to the financial statements.
In 2023 the Group used several KPIs to assess the business
performance against strategy including M&A led growth
initiatives and acquisitions, managing the performance of the
group’s newly acquired assets and controlling its G&A expenses.
In 2024 the future developments of the Group will be focused
on realising the upside of the portfolio assembled, future
participation in the Angolan onshore Blocks KON15 and KON19,
the safe operational delivery of asset performance targets and
further M&A and new licence opportunities, as described in the
Strategic Report pages 18 - 65.
Results and dividends
The Group loss for the financial year was $2.7 million (2022:
loss $9.1 million). This leaves accumulated Group retained
earnings of $19.2 million (2022: retained earnings of $21.9
million) to be carried forward. The Directors do not recommend
the payment of a dividend (2022: $nil).
Directors Liabilities
Qualifying third-party indemnity provisions for the benefit of all
the Directors were in force throughout the financial year and
they remained in force as at the date of approval of the Annual
Report as described in the Remuneration Committee report
pages 74 - 83.
Going concern
The Group business activities, together with the factors likely to
affect its future development, performance and position are set
out in the Asset summary on pages 28 - 41. The financial position
of the Group and Company, its cash flows and liquidity position
are described in the Financial Review on pages 60 - 63. In
addition, Note 24 to the financial statements includes the Group’s
objectives, policies and processes for managing its capital
financial risk: details of its financial instruments and its exposures
to credit risk and liquidity risk.
The Group has sufficient cash resources for its working capital
needs and its committed capital expenditure programme at
least for the next 12 months from the signing of the annual
report. Consequently, the Directors believe that both the
Group and Company are well placed to manage their business
risks successfully.
The Group has sufficient cash resources based on existing cash
on balance sheet, proceeds from future oil sales and utilisation of
the revolving working capital facility to meet its liabilities as they
fall due for a period of at least 12 months from the date of signing
these financial statements, based on forecasts covering the
period through to 31 December 2025, notwithstanding the impact
of the situation in Ukraine and the Middle East and the resultant
impact to commodity prices and foreign exchange rates.
The Board has looked at a combination of downside scenarios,
including a production shortfall alongside lower than anticipated
oil prices. The impact of the downside scenarios can be
mitigated by the implementation of hedges of 70% of the
remaining 2024 cargos. Further scenarios associated with
additional acquisitions of KON15 and KON19 have also been
reviewed and the Board believe that liquidity is sufficient to
pursue these opportunities and cover all financial covenants,
the tests of which, for current borrowings, have been passed for
the Historic Ratio (Net debt/Ebitda) and the Gross liquidity test,
and are not forecast to be breached within the going concern
period. The Board also notes the implementation of the hedging
policy and is confident in the utilisation of commodity-based
derivatives to manage oil price downside risk. Thus, the Board
believes its appropriate to continue to adopt the going concern
basis of accounting in preparation of the financial statements.
The Directors have at the time of approving the financial statements,
a reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future.
85Strategic ReportOverviewCorporate GovernanceGroup Accounts Directors’ Report
continued
Capital structure
Details of the issued share capital, together with details of the
movements in the Company’s issued share capital during the
year, are shown in Note 18 to the financial statements. The
Company has one class of ordinary share, which carries no
right to fixed income. Each share carries the right to one vote
at general meetings of the Company. There are no specific
restrictions on the size of a holding nor on the transfer of
shares, which are both governed by the general provisions of
the Articles of Association of the Company and prevailing
legislation. The Directors are not aware of any agreements
between holders of the Company’s shares that may result in
restrictions on the transfer of securities or on voting rights. No
person has any special rights of control over the Company’s
share capital and all issued shares are fully paid.
Directors
The Directors who served during the year were as follows:
• Mr. Paul McDade
• Mr. Ian Cloke
• Ms. Anastasia Deulina
• Mr. Jeffrey MacDonald
• Mr. Thierry Tanoh
• Mr. Gavin Wilson
Biographical details of the current serving Directors can be found
in the Board of Directors section of this report on page 66.
Directors and election rotation
With regard to the appointment and re-election of the Directors,
the Company is governed by its Articles of Association, the
Companies Acts and related legislation.
Business risk
A summary of the principle and general business risks can be
found within the Strategic Report on pages 54 - 57.
Financial instruments
Information about the use of financial instruments, the Group’s
policy and objectives for financial risk management is given in
Note 24 to the financial statements.
Subsequent events
Details of the subsequent events are given in Note 28 to the
financial statements.
Auditors
Each of the persons who are a Director at the date of approval
of this Report and Financial Statements confirms that:
• So far as the Director is aware, there is no relevant audit
information of which the Company’s Auditors are unaware; and
•
the Directors have taken all the steps that they ought to
have taken as a director in order to make themselves aware
of any relevant audit information and to establish that the
Company’s Auditors are aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the
Companies Act 2006.
BDO LLP was re-appointed as Auditor in 2023 following a
tender process overseen by the Audit Committee and will
therefore continue in office as Auditors. A resolution to appoint
BDO will be proposed at the forthcoming Annual General
Meeting to be held on 27 June 2024.
Significant shareholdings
Except for the holdings of ordinary shares listed below, the
Company has not been notified by or become aware of any
persons holding 3% or more of the 226,155,990 issued ordinary
shares of 10 pence each of the Company at 29 May 2024:
Paul McDade
Chief Executive Officer
30 May 2024
Askar Alshinbayev
Denis O'Brien
Kite Lake Capital Management
(UK) LLP
Number
%
48,104,784
21.27%
15,750,000
6.96%
13,500,000
5.97%
Athos Capital Limited
6,887,073
3.05%
86Afentra plc Annual Report and Financial Statements 2023 Statement of Directors’ Responsibilities
The Directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law
and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
are required to prepare the Group and Company financial
statements in accordance with UK adopted international
accounting standards. Under company law the directors must
not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Group and Company and of the profit or loss of the Group for
that period.
In preparing these financial statements, the Directors are
required to:
• Select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
• state whether they have been prepared in accordance with
UK adopted international accounting standards subject
to any material departures disclosed and explained in the
financial statements; and
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the Group
and the Company will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any
time the financial position of the Company and enable them
to ensure that the Financial Statements comply with the
requirements of the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the Annual Report
and the Financial Statements are made available on a website.
Financial Statements are published on the Company’s website
in accordance with legislation in the United Kingdom governing
the preparation and dissemination of Financial Statements,
which may vary from legislation in other jurisdictions. The
maintenance and integrity of the Company’s website is the
responsibility of the Directors. The Directors’ responsibility also
extends to the ongoing integrity of the Financial Statements
contained therein.
For and on behalf of the Board
Paul McDade
Chief Executive Officer
Anastasia Deulina
Chief Financial Officer
30 May 2024
30 May 2024
87Strategic ReportOverviewCorporate GovernanceGroup Accounts Group Accounts
Year ended 31 December 2023
88Afentra plc Annual Report and Financial Statements 2023 89Strategic ReportOverviewCorporate GovernanceGroup Accounts Independent Auditor’s Report
to the members of Afentra Plc
Opinion on the Financial Statements
In our opinion:
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31
December 2023 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with UK adopted international accounting
standards;
the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice; and
•
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Afentra Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended
31 December 2023 which comprise the consolidated statement of comprehensive income, the consolidated statement of financial
position, the consolidated statement of changes in equity, the consolidated statement of cash flows, the company statement
of financial position, the company statement of changes in equity, the notes to the financial statements, including a summary of
material accounting policies.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and
UK adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the
Parent Company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting
Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our
report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the Parent
Company’s ability to continue to adopt the going concern basis of accounting included:
• Verifying the opening cash position used in the cash flow forecast.
• Reviewing and recalculating forecast covenants included in the Reserve Based Lending facility.
• Obtaining and assessing the reasonableness of the Group and Parent Company’s base case cash flow forecasts and underlying
assumptions which have been approved by the Board, by reviewing historic forecasts against actuals in order to assess the
ability of Management to forecast accurately.
90Afentra plc Annual Report and Financial Statements 2023 • Reviewing licence agreements to check that committed expenditure is appropriately included in forecasts.
• Comparing the level of committed exploration and investment spend per the Group’s and Parent Company’s contractual
arrangements to the level of such expenditure included in the going concern model.
• Performing checks on the arithmetical accuracy of the cash flow forecasts approved by the directors.
• Reviewing stress test scenarios including scenarios relating to reduced production levels and reduced commodity prices.
• Reviewing and considering the adequacy of disclosures in the financial statements relating to the Directors’ assessment of the
going concern basis of preparation in order to conclude whether the disclosure reflects our understanding of the business and
evidence obtained during the course of the audit.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group and the Parent Company’s ability to continue as a going concern
for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of
this report.
Overview
Coverage
100% (2022: 100%) of Group total assets and loss before tax
Key audit matters
Carrying value of exploration and evaluation assets
Acquisition accounting
Carrying value of investments in subsidiaries in the Parent Company Accounts
Materiality
Group Financial Statements as a whole
• $1,600k based on 3.5% of net assets (2022: $790k based on 1.5% of total assets)
2023
2022
Yes
Yes
Yes
Yes
No
Yes
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system
of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of
management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
Our Group audit scope focused on the Group’s principal operating entities, Afentra Plc, Afentra Angola Limited and Afentra Northwest
Africa Holdings Limited. We have identified these three entities as significant components for the purpose of our Financial Statement
audit, based on their relative share of net assets. Full scope audits were performed on these significant components.
The remaining components of the Group were considered non-significant and these components were principally subject to analytical
review procedures, together with additional substantive testing over the risk areas detailed above where applicable to that component.
All audit work (full scope audit or review work) was conducted by BDO LLP.
91Strategic ReportOverviewCorporate GovernanceGroup Accounts Independent Auditor’s Report (cont.)
to the members of Afentra Plc
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the
audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Acquisition Accounting
See Note 1e and Note 2 for details of the accounting policy and judgements relating to this key audit matter.
Details of the asset acquisitions are provided in Note 25.
The group completed the acquisition of participating interests in the producing oil and gas blocks 3/05, 3/05A and 23 during the year
for total consideration of $74.6 million. The group acquired a 4% interest in Block 3/05 and a 5.33% interest in Block 3/05A from INA
in May 2023 and an additional 14% interest in block 3/05 and a 40% interest in block 23 from Sonangol in December 2023.
The acquisition of the oil blocks resulted in the recognition of material balances on the consolidated statement of financial position
and involved management applying significant judgement in determining whether joint control exists in the operating agreements,
and in forming an appropriate accounting policy for an acquisition of a working interest in a producing oil field where the definition of
joint control is not met.
Management also made significant judgement in determining the amount of contingent consideration attributable to both
acquisitions including but not limited to judgements on future production, future oil price and in allocating the consideration across
the assets acquired and liabilities assumed.
Given the materiality of the acquired balances in the context of the Consolidated statement of financial position and the significant
level of judgement involved, we considered this to be a key audit matter.
How the scope of our audit addressed the key audit matter
Our audit work included the following:
• Obtaining and critically reviewing management’s assessment of whether joint control exists within the operating arrangement,
in line with the requirements of IFRS 11 Joint Arrangements;
• We reviewed and obtained an understanding of the terms of the joint operating agreement and production sharing agreement
and with the assistance of our technical experts, we challenged management’s assessment of whether joint control exists and
reviewed the appropriateness of Management’s accounting policy for an acquisition of a working interest in a producing oil field
where the definition of joint control is not met;
• We reviewed the appropriateness of management’s allocation of purchase consideration to individual identifiable assets
acquired and liabilities assumed, on a relative fair value basis and challenged the inputs to the fair values applied, specifically
the oil and gas asset which included the discount rate, oil price and reserves estimate from the competent persons report;
• We assessed the competence and capabilities of Management’s independent expert who prepared the competent persons
report by reading publicly available information and reading their terms of engagement with the Group to identify any matters
that could have affected their independence and objectivity or imposed scope limitations upon them;
• We reviewed the reasonableness of the probability weighting applied to measure contingent consideration and challenged
management’s assessment of the likelihood of each contingency being met. Our challenge of Management’s judgement included
agreeing estimates of future oil prices and production forecasts to external sources and the lead operator’s budget; and
• With the assistance of our valuations experts, we reviewed the appropriateness of the discount rate used in discounting
contingent consideration.
Key observations
Based on the procedures performed, we found the judgement made by Management regarding the acquisition accounting to
be reasonable.
92TitleYear ended 31 December 2023Afentra plc Annual Report and Financial Statements 2023 Carrying value of exploration and evaluation asset
See Note 1g and Note 2 for details of the accounting Policy, and judgements relating to this key audit matter.
Details of the exploration and evaluation assets are provided in Note 10.
The Group holds an exploration and evaluation (‘E&E’) asset with a carrying value of $21,867,000 (2022: $21,324,000) which
represents its 34% interest in the Odewayne Block, fully carried by Genel Energy Somaliland Limited (‘Genel’) for its share of the
costs of all exploration activities during the Third and Fourth Periods of the production sharing agreement.
Management performed an impairment indicator review in accordance with accounting standards to assess whether there were
any indicators of impairment for the exploration asset and whether a full impairment assessment was required. Following this
assessment, Management concluded that there were no impairment indicators.
Given the materiality of the E&E asset in the context of the Group’s statement of financial position and the significant judgement
involved in making the impairment assessment, we have considered this to be a key audit matter.
How the scope of our audit addressed the key audit matter
Our specific audit testing in regard to this included:
• We reviewed Management’s impairment indicator assessment and considered whether there are any indicators of impairment
in line with criteria set out under the accounting standards including, results of recent exploration work performed in the year,
future planned expenditure as well as publicly available information;
• We obtained and reviewed the oil and gas licenses and ensured that the Group still has legal title;
• We reviewed the audited financial statements of the joint venture partner to identify if there were adverse information or
impairment relating to Odewayne;
• We additionally reviewed public information relating to the joint venture partner’s outlook for exploration activities in Somaliland;
• We reviewed and considered Management’s position on whether there is an intention to develop the asset and whether it
remains commercially viable;
• We reviewed the FY 24 budget and work programmes to confirm there is substantive exploration activity planned on the
Odewayne block; and
• We reviewed financial statements disclosures to confirm that disclosures are in line with the accounting standards.
Key observations
Based on the procedures performed, we found the judgements made by Management regarding its impairment indicator review
of the Group’s E&E asset to be reasonable.
93Strategic ReportOverviewCorporate GovernanceGroup Accounts Independent Auditor’s Report (cont.)
to the members of Afentra Plc
Carrying value of net investment in subsidiaries (investments and loans receivables) in the Parent Company Accounts
See Note 1k and Note 2 for details of the accounting policy, critical accounting estimate, and judgements relating to this key audit matter.
Details of the Parent Company’s investments in subsidiaries are provided in Notes 13 and 15.
The recoverability of the net investment in subsidiaries is intrinsically linked to the underlying producing Oil & Gas and exploration
and evaluation assets.
Management has performed an impairment indicator review in accordance with the accounting standards to assess whether there
are indicators that the carrying value of its net investments in subsidiaries may be higher than its recoverable amount.
Based on this assessment management has concluded that no impairment indicators exist and that no impairment of the net
investments is required. Management also considered whether the subsidiaries could repay the loans if they were demanded at the
statement of financial position date. Based on management’s assessment, no expected credit loss was recognised in the year.
The material value of the net investments in subsidiary companies and the significant judgement involved in determining
impairment indicators and expected credit losses makes this a key area of focus for our audit, and we have considered this to be
a key audit matter.
How the scope of our audit addressed the key audit matter
Our specific audit testing in regard to this included:
• We reviewed management’s impairment indicator assessment for the net investment in subsidiaries in accordance with the
accounting standards and considered whether there were any indicators of impairment;
• We reviewed the estimates and assumptions used in management’s impairment indicator assessment and checked for
consistency with the assessment of the carrying value of the underlying assets and checked for any evidence that could
indicate that the assets would not support a recovery of the carrying amount of the net investment;
• We obtained and reviewed management’s assessment of the projects and related results within each subsidiary, and their
conclusions reached on whether the projects are considered to be successful or unsuccessful. This included consideration
of technical data, the award of the necessary licences, the ability to raise finance to develop the projects and the ability to
sell the project;
• We have confirmed our understanding of the nature and terms of the intercompany loan receivables through discussion with
management and obtaining supporting documentation;
• We have obtained and reviewed management’s assessment for expected credit losses and evaluated the ability of the
subsidiaries to repay the loan balances, based on the assessment of the underlying E&E and Oil & Gas assets; and
• We reviewed minutes of meetings and press releases to corroborate management’s assessment of the status of each project.
Key observations
Based on the procedures performed, we found the judgement and estimates made by management are reasonable.
94Afentra plc Annual Report and Financial Statements 2023 Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We
consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of
reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality
level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will
not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality
as follows:
Materiality
Basis for determining
materiality
Rationale for the
benchmark applied
Group Financial Statements
Parent Company Financial Statements
2023
$’000
1,600
2022
$’000
790
2023
$’000
1,200
2022
$’000
592
3.5% of net assets
1.5% of total assets
75% of Group materiality
Capped at 75% of Group materiality given the
assessment of the component’s aggregation risk.
Following the
acquisition of a
working interest in the
producing oil fields
during the year, we
consider net assets to
be one of the principal
considerations for
users of the financial
statements as the
Group incurred
significant debt upon
acquiring the oil and
gas assets in Angola,
which resulted in
change (mix of equity
and debt) in the
gearing of the Group.
In the comparative,
we considered total
assets to be the most
significant determinant
of the Group’s financial
performance on the
basis that the Group’s
principal activity is the
development of oil and
gas exploration assets.
We consider total
assets to be one
of the principal
considerations for
users of the financial
statements.
Performance
materiality
Basis for determining
performance
materiality
Rationale for the
percentage applied
for performance
materiality
1,200
592
900
444
75% of the above materiality level.
In reaching our conclusion on the level of performance materiality to be applied we considered a
number of factors including the expected total value of known and likely misstatements (based on
past experience), our knowledge of the Group’s internal controls and management’s attitude towards
proposed adjustments.
95Strategic ReportOverviewCorporate GovernanceGroup Accounts Independent Auditor’s Report (cont.)
to the members of Afentra Plc
Specific materiality
We also determined that for the statement of comprehensive income, a misstatement of less than materiality for the financial
statements as a whole, specific materiality, could influence the economic decisions of users. As a result, we determined materiality
for these items based on 7.8% of Earning before Interest, tax, depreciation and amortisation (2022: Nil) because the Group’s loan
facilities include financial covenants which are based on this metric.
Component materiality
For the purposes of our Group audit opinion, we set materiality for each significant component of the Group, apart from the Parent
Company whose materiality is set out above based on a percentage of between 46% and 75% (2022:75%) of Group materiality
dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged
from $730k to $1,200k (2022: $592k). In the audit of each component, we further applied performance materiality levels of 75%
(2022:75%) of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was
appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of $64k (2022: $15k).
We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information included in the Annual
report and Financial Statements other than the financial statements and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course
of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
96Afentra plc Annual Report and Financial Statements 2023 Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the
Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the Strategic report and the Directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the Strategic report and the Directors’ report have been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report
or the Directors’ report.
Matters on which we
are required to report
by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our
audit have not been received from branches not visited by us; or
•
the Parent Company financial statements are not in agreement with the accounting records and
returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors’ responsibilities, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative
but to do so.
Auditor’s responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
97Strategic ReportOverviewCorporate GovernanceGroup Accounts Independent Auditor’s Report (cont.)
to the members of Afentra Plc
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on:
• Our understanding of the Group and the industry in which it operates;
• Discussion with management, those charged with governance and the Audit Committee; and
• Obtaining an understanding of the Group’s policies and procedures regarding compliance with laws and regulations;
We considered the significant laws and regulations to be the applicable accounting framework, tax legislations, the Angolan
Petroleum Activities Law, the Production Sharing Agreement, AIM Listing Rules and the QCA corporate governance code.
The Group is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the
amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws
and regulations to be environmental regulations and the health and safety legislation.
Our procedures in respect of the above included:
• Reviewing RNS announcements and minutes of meeting of those charged with governance for any instances of non-
compliance with laws and regulations;
• Holding discussions with management and the Audit Committee regarding their knowledge of any known or suspected
instances of fraud;
• Review management’s correspondence with regulatory and tax authorities for any instances of non-compliance with laws
and regulations;
• Review of legal expenditure accounts to understand the nature of expenditure incurred; and
• Reviewing minutes of board meetings as well as the technical, finance, contractor and operating committee meetings.
Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment
procedures included:
• Making enquiries with management and those charged with governance regarding any known or suspected instances of fraud;
• Obtaining an understanding of the Group’s policies and procedures relating to:
• Detecting and responding to the risks of fraud; and
•
Internal controls established to mitigate risks related to fraud.
• Reviewing minutes of meetings of those charged with governance for any known or suspected instances of fraud;
• Discussion amongst the engagement team as to how and where fraud might occur in the financial statements;
• Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material
misstatement due to fraud; and
• Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these.
98Afentra plc Annual Report and Financial Statements 2023 Based on our risk assessment, we considered the areas most susceptible to fraud to be management override of controls via
posting inappropriate journal entries and management bias with respect to significant accounting estimates and judgements.
Our procedures in respect of the above included:
• Testing a sample of journal entries throughout the year, which met pre-defined risk criteria, by agreeing to supporting
documentation and testing a sample of journal outside of the risk criteria, by agreeing to supporting documentation;
• Assessing the judgements made by management when making key accounting estimates and judgements, and challenging
management on the appropriateness of these judgements, specifically around key audit matters as noted above; and
• Performing a detailed review of the Group’s year end adjusting entries and consolidation entries and investigating any that
appear unusual as to nature or amount to supporting documentation.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were
all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with
laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the
risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud
may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations
in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
John Black (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor,
55 Baker Street, Marylebone, London W1U 7EU
30 May 2024
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
99Strategic ReportOverviewCorporate GovernanceGroup Accounts Consolidated Statement of Comprehensive Income
Year ended 31 December
Revenue
Cost of sales
Gross profit
Other administrative expenses
Pre-licence costs
Total administrative expenses
Profit/(loss) from operations
Finance income
Finance expense
Loss before tax
Tax
Loss for the year attributable to the owners of the parent
Other comprehensive expense - items to be reclassified to
the income statement in subsequent periods
Currency translation adjustments
Total other comprehensive expense for the year
Total comprehensive expense for the year attributable
to the owners of the parent
Basic and diluted loss per share (US cents)
Note
3
4
5
7
7
8
9
2023
$000
26,390
(12,571)
13,819
(6,647)
(4,810)
(11,457)
2,362
240
(3,508)
(906)
(1,799)
(2,705)
(96)
(96)
(2,801)
(1.2)
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
2022
$000
-
-
-
(5,484)
(3,491)
(8,975)
(8,975)
86
(197)
(9,086)
-
(9,086)
-
-
(9,086)
(4.1)
100Afentra plc Annual Report and Financial Statements 2023 Consolidated Statement of Financial Position
Year ended 31 December
Non-current assets
Exploration and evaluation assets
Property, plant and equipment
Other non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Restricted Funds
Total assets
Equity
Share capital
Currency translation reserve
Share option reserve
Retained earnings
Total equity
Current liabilities
Borrowings
Trade and other payables
Contingent consideration
Lease liability
Non-current liabilities
Borrowings
Contingent consideration
Provisions
Lease liability
Total liabilities
Total equity and liabilities
Note
10
11
12
14
15
16
17
18/19
19
19
19
20a
21
22a
23
20a
22a
22b
23
2023
$000
21,867
75,131
76,973
173,971
13,441
3,640
14,729
4,850
36,660
210,631
28,143
(298)
965
19,162
47,972
6,752
27,307
4,621
155
38,835
24,951
21,863
77,010
-
123,824
162,659
210,631
2022
$000
21,324
540
-
21,864
-
419
20,384
10,200
31,003
52,867
28,143
(202)
-
21,867
49,808
-
2,689
-
210
2,899
-
-
33
127
160
3,059
52,867
The financial statements of Afentra plc, registered number 1757721, were approved by the Board of Directors and authorised for
issue on 30 May 2024. Signed on behalf of the Board of Directors:
Paul McDade
Chief Executive Officer
30 May 2024
101Strategic ReportOverviewCorporate GovernanceGroup Accounts Consolidated Statement of Changes in Equity
Year ended 31 December 2023
At 1 January 2022
Loss for the year
Currency translation adjustments
Total comprehensive expense for the year
attributable to the owners of the parent
At 31 December 2022
Loss for the year
Currency translation adjustments
Total comprehensive expense for the year
attributable to the owners of the parent
Share based payment charge for the year
Share
capital
$000
28,143
-
-
-
28,143
-
-
-
-
At 31 December 2023
28,143
Currency
translation
reserve
$000
(202)
-
-
-
(202)
-
(96)
(96)
-
(298)
Share
option
reserve
$000
-
-
-
-
-
-
-
-
Retained
earnings
$000
30,953
(9,086)
-
Total
$000
58,894
(9,086)
-
(9,086)
(9,086)
21,867
(2,705)
-
(2,705)
49,808
(2,705)
(96)
(2,801)
965
965
-
965
19,162
47,972
102Afentra plc Annual Report and Financial Statements 2023 Consolidated Statement of Cash Flows
Year ended 31 December
Note
Operating activities
Loss before tax
Depreciation, depletion & amortisation
11
Share-based payment charge
Finance income and gains
Finance expense and losses
Operating cash flow prior to working capital movements
Decrease in inventories (from acquisition date)
Decrease/(increase) in trade and other receivables (from
acquisition date)
(Decrease)/increase in trade and other payables (from
acquisition date)
Increase/(decrease) in provisions
Cash flow generated from/(used in) operating activities
Petroleum income tax paid
Net cash flow generated from/(used in) operating activities
Investing activities
Corporate acquisitions
Interest received
Purchase of property, plant and equipment
Exploration and evaluation costs
Cash inflow from/(outflow from) restricted funds
Net cash used in investing activities
Financing activities
Drawdown on loan facilities net of transaction costs
Principal repayments on loan facilities
Interest paid
Principal and interest paid on lease liability
25
7
11
10
17
20a
20a
7
Net cash generated from/(used in) financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
Cash and cash equivalents at end of year
16
2023
$000
(906)
2,880
965
(240)
3,508
6,207
4,789
5,809
(2,688)
3
14,120
(1,799)
12,321
(48,126)
240
(3,316)
(43)
5,350
(45,895)
45,066
(14,367)
(2,504)
(245)
27,950
(5,624)
20,384
(31)
14,729
2022
$000
(9,086)
244
-
(86)
197
(8,731)
-
(131)
2,170
(3)
(6,695)
-
(6,695)
-
86
(127)
(35)
(10,200)
(10,276)
-
-
-
(225)
(225)
(17,196)
37,727
(147)
20,384
103Strategic ReportOverviewCorporate GovernanceGroup Accounts Company Statement of Financial Position
Year ended 31 December
Non-current assets
Investments
Trade and other receivables
Current assets
Trade and other receivables
Cash and cash equivalents
Restricted funds
Total assets
Equity
Share capital
Share option reserve
Retained earnings
Total equity
Current liabilities
Trade and other payables
Total liabilities
Total equity and liabilities
Note
13
15
15
16
17
18/19
19
19
21
2023
$000
21,105
35,527
56,632
10,329
4,413
-
14,742
71,374
28,143
965
13,525
42,633
28,741
28,741
28,741
71,374
2022
$000
20,140
21,177
41,317
4,426
20,380
8,000
32,806
74,123
28,143
-
17,951
46,094
28,029
28,029
28,029
74,123
The loss for the financial year within the Company accounts of Afentra plc was $4.4 million (2022: $3.6 million loss). As provided by s408 of
the Companies Act 2006, no individual statement of comprehensive income and expense is provided in respect of the Company.
The financial statements of Afentra plc, registered number 1757721, were approved by the Board of Directors and authorised for issue
on 30 May 2024. Signed on behalf of the Board of Directors:
Paul McDade
Chief Executive Officer
30 May 2024
104Afentra plc Annual Report and Financial Statements 2023
Company Statement of Changes in Equity
Year ended 31 December 2023
At 1 January 2022
Total comprehensive expense for the year
At 31 December 2022
Total comprehensive expense for the year
Share based payment charge for the year
At 31 December 2023
Share
capital
$000
28,143
-
28,143
-
-
28,143
Share
option
reserve
$000
-
-
-
-
965
965
Retained
earnings
$000
21,580
(3,629)
17,951
(4,426)
-
Total
$000
49,723
(3,629)
46,094
(4,426)
965
13,525
42,633
105Strategic ReportOverviewCorporate GovernanceGroup Accounts Notes to the Financial Statements
Year ended 31 December 2023
1. MATERIAL ACCOUNTING POLICIES
a) General information
Afentra plc is a public company limited by shares, incorporated in the United Kingdom under the UK Companies Act 2006. The
address of the registered office is High Holborn House, 52-54 High Holborn, London WC1V 6RL. The Company and the Group are
engaged in the exploration, development and production of commercial oil and gas.
These financial statements are presented in US dollars as this is the currency in which the majority of the Group’s Cash and cash
equivalents, revenues and expenditure are transacted. The functional currency of the Company is US dollars.
b) Basis of accounting and adoption of new and revised standards
The financial statements have been prepared in accordance with UK adopted international accounting standards and with those
parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated. As ultimate parent of
the Group, the Company has taken advantage of Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101), which
addresses the financial reporting requirements and disclosure exemptions in the individual financial statements of “qualifying entities”,
that otherwise apply the recognition, measurement and disclosure requirements of UK adopted international accounting standards.
The disclosure exemption adopted by the Company in accordance with FRS 101 are:
•
•
the requirements under IAS 7 to present a cash flow statement; and
the requirements of IFRS 7 Financial Instruments: Disclosures, as equivalent disclosures are included in the consolidated
financial statements.
(i) New and amended standards adopted by the Group:
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set
out below.
The following standards and amendments became effective in the year ended 31 December 2023.
Standard
IFRS 17
IAS 1
IAS 8
IAS 12
Description
Insurance Contracts
Amendments – Disclosure of Accounting Policies
Amendments – Definition of Accounting Estimates
Amendment - Deferred Tax related to Assets and Liabilities arising from a
Single Transaction
Effective date
1 January 2023
1 January 2023
1 January 2023
1 January 2023
None of the above standards or amendments have had a material impact on the Group.
(ii) Standards, amendments and interpretations, which are effective for reporting periods beginning after the date of these
financial statements which have not been adopted early:
Standard
IFRS 16
IAS 1
IAS 7
IAS 21
Description
Amendment – Leases (Amendment-Liability in a Sale and
Leaseback)
Amendment – Classification of Liabilities as Current or Non-
current and Non-current Liabilities with Covenants
Effective date
Impact
1 January 2024
No material impact
1 January 2024
No material impact
Amendment – Supplier Finance Arrangements
1 January 2024
No material impact
Amendment – Lack of exchangeability
1 January 2025
No material impact
106Afentra plc Annual Report and Financial Statements 2023 c) Going concern
The Group business activities, together with the factors likely to affect its future development, performance and position are set out
in the Asset summary on pages 28 - 41. The financial position of the Group and Company, its cash flows and liquidity position are
described in the Financial Review on pages 60 - 63. In addition, Note 24 to the financial statements includes the Group’s objectives,
policies and processes for managing its capital financial risk: details of its financial instruments and its exposures to credit risk and
liquidity risk.
The Group has sufficient cash resources for its working capital needs and its committed capital expenditure programme at least for
the next 12 months from the signing of the annual report. Consequently, the Directors believe that both the Group and Company are
well placed to manage their business risks successfully.
The Group has sufficient cash resources based on existing cash on balance sheet, proceeds from future oil sales and utilisation of
the revolving working capital facility to meet its liabilities as they fall due for a period of at least 12 months from the date of signing
these financial statements, based on forecasts covering the period through to 31 December 2025, notwithstanding the impact of
the situation in Ukraine and the Middle East and the resultant impact to commodity prices and foreign exchange rates.
The Board has looked at a combination of downside scenarios, including a production shortfall alongside lower than anticipated oil
prices. The impact of the downside scenarios can be mitigated by the implementation of hedges of 70% of the remaining 2024
cargos. Further scenarios associated with additional acquisitions of KON15 and KON19 have also been reviewed and the Board
believe that liquidity is sufficient to pursue these opportunities and cover all financial covenants, the tests of which, for current
borrowings, have been passed for the Historic Ratio (Net debt/Ebitda) and the Gross liquidity test, and are not forecast to be
breached within the going concern period. The Board also notes the implementation of the hedging policy and is confident in the
utilisation of commodity-based derivatives to manage oil price downside risk. Thus, the Board believes its appropriate to continue to
adopt the going concern basis of accounting in preparation of the financial statements.
The Directors have at the time of approving the financial statements, a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future.
d) Basis of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the
Company (its subsidiaries) made up to 31 December each year. Control is recognised where an investor is exposed, or has rights, to
variable returns from its investment with the investee and has the ability to affect these returns through its power over the investee.
The results of subsidiaries acquired, or disposed of, during the year are included in the Statement of Comprehensive Income from
the effective date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line
with those used by the Group.
(ii) Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
A separate Statement of Comprehensive Income and expense for the Parent Company has not been published in accordance with
section 408 of the Companies Act 2006.
107Strategic ReportOverviewCorporate GovernanceGroup Accounts Notes to the Financial Statements
Year ended 31 December 2023
e) Joint arrangements
The Group is a party to a joint arrangement regardless of whether the Group has joint control of the arrangement. Where the
contractual arrangement confers joint control over the relevant activities to the Group and at least one other party then the Group
classifies its interest in the joint arrangement as joint operations or joint ventures in accordance with IFRS11. Joint control is assessed
under the same principles as control over subsidiaries. If there is no joint control, then the Group classifies its interest in the joint
arrangement as a party to a joint arrangement. In assessing the classification of interests in joint arrangements, the Group considers:
the structure of the joint arrangement;
the contractual terms of the joint arrangement; and
•
•
• any other facts and circumstances.
The Group accounts for its interests in joint arrangements by recognising its share of assets, liabilities, revenues and expenses in
accordance with its contractually conferred rights and obligations.
f) Revenue
Revenue is derived from the sales of oil, from the interests held for Block 3/05 and Block 3/05A in Angola. Revenue from the sale of
crude oil is recognised when performance conditions in the sales contract are satisfied and it is probable that the Group will collect
consideration to which it is entitled. For crude oil the performance condition is the delivery of the oil through lifting or on delivery of
the oil into an infrastructure.
Under/overlift
Any production imbalance that may arise as a result of lifted volumes being different to produced volumes has been recognised as
an adjustment to cost of sales, with the balance being recognised within trade and other receivables/payables. Underlifted barrels
have been valued at cost and overlifted barrels have be valued at market value.
g) Oil and gas interests
Exploration and evaluation (‘E&E’) assets
Capitalisation
Pre-acquisition costs on oil and gas assets are recognised in the profit or loss when incurred. Costs incurred after rights to explore
have been obtained, such as geological and geophysical surveys, drilling and commercial appraisal costs, and other directly
attributable costs of exploration and appraisal including technical and administrative costs, are capitalised as intangible E&E assets.
The assessment of what constitutes an individual E&E asset is based on technical criteria but essentially either a single licence
area or contiguous licence areas with consistent geological features are designated as individual E&E assets. Costs relating to the
exploration and evaluation of oil and gas interests are carried forward until the existence, or otherwise, of commercial reserves have
been determined.
E&E costs are not amortised prior to the conclusion of appraisal activities. Once active exploration is completed the asset is
assessed for impairment. If commercial reserves are discovered then the carrying value of the E&E asset is reclassified as a
development and production (‘D&P’) asset, following development sanction, but only after the carrying value is assessed for
impairment and where appropriate its carrying value adjusted. If it subsequently assessed that commercial reserves have not been
discovered, the E&E asset is written off to the profit or loss.
Depreciation, Depletion and Amortisation
Costs associated with Development and Production assets, including the costs of facilities, wells and subsea equipment are
capitalised within Property, Plant & Equipment. These costs are depreciated on a unit of production basis based on the total proved
and probable reserves of the asset.
108Afentra plc Annual Report and Financial Statements 2023 Impairment
In accordance with IFRS 6 E&E assets are reviewed for impairment when circumstances arise which indicate that the carrying value
of an E&E asset exceeds the recoverable amount. The recoverable amount of the individual asset is determined as the higher of
its fair value less costs to sell and value in use. Impairment losses resulting from an impairment review are recognised in the profit
or loss within the Statement of Comprehensive Income. Any impairment loss is separately recognised within the Statement of
Comprehensive Income.
IImpaired assets are reviewed annually to determine whether any substantial change to their fair value amounts previously impaired
would require reversal.
As previously recognised, impairment loss is reversed if the recoverable amount increases as a result of a change in the estimates used
to determine the recoverable amount, but not to an amount higher than the carrying amount that would have been determined (net of
depletion or amortisation) had no impairment loss been recognised in prior periods. Reversal of impairments and impairment charges
are credited/ (charged) under total administration expenses within the Statement of Comprehensive Income. Refer to Note 2 for
detailed disclosure of the results of impairments and impairment reviews performed.
h) Property, plant and equipment assets other than oil and gas assets
Property, plant and equipment other than oil and gas assets are stated at cost, less accumulated depreciation, and any provision
for impairment. Depreciation is provided at rates estimated to write off the cost, less estimated residual value, of each asset over its
expected useful life as follows:
• Office lease, straight-line over the lease term
• Computer and office equipment depreciation, 33% straight-line
i) Foreign currencies
The US dollar is the functional and reporting currency of the Company and the reporting currency of the Group. Transactions
denominated in other currencies are translated into US dollars at the rate of exchange ruling at the date of the transaction. Assets
and liabilities in other currencies are translated into US dollars at the rate of exchange ruling at the reporting date. All exchange
differences arising from such translations are dealt with in the current year profit and loss.
The results of entities with a functional currency other than the US dollar are translated at the average rates of exchange during the
period and their statement of financial position at the rates ruling at the reporting date. Exchange differences arising on translation of
the opening net assets and on translation of the results of such entities are dealt with through the currency translation reserve.
j) Taxation
Current tax - Angola
The activities relating to the Angolan branch are subject to tax in Angola. Angolan tax is calculated on the basis of revenue rather
than the profits of the branch. Petroleum income tax is calculated on the basis of profit oil which is valued by the tax reference prices
determined by the Ministry of Finance on a quarterly basis. From 1 January 2024 the group has applied the foreign branch election
that ringfences the profits in Angola to only be subject to Angolan tax.
Current tax – United Kingdom
Tax is payable based upon taxable profit for the year. Taxable profit differs from net profit as reported in the Statement of
Comprehensive Income because it excludes items of income or expense that are taxable or deductible on other years and it further
excludes items that are never taxable or deductible. Any Group liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the reporting date.
k) Investments (Company)
Investments in subsidiaries are carried at cost less accumulated impairment losses in the Company’s balance sheet. Investments
in subsidiaries are assessed for impairment in line with the requirements of IAS 36 and where evidence of non-recoverability is
identified an appropriate impairment is accounted for in the profit or loss.
109Strategic ReportOverviewCorporate GovernanceGroup Accounts Notes to the Financial Statements
Year ended 31 December 2023
l) Leases
In accordance with IFRS 16, at the lease commencement date, the Group recognises a right-of-use asset and a lease liability on the
balance sheet. The Group also assesses the right-of-use asset for impairment when such indicators exist. At the commencement
date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the
interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate.
m) Financial instruments
There are no other categories of financial instrument other than those listed below:
Trade receivables and amounts due from subsidiaries
Trade receivables are recognised and carried at the original invoice amount less any provision for impairment. Other receivables and
amounts due from subsidiaries are recognised and measured at nominal value less any provision for impairment.
The Group and Company applies the expected credit loss model in respect of trade receivables and amounts due from subsidiaries.
The Group and Company track changes in credit risk and recognise a loss allowance based on lifetime ECLs at each reporting date.
Cash and cash equivalents
Cash and cash equivalents comprise demand deposits, and other short-term investments, with an original maturity of 3 month, are
readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
Restricted cash
Restricted cash amounts are fully cash collateralised and are only available on demand. Please see Note 17 for detailed disclosure.
The Group has the following financial liabilities; all are classified as held at amortised cost.
Non-current asset – decommissioning pre funding
The prefunding amount recognised is limited to the lower of the decommissioning liability recognised and the value of the prefunding
provided. Please see Note 12 for detailed disclosure.
Trade payables
Trade payables are stated at their amortised cost.
Borrowings and loans
IInterest bearing bank loans and overdrafts are recorded at the proceeds received. Finance charges relating to securing the loans and
overdrafts are capitalised as part of the loan and amortised over the repayment term period of the loan.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.
An equity instrument is any contract that evidences a residual interest in the asset of the Group after deducting all of its liabilities.
Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs.
n) Pension costs
The Group operates a number of defined contribution pension schemes. The amount charged to the Statement of Comprehensive
Income for these schemes is the contributions payable in the year. Differences between contributions payable in the year and
contributions actually paid are shown as either accruals or prepayments in the Statement of Financial Position.
o) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers.
The chief operating decision makers have been identified as the Board of Directors. The Group currently only operates in Africa
supported by the United Kingdom head office which is not deemed to be an operating segment as it does not generate any revenue
outside of the operations in Africa. As the Group only has one operating segment no further breakdown has been provided.
110Afentra plc Annual Report and Financial Statements 2023 p) Decommissioning liabilities
Provisions for decommissioning are recognised when the Group has a present legal or constructive obligation, which generally
arises when a well is drilled or equipment installed. The provision for future decommissioning is calculated, based on future cash
flows discounted at a pre-tax discount rate to reflect risks specific to the costs. An amount equivalent to the initial provision for
decommissioning costs is capitalised and amortised over the life of the underlying asset. With regard to prefunded decommissioning
obligations the Group follows guidance provided by IFRIC 5 (Interpretations Committee response) where the future reimbursement
shall be measured at the lower of:
a. the amount of the decommissioning obligation recognised; and
b. the contributor’s share of the fair value of the net assets of the fund attributable to contributors.
The Group has recognised its working interest share (18%) in the value of the prefund of $553m (gross) as a non-current asset
“Decommissioning pre-funding” and has also recorded an offsetting long-term liability. In accordance with IAS 37 the amount
recognised has been inflated out to 2040 (licence expiry) using long term US inflation rates as a guide (the Group has selected
2.5%) and discounted back to reflect the present value at a discount rate of 4.07%.
q) Inventories
Oil Inventories are stated at the lower of cost or net realisable value. The cost comprises direct materials, direct labour, overheads,
and other charges incurred in the production and storage of oil. Other inventories are stated at the lower of cost and net realisable
value. The cost of materials is the purchase cost, determined on a first-in, first-out basis.
r) Share based payments
Employees (including Senior Executives) of the Group receive remuneration in the form of share-based payment transactions which
are equity settled. The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on
which they are granted. The fair value is determined by an external valuer using an appropriate pricing model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which
the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled
to the award (the “vesting date”). The cumulative expense recognised for equity-settled transactions at each reporting date until
the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity
instruments that will ultimately vest. The Income Statement charge or credit for a period represents the movement in cumulative
expense recognised as at the beginning and end of that period.
The key areas of estimation regarding share based payments are share price volatility; and estimated lapse rates.
No adjustments are made in respect of market conditions not being met, neither the number of instruments nor the grant-date fair
value is adjusted if the outcome of the market condition differs from the initial estimate.
Where the terms of an equity-settled award are modified, the minimum expense recognised is the expense as if the terms had not
been modified. An additional expense is recognised for any modification, which increases the total fair value of the share based
payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated
as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the
original award, as described in the previous paragraph.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share. This
shows the maximum number of awarded share awards/options, the expected number to vest will be lower than this due to factors
such as the vesting criteria and the settlement being made on a net of tax basis.
111Strategic ReportOverviewCorporate GovernanceGroup Accounts Notes to the Financial Statements
Year ended 31 December 2023
2. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
In the application of the Group’s accounting policies, which are described in Note 1, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if
the revision affects both current and future periods.
Judgements
Business combinations and asset acquisitions
The Group has acquired a working interest in a producing oil block and judgement is required to determine whether the acquisition
should be accounted for as an asset acquisition or a business combination. The Group assessed joint control, as determined under
IFRS11, does not exist among the contractor partners to the arrangement because there are several combinations of partners who
can combine to meet the passmark vote for strategic and financial decisions.
No specific accounting guidance exists for an acquisition of a working interest in a producing oil block where joint control does not
exist and management have determined the acquisition will be accounted for as an asset acquisition under IFRS 3 and requires an
allocation of the consideration across the identified assets and liabilities based on their relative fair values.
Company – Investment
If circumstances indicate that impairment may exist, investments in subsidiary undertakings of the Company are evaluated using
market values, where available, or the discounted expected future cash flows of the investment. If these cash flows are lower than
the Company’s carrying value of the investment, an impairment charge is recorded in the Company. Where impairments have been
booked against the underlying exploration assets, the investments in subsidiaries have been written down to reflect their recoverable
value. Evaluation of impairments on such investments involves significant management judgement and may differ from actual results.
A full impairment review has not been performed in 2022 as management have not identified any indicators of impairment and thus
no impairments were recognised during the year by the Company.
As at 31 December 2023, Company investments in subsidiaries totalled $21.1 million (see Note 13), the majority being underpinned
by the Odewayne exploration Block in Somaliland. After reviewing the feasibility of the asset detailed in the Asset summary on pages
28 - 41, management did not note any impairment indicators that would result in a full impairment review to be undertaken.
Impairment of assets
Management is required to assess oil and gas assets for indicators of impairment and has considered the economic value of
individual E&E assets. E&E assets are subject to a separate review for indicators of impairment, by reference to the impairment
indicators set out in IFRS 6, which is inherently judgmental.
After reviewing the feasibility of the asset detailed in the Asset summary on pages 28 - 41 and considering the key factors including;
the extension to the current period and further exploration work streams planned in 2023, management did not note any impairment
indicators that would result in a full impairment review to be undertaken.
The Directors judgement was that a full impairment review wasn’t required and thus no impairments were recognised during the year,
by the Group.
112Afentra plc Annual Report and Financial Statements 2023 Contingent consideration
Contingent consideration in relation to the asset acquisitions relation to Block 3/05 and 3/05A in Angola is accounted for as a
financial liability at fair value at the date of the acquisition with any subsequent remeasurements recognised in profit or loss. These
fair values are generally based on risk adjusted future cash flows discounted using the appropriate discount rates. Management
utilise a scenario based approach to estimate the likely contingent payments under each scenario and then apply a probability to
each scenario.
The sensitivity of the elements of contingent consideration to changes in the probabilities of the scenarios and to the discount rates
is disclosed in Note 22a.
Estimates
Oil and gas reserve estimate
Oil and gas reserves are estimate quantities of oil, gas and natural gas liquids that geological and engineering data demonstrate with
reasonable certainty to be recoverable in future years from known reserves under existing economic and operating conditions. The
process requires interpretation of the available technical data and making many assumptions about future conditions, including
price and other economic factors. As the economic assumptions and interpretations used may change and as additional geological
information is obtained during the operation of the field, estimates of recoverable reserves may change. Such changes may impact
the Group’s reported financial position and results in the following areas:
• The carrying value of oil and gas exploration and evaluation assets and development and production assets
• The depreciation, depletion and amortisation charges
• Provisions for decommissioning
• Contingent consideration
Group and Company – expected credit loss model prescribed by IFRS 9
IFRS 9 requires the Company to make assumptions when implementing the forward-looking expected credit loss model. This model
is required to be used to assess other receivables (Decommissioning fund) and the intercompany loan receivables from Afentra (UK)
Limited and Afentra (East Africa) Limited for impairment.
Arriving at the expected credit loss allowance involved considering different scenarios for the recovery of the intercompany loan
receivables, the possible credit losses that could arise and the probabilities for these scenarios. The following was considered; the
exploration project risk, country risk, the expected future oil prices, the value of the potential reserves, the ability to sell the project,
and the ability to find a new farm-out partner.
The credit loss allowance was assessed at 31 December 2023. No movement in credit loss allowances for amounts owed from
subsidiary undertakings occurred during the period.
113Strategic ReportOverviewCorporate GovernanceGroup Accounts Notes to the Financial Statements
Year ended 31 December 2023
3. REVENUE
Revenue from crude oil sales
Total operating revenue
All of the revenue from crude oil sales was generated in Angola, Africa.
4. COST OF SALES
Operating Costs
Depletion of property, plant and equipment - oil and gas
Depletion absorbed into inventories
All cost of sales relate to operations in Angola, Africa.
5. PROFIT/LOSS FROM OPERATIONS
Profit/(loss) from operations is stated after charging:
Cost of Sales
Staff costs
Exceptional (one off) cost - RTO process
Depreciation of property, plant and equipment
An analysis of auditor's remuneration is as follows:
Fees payable to the Group's auditors for the audit of the
Group's annual accounts
Audit of the Company's subsidiaries pursuant to legislation
Total audit fees
2023
$000
26,390
26,390
2023
$000
11,726
2,600
(1,755)
12,571
2023
$000
12,571
6,536
1,580
280
131
5
136
2022
$000
-
-
2022
$000
-
-
-
-
2022
$000
-
4,533
2,642
244
63
5
68
Note
4
6
11
114Afentra plc Annual Report and Financial Statements 2023 6. EMPLOYEE INFORMATION
The average monthly number of employees of the Group and Company was as follows:
Corporate
Non-executive
Group and Company employee costs during the year amounted to:
Wages and salaries
Social security costs
Other pension costs
Share based payments
Group
Company
2023
2022
2023
2022
10
3
13
9
2
11
-
3
3
Group
Company
2023
$000
4,669
622
280
965
6,536
2022
$000
3,780
541
212
-
4,533
2023
$000
212
15
-
-
227
-
2
2
2022
$000
174
15
-
-
189
Key management personnel include Directors who have been paid $2.8 million (2022: $2.6 million). See Remuneration Committee Report
(pages 74 - 83) and Note 27 for additional detail. The highest paid Director in the current year received $782k (2022: $745k).
A portion of the Group’s staff costs and associated overheads are expensed as pre-licence expenditure ($4.8 million) or capitalised
($34k). In 2023 this amounted to $4.8 million (2022: $3.1 million).
115Strategic ReportOverviewCorporate GovernanceGroup Accounts Notes to the Financial Statements
Year ended 31 December 2023
7. FINANCE INCOME AND FINANCE EXPENSE
Finance income:
Interest revenue on short-term deposits
Finance expense:
Interest on borrowings
Finance and arrangement fees
Offtaker fees
Finance charges on hedge instument
Other interest expense
Bank charges
Interest expense for leasing arrangement
Exchange differences
8. TAXATION
The tax charge for the year is calculated by applying the applicable standard rate of tax as follows:
UK corporation tax at 23.52% (2022: 19%)
Double tax relief
Foreign tax
Loss before tax
Tax on loss on ordinary activities at standard UK corporation tax rate of 23.52% (2022: 19%)
Effects of:
Expenses not deductible for tax purposes / (income not taxable)
Deferred tax movement on provisions not provided
Tax losses carried forward / (utilised)
Other tax adjustments
Tax charge for the year
2023
$000
240
240
1,764
392
776
473
31
14
18
40
3,508
2023
$000
1,799
(1,799)
1,799
1,799
(906)
(213)
444
(79)
1,641
6
1,799
2022
$000
86
86
-
-
-
-
-
22
21
154
197
2022
$000
-
-
-
(9,086)
(1,726)
(13)
(158)
1,897
-
Deferred tax
At the reporting date the Group had an unrecognised deferred tax asset of $34.0 million (2022: $32.6 million) relating primarily
to unused tax losses and unutilised capital allowances, with no expiry date. No deferred tax asset has been recognised due to the
uncertainty of future profit streams against which these losses could be utilised, as the profits generated in Angola are subject to
Angolan tax which is calculated on a profit oil basis which does not allow for the offsetting of historic losses.
116Afentra plc Annual Report and Financial Statements 2023 9. LOSS PER SHARE (BASIC AND DILUTED)
Loss for the year
2023
$000
(2,705)
2022
$000
(9,086)
Weighted average number of ordinary shares in issue during the year
220,053,520
220,053,520
EPS (US cents)
Total possible dilutive effect of share awards outstanding (see note 26)
(1.2)
23,023,546
(4.1)
-
Fully diluted average number of ordinary shares during the year
243,077,065
220,053,520
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number
of shares outstanding during the period. Diluted earnings per share is calculated using the weighted average number of shares
adjusted to assume the conversion of all dilutive potential ordinary shares. Share options and awards are not included in the dilutive
calculation for loss making periods because they are anti-dilutive.
The dilutive effect of share awards outstanding is the total possible award number and does not take into account vesting conditions
potentially not met, or the Group’s expectation that these awards will be settled net of tax, that will reduce the impact of the dilutive
effect of the awards.
10. EXPLORATION AND EVALUATION ASSETS
Net book value at 1 January 2022
Additions during the year
Net book value at 31 December 2022
Acquisitions during the year
Additions during the year
Net book value at 31 December 2023
Group intangible assets at the year end 2023:
Group
$000
21,289
35
21,324
500
43
21,867
• Block 23 PSA, Angola: Afentra Angola Ltd 40%, and Sonangol 60% (Operator).
• Odewayne PSA, Somaliland: Afentra (East Africa) Limited 34%, Genel Energy Somaliland Limited 50% (Operator) and
Petrosoma 16%.
117Strategic ReportOverviewCorporate GovernanceGroup Accounts Notes to the Financial Statements
Year ended 31 December 2023
11. PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 January 2022
Modification during the year
Additions during the year
Disposals during the year
At 31 December 2022
Modification during the year
Acquisitions during the year
Additions during the year
Disposals during the year
At 31 December 2023
Accumulated depreciation and impairment
At 1 January 2022
Charge for the year
Disposals during the year
At 31 December 2022
Charge for the year
Disposals during the year
At 31 December 2023
Net book value at 31 December 2023
Net book value at 31 December 2022
Net book value at 31 December 2021
Oil and gas
assets
$000
-
-
-
-
-
-
71,356
6,066
-
77,422
-
-
-
-
(2,600)
-
(2,600)
74,822
-
-
Office
lease
$000
1,203
(60)
-
-
1,143
22
-
-
-
Computer
and office
equipment
$000
279
(8)
127
(49)
349
9
-
18
(5)
Total
$000
1,482
(68)
127
(49)
1,492
31
71,356
6,084
(5)
1,165
371
78,958
(598)
(187)
-
(785)
(190)
-
(975)
190
358
605
(159)
(57)
49
(167)
(90)
5
(252)
119
182
120
(757)
(244)
49
(952)
(2,880)
5
(3,827)
75,131
540
725
Block 3/05 PSA, Angola: Afentra Angola Ltd 18%, Sonangol (Operator) 36%, M&P 20%, Azule 12%, Etu Energias 10% and NIS-
Naftagas 4%.
Block 3/05A PSA, Angola: Afentra Angola Ltd 5.33%, Sonangol (Operator) 33.33%, M&P 26.68%, Azule 16%, Etu Energias 13.33%
and NIS-Naftagas 5.33%.
The right of use asset (office lease) is depreciated on a straight-line basis over the lifetime of the lease contract. The current lease
term is for 8 years, ending in 2024. See Note 1 for details (Leases) and Note 23 (Leases).
See Note 25 for further information on the additions in the year.
118Afentra plc Annual Report and Financial Statements 2023 12. OTHER NON-CURRENT ASSETS
The Group have reviewed the accounting treatment for the decommissioning fund held by the Block 3/05 Operator and have
recognised a non-current asset and an offsetting non-current liability for $77.0 million, which equates to the present value of the
future decommissioning liability. It is management’s view that the future liability for decommissioning is represented by the totality of
the funds held by the Operator, specifically for such purposes. The non-current asset held for decommissioning liability is limited to
the lower of the present value of the future decommissioning liability and the amount of the funds held by the Operator.
Decommissioning fund
13. INVESTMENT IN SUBSIDIARIES
Cost
At 1 January 2022
At 31 December 2022
Additions during the year
At 31 December 2022
2023
$000
76,973
76,973
2022
$000
-
-
Company
$000
20,140
20,140
965
21,105
See Note 2 (Company – Investment) for details on the impairment assessment methodology.
The subsidiary undertakings at 31 December 2023 are as follows (included on consolidation):
Country of
incorporation
Class of
shares held
Type of
ownership
Proportion of
voting rights
held 2023
Proportion of
voting rights
held 2022
Nature of
business
Afentra (UK) Limited
Afentra Overseas
Limited
Afentra (Angola) Ltd 1
Afentra Northwest
Africa Holdings Limited
Afentra Holdings
Limited 2
Afentra (East Africa)
Limited 3
United
Kingdom 4
United
Kingdom 4
United
Kingdom 4
Ordinary
Direct
Ordinary
Direct
Ordinary
Direct
Jersey, CI 5
Ordinary
Direct
Jersey, CI 5
Ordinary
Indirect
Jersey, CI 5
Ordinary
Indirect
1 Holder of Afentra (Angola), Lda - (Sucursal em Angola) the local branch in Angola
2 Held directly by Afentra Northwest Africa Holdings Limited
3 Held directly by Afentra Holdings Limited
4 Registered address - 52-54 High Holborn, London, WC1V 6RL
5 Registered address - IFC5, St Helier, Jersey, JE1 1ST
100%
100%
100%
100%
100%
100%
100%
Exploration for oil
and gas
100% Investment holding
company
100% Extraction of crude
petroleum
100%
Exploration for oil
and gas
100% Investment holding
company
100%
Exploration for oil
and gas
A charge is placed on Afentra (Angola) Ltd shares to Mauritius Commercial Bank Limited as required by the terms of the debt facilities.
119Strategic ReportOverviewCorporate GovernanceGroup Accounts Notes to the Financial Statements
Year ended 31 December 2023
14. INVENTORIES
Oil stock
Warehouse stock and materials
Oil stock inventory is stated at the lower of cost and net realisable value.
The Company did not hold any inventory at the year end.
2023
$000
9,658
3,783
13,441
15. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Amounts owed from subsidiary undertakings
Underlift receivables
Other receivables
Prepayments and accrued income
Non-current
Amounts owed from subsidiary undertakings
Group
Company
2023
$000
90
-
3,123
218
209
3,640
2022
$000
81
-
-
167
171
419
2023
$000
-
10,063
-
212
54
10,329
4,426
Company
2023
$000
35,527
35,527
2022
$000
21,177
21,177
Trade and other receivables, not credit impaired, consist of current receivables that the Group views as recoverable in the short term.
Credit loss allowances for amounts owed from subsidiary undertakings amount to $9.1 million (2022: to $9.1 million).
The Directors consider that the carrying amount of trade and other receivables is a reliable estimate of their fair value.
Transactions between subsidiaries are non-interest bearing and repayable on demand.
See Note 1 for details (Financial instruments - Trade receivables).
2022
$000
-
-
-
2022
$000
-
4,232
-
145
49
120Afentra plc Annual Report and Financial Statements 2023 16. CASH IN BANK AND SHORT-TERM DEPOSITS
Cash at bank available on demand
Cash on hand
Group
Company
2023
$000
14,725
4
14,729
2022
$000
20,380
4
20,384
2023
$000
4,413
-
4,413
2022
$000
20,380
-
20,380
17. RESTRICTED FUNDS
As at 31 December 2023 the Group had the following restricted funds:
Funds placed into Escrow, held by Citibank, in respect of a $4.9 million cash deposit in respect of the Azule Acquisition (2022: $10.2
million). This Escrow account has been fully cash collateralised.
18. SHARE CAPITAL
Authorised, called up, allotted and fully paid
220,053,520 ordinary shares of 10p (2022: 220,053,520 ordinary shares of 10p)
28,143
28,143
2023
$000
2022
$000
19. RESERVES
Reserves within equity are as follows:
Share capital
Amounts subscribed for share capital at nominal value.
Share option reserve
Cumulative amounts charged in respect of employee share option arrangements. See Note 26 for further details.
Currency translation reserve
The foreign currency translation reserve includes movements that relate to the retranslation of the subsidiaries whose functional
currencies are not designated in US dollars.
Retained earnings
Cumulative net gains and losses recognised in the Statement of Comprehensive Income less any amounts reflected directly in
other reserves.
121Strategic ReportOverviewCorporate GovernanceGroup Accounts Notes to the Financial Statements
Year ended 31 December 2023
20. BORROWINGS AND NET DEBT
20a. Borrowings
The Group has activated elements of both the RBL Facility and Working Capital facility in order to facilitate the completion of the
INA and Sonangol acquisitions. As at 31 December 2023, the Group has drawn down $34.8 million (RBL) and $nil million (Working
Capital) with the following key terms:
RBL facility
• 5-year tenor
• 8% margin over 3-month SOFR (Secured Overnight Financing Rate)
• Semi- annual linear amortisations
• Key financial covenant of Net Debt to EBITDA < 3:1
Working capital up to $30 million revolving facility
• 5-year tenor
• 4.75% margin over1-month SOFR
• Repayable with proceeds from liftings
Current
Reserve Based Lending Facility
Working Capital Facility
Non-current
Reserve Based Lending Facility
Borrowings
At 1 January
Loan drawdowns
Interest charge
Repayments
Unamortised debt arrangement cost
Interest accrued
At 31 December
2023
$000
6,752
-
6,752
2023
$000
24,951
24,951
2023
$000
-
48,003
1,152
(15,519)
(2,545)
612
31,703
2022
$000
-
-
-
2022
$000
-
-
2022
$000
-
-
-
-
-
-
-
A charge is placed on Afentra (Angola) Ltd shares to Mauritius Commercial Bank Limited as required by the terms of the debt facilities.
122Afentra plc Annual Report and Financial Statements 2023 20b. Net debt
Cash and cash equivalents
Restricted Funds
Borrowings
Lease liability
Net Debt
2023
$000
14,729
4,850
(31,703)
(155)
(12,279)
Assets
Sub total Cash/restricted
funds
Liabilities
Borrowings
Leases
Net Debt as at 1 January 2022
Lease payments
Other changes
Interest payments
Net Debt as at 31 December 2022
Financing cashflows
Lease payments
Loan repayments
Other changes
Interest expense
Interest payments
-
-
-
-
-
(45,066)
-
14,367
-
(2,156)
1,152
(581)
223
-
21
(337)
-
164
-
-
-
18
(581)
223
-
21
(337)
(45,066)
164
14,367
-
(2,156)
1,170
37,727
-
(7,143)
-
30,584
-
-
-
(11,005)
-
-
2022
$000
20,384
10,200
-
(337)
30,247
Total
37,146
223
(7,143)
21
30,247
(45,066)
164
14,367
(11,005)
(2,156)
1,170
Net Debt as at 31 December 2023
(31,703)
(155)
(31,858)
19,579
(12,279)
21. TRADE AND OTHER PAYABLES
Current liabilities
Trade payables
Joint venture balances
Amounts owed to subsidiary undertakings
Accruals
Group
Company
2023
$000
929
22,685
-
3,693
27,307
2022
$000
478
-
-
2,211
2,689
2023
$000
909
-
27,540
292
28,741
2022
$000
287
-
27,541
201
28,029
The Directors consider that the carrying amount of trade and other payables is a reliable estimate of their fair value. Transactions
between subsidiaries are non-interest bearing and repayable on demand, with the exception of the intercompany balance between
Afentra PLC and Afentra Angola, which is interest bearing.
123Strategic ReportOverviewCorporate GovernanceGroup Accounts Notes to the Financial Statements
Year ended 31 December 2023
22. CONTINGENT CONSIDERATION AND PROVISIONS
22a. Contingent consideration
Provisions include contingent consideration payable to SNL and INA on Blocks 3/05 and 3/05A:
INA acquisition:
• Tranche 1: The contingent consideration for 3/05 relates to the 2023 and 2024 production levels and a realised brent price
hurdle up to an annual cap of $2.0 million;
• Tranche 2: The contingent consideration for 3/05A relates to the successful future development of the Caco Gazela and Punja
development areas, with production and oil price hurdles. The maximum payable for these development areas is $5.0 million.
SNL acquisition:
• The contingent consideration for the SNL acquisition is payable annually over the next 10 years in each year where production
exceeds 15,000bopd, and the realised oil price exceeds $65. The maximum annual amount payable is $3.5 million, resulting in a
total maximum payment of $35 million over 10 years.
Management have reviewed the contingent payments related to the SNL and INA acquisitions, which are dependent upon
production levels, future oil price hurdles and future B3/05A developments. Judgement has been applied to the probability of the
circumstances occurring that would give rise to some or all of the future payments. For each tranche of contingent consideration
Management have applied a multiple scenario approach with 4 scenarios applied to each tranche along with the related weightings
of probability resulting in an expected amount payable.
In addition, Management has applied a discount rate that approximates to the incremental borrowing rate in arriving at a present
value at the balance sheet date of the probable future liabilities. The discount rate is based at a market rate of 9.1%. Management is
therefore comfortable with the liabilities recorded at the balance sheet date in respect of these contingent future events.
In applying Management’s judgement to the different scenarios and applying the discount rate noted above results in contingent
consideration of $26.5 million. A 2% increase in the discount rate would result in a reduction in contingent consideration of $1.6
million and a 2% decrease in the discount rate would result in an increase in contingent consideration of $1.8 million. The impact of
removing the scenarios that have an expectation the realised brent price hurdles will not be met (5% original weighting) and including
a relative increase in the base case scenarios would increase the contingent consideration by $0.6 million.
Current
Contingent consideration
Non-current
Contingent consideration
2023
$000
4,621
4,621
2023
$000
21,863
21,863
2022
$000
-
-
2022
$000
-
-
22b. Decommissioning and other provisions
As part of the acquisition of Block 3/05 from SNL and INA the Group is responsible for the future cost of decommissioning the
wells. As set out in Note 12 the decommissioning is prefunded and held by the Block 3/05 Operator and the Group has recognised
a non-current asset to offset the decommissioning non-current liability of $77.0 million, which equates to the present value of the
future decommissioning liability.
124Afentra plc Annual Report and Financial Statements 2023 The cost of the decommissioning is equal to the agreed decommissioning plan. The Group’s share of this cost is $99.7 million.
In calculating the decommissioning liability at 31 December 2023 the cost has been inflated to provide the future cost of
decommissioning at a rate of 2.5% and then discounted to the present value at a discount rate of 4.07%. This results in a
decommissioning liability of $77.0 million.
The impact of changes to the inflation and discount rates, independently, would result in the following. An increase in the inflation
rate to 3% would increase the decommissioning liability by $6.6 million. An increase in the discount rate to 4.25% would decrease
the decommissioning liability by $2.2 million. A decrease in the inflation rate to 2% would decrease the decommissioning liability by
$6.1 million. A decrease to the discount rate to 4.00% would increase the decommissioning liability by $0.9 million.
Non-current
Decommissioning
Other
2023
$000
76,973
37
77,010
2022
$000
-
33
33
Movements in current and non-current provisions (contingent consideration) during 2023 are primarily due to the acquisitions of the
INA and Sonangol interests in Angola (Block 3/05 (18%) and Block 3/05A (5.33%).
23. LEASES
The Group has a lease for the head office and classifies it as a right-of-use asset in a consistent manner to its property, plant and
equipment (see Note 11).
On adoption of IFRS 16, the Company recognised lease liabilities in relation to the head office which had previously been classified
as ‘operating leases’ under IAS 17. These liabilities were measured at the present value of the remaining lease payments, discounted
using the lessee’s incremental borrowing rate as of 1 January 2023. The incremental borrowing rate applied to the lease liabilities on 1
January 2023 was 5%.
The depreciation charge in 2023 was $190k (2022: $187k) (see Note 11) with an interest expense in 2023 of $18k (2022: $21k) (see
Note 7). Cash outflow in 2023 was $227k (2022: $204k).
Lease liabilities are presented in the statement of financial position as follows:
Current
Non-current
2023
$000
155
-
155
2022
$000
210
127
337
Extension options are included in the lease liability when it, based on the management’s judgement, is reasonably certain that an
extension will be exercised. As at 31 December 2023, the contractual maturities of the Company’s lease liabilities are as follows:
Within one
year
Between one
to two years
$000
$000
Over two
years
$000
Total
Interest
$000
$000
Carrying
amount
$000
Group
Lease liability
163
-
-
163
(8)
155
125Strategic ReportOverviewCorporate GovernanceGroup Accounts Notes to the Financial Statements
Year ended 31 December 2023
24. FINANCIAL INSTRUMENTS
Capital risk management and liquidity risk
The Group and Company are not subject to externally imposed capital requirements. The capital structure of the Group and
Company consists of cash and cash equivalents held for working capital purposes and equity attributable to the equity holders of
the parent, comprising issued capital, reserves and retained earnings as disclosed in the Statement of Changes in Equity. The Group
and Company uses cash flow models and budgets, which are regularly updated, to monitor liquidity risk.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement
and the basis on which income and expenses are recognised, in respect of each material class of financial asset, financial liability
and equity instrument are disclosed in Note 1 to the financial statements. Due to the short-term nature of these assets and liabilities
such values approximate their fair values at 31 December 2023 and 31 December 2022.
Group
Financial assets at amortised cost
Cash and cash equivalents
Restricted funds
Trade and other receivables
Total
Financial liabilities at amortised cost
Borrowings (current)
Non-current borrowings
Trade and other payables
Total
Carrying amount/Fair value
2023
$000
14,729
4,850
3,431
23,010
6,752
27,381
27,307
61,440
2022
$000
20,384
10,200
248
30,832
-
-
2,689
2,689
Of the above assets and liabilities due to the short term nature, carrying amounts approximate their fair values at 31 December 2023
and 31 December 2022 except for non-current borrowings, for which the fair value is based upon a market rate of 9.1% and therefore
having a fair value of $27.4 million against the carrying amount of $25.0 million.
Financial liabilities at fair value
Contingent consideration
Total
2023
$000
26,484
26,484
2022
$000
-
-
Provision for contingent consideration is a financial liability measured through profit or loss with a level 3 fair value hierarchy
classification. There were no transfers between fair value levels during the year. Contingent consideration was valued using a
discounted cash flow and scenario analysis method. The main inputs in the valuation process were discount rates, forecast realised
crude oil prices and future production. See Note 22a for details of the sensitivity analysis performed.
Financial risk management objectives
The Group’s and Company’s objective and policy is to use financial instruments to manage the risk profile of its underlying
operations. The Group continually monitors financial risk including oil and gas price risk, interest rate risk, equity price risk, currency
translation risk and liquidity risk and takes appropriate measures to ensure such risks are managed in a controlled manner including,
where appropriate, through the use of financial derivatives. The Group and Company does not enter into or trade financial
instruments, including derivative financial instruments, for speculative purposes.
126Afentra plc Annual Report and Financial Statements 2023 Interest rate risk management
The Group has outstanding borrowings (see Note 20) and thus, the Group and Company is exposed to interest rate risk on its
borrowings and short-term cash deposits. The Group monitors this risk and utilises it hedging policy if and when required.
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to interest rates at the reporting date and assumes
the amount of the balances at the reporting date were outstanding for the whole year. A 100 basis point change represents
management’s estimate of a possible change in interest rates at the reporting date. If interest rates had been 100 basis points
higher/lower and all other variables were held constant the Group’s profits and equity would be impacted as follows:
Cash and cash equivalents
2023
$000
147
Increase
2022
$000
204
Decrease
2022
$000
(204)
2023
$000
(147)
Borrowings
(317)
-
317
-
Foreign currency risk
The Company’s functional currency is the US dollar, being the currency in which the majority of the Group’s expenditure is transacted.
Small elements of its management, services and treasury functions are held and transacted in Pounds Sterling. Such elements
transacted in Pounds Sterling have been exchanged at; the average rate of $1.2434/£1.00 (2022: $1.2362/£1.00) or the year end spot
rate of $1.2747/£1.00 (2022: $1.2039/£1.00), depending on its nature and timing. The Group does not enter into derivative transactions
to manage its foreign currency. Foreign currency risk is immaterial to the Group and Company – see the following table:
Financial assets
Cash and cash equivalents
Cash and cash equivalents held in US$
Cash and cash equivalents held in GBP
Trade and other receivables
Trade and other receivables held in US$
Trade and other receivables held in GBP
Group
2023
$000
13,222
1,507
14,729
Group
2023
$000
3,142
289
3,431
2022
$000
20,094
290
20,384
2022
$000
-
248
248
127Strategic ReportOverviewCorporate GovernanceGroup Accounts Notes to the Financial Statements
Year ended 31 December 2023
Financial liabilities
Trade and other payables
Trade and other payables held in US$
Trade and other payables held in GBP
Borrowings
Borrowings held in US$
Non-current borrowings held in US$
Group
2023
$000
24,262
3,045
27,307
Group
2023
$000
6,752
24,951
31,703
2022
$000
1,999
690
2,689
2022
$000
-
-
-
Credit risk management
The Group has to manage its currency exposures and the credit risk associated with the credit quality of the financial institutions
in which the Group maintains its cash resources. At the year end the Group held approximately 89.8% (2022: 98.6%) of its cash in
US dollars. At the year end the Group held the majority of its balances with AA-/A Standard & Poor’s or equivalent rated institutions.
The Group continues to proactively monitor its treasury management to ensure an appropriate balance of the safety of funds and
maximisation of yield.
Trade and other receivables are non-interest bearing. The Group does not hold any collateral as security and the Group does not
hold any significant allowance in the impairment account for trade and other receivables as they relate to counterparties with no
default history. There are no financial assets held at fair value under the level 1, 2 and 3 hierarchy.
Liquidity and interest rate tables
The following tables detail the remaining contractual maturity for the non-derivative financial assets and liabilities of the Group.
The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on
which the Group can be required to pay. The table includes both interest and principal cash flows including cashflows on actual
contractual arrangements.
The weighted average interest rate used in 2023 is nil % (2022: nil %).
Less than
six months
Six
months
to one year
One to
six years
Total
Interest
Principal
$000
$000
$000
$000
$000
$000
Group
Borrowing (2023)
5,065
5,413
34,901
45,379
11,743
33,636
Trade and other payables (2023)
Trade and other payables (2022)
76
355
22,685
-
-
-
22,761
355
-
-
-
-
128Afentra plc Annual Report and Financial Statements 2023 25. ASSET ACQUISITIONS
During the period the Group completed the acquisition of interests in Block 3/05 (18%) and Block 3/05A (5.33%) offshore
Angola for a net $48.1 million payment with subsequent contingent payments of $26.5 million. See Note 22a for details of the
contingent consideration.
Block 3/05
$000
Block 3/05A
$000
Block 23
$000
Total
$000
Consideration
Initial consideration
Actual adjustments from effective date
Contingent consideration - extension of
Block 3/05 licence
Contingent consideration - oil price linked
Consideration paid
Contingent consideration - oil price and
production linked / future developments
Total consideration
Net assets
Oil and gas properties
Other non-current assets (decommissioning fund)
Exploration and evaluation assets
Non-current provision (decommissioning)
Inventory (Oil Stock)
Joint Venture partner balance
Joint Venture working capital
Net assets acquired
65,000
(34,604)
10,000
2,028
42,423
25,122
67,545
63,745
76,973
-
(76,973)
14,272
(2,165)
(8,307)
67,545
3,000
2,203
-
-
5,203
1,362
6,565
7,611
-
-
-
88
627
(1,761)
6,565
500
-
-
-
500
-
500
-
-
500
-
-
-
-
500
68,500
(32,401)
10,000
2,028
48,126
26,484
74,610
71,356
76,973
500
(76,973)
14,360
(1,538)
(10,068)
74,610
The Group performed an assessment of the SNL and INA acquisitions to determine whether the acquisition should be accounted
for as an asset acquisition or a business combination. For both transactions, the Group established that under IFRS11, joint control
does not exist, and therefore the Group have deemed the acquisition to qualify as an acquisition of group of assets and liabilities, not
of a business. Furthermore, the Group gave regard to guidance included under IFRS 11- Joint Arrangements, and will account for its
share of the income, expenses, assets, and liabilities from the acquisition date.
The consideration (contingent and actual consideration paid) was allocated to assets and liabilities based on their relative fair values.
129Strategic ReportOverviewCorporate GovernanceGroup Accounts Notes to the Financial Statements
Year ended 31 December 2023
26. SHARE BASED PAYMENTS
At 1 January
Arising in the year
At 31 December
2023
$000
-
965
965
2022
$000
-
-
-
During the year, Afentra plc operated two share incentive schemes: the Founder Share Plan (FSP) and the Long-Term Incentive Plan
(LTIP). Details of the schemes are summarised below:
Founder Share Plan
Under the FSP, the founders are eligible to receive 15% of the growth in returns of the Company over the five year period
commencing from its Admission to AIM on 16 March 2021. The awards are expressed as a percentage of the total maximum
potential award, being 10% of the Company’s issued share capital.
Should a hurdle of doubling the Total Shareholder Return (“TSR”) over the five-year period be met, the awards will be converted into
nil cost options over ordinary shares of 10p each in the share capital Company.
For the purpose of determining the fair value of an award, the following assumptions have been applied and a valuation calculation
run through the Monte Carlo Model:
Award date
Weighted average share price at grant date
Exercise price
Risk free rate
Dividend yield
Volatility of Company share price
2022
£0.15
nil
1.88%
0%
44%
The risk-free rate assumption has been set as the yield as at the grant date on zero coupon government bonds of a term
commensurate with the remaining performance period.
The volatility assumptions are based on the daily share price volatility over a historical period prior to the respective dates of grant
with length commensurate to the expected life.
The weighted average exercise price of outstanding options is nil.
The weighted average remaining contractual life as at 31 December 2023 is 26 months.
130Afentra plc Annual Report and Financial Statements 2023 Long Term Incentive Plan
The awards issued under the LTIP are nil-cost options to acquire ordinary shares in the Company, subject to a performance
condition. For the purpose of determining whether the condition has been met, the TSR of the Company is measured over the
three year performance period, commencing at the grant date. The awards have been valued using the Monte Carlo model, which
calculates a fair value based on a large number of randomly generated simulations of the Company’s TSR.
Award date
Weighted average share price at grant date
Risk free rate
Dividend yield
Volatility of Company share price
Weighted average fair value
16 Mar 21
1 Nov 22
30 Sep &
3 Oct 22
1 Mar 23
£0.15
1.90%
0%
40%
£0.04
£0.30
4.20%
0%
54%
£0.16
£0.30
4.23%
0%
54%
£0.16
£0.28
3.75%
0%
55%
£0.15
6 & 13
Dec 23
£0.30
3.92%
0%
54%
£0.16
The risk-free rate assumption has been set as the yield as at the grant date on zero coupon government bonds with remaining term
commensurate with the remaining projection period.
The volatility assumptions are based on the daily share price volatility over a historical period prior to the respective dates of grant
with length commensurate to the expected life.
The weighted average exercise price of outstanding options is £nil.
The weighted average remaining contractual life as at 31 December 2023 is 15 months.
Employees (including Senior Executives) of the Company receive remuneration in the form of share-based payment transactions
which are equity settled. The cost of equity-settled transactions with employees is measured by reference to the fair value at the
date on which they are granted. The fair value is determined by an external valuer using an appropriate pricing model. Although these
awards are deemed to be equity settled, an employee may elect to receive their entitled settlement, in whole or in part, in cash.
The estimated cost of equity-settled transactions is recognised in the profit and loss account as an expense, together with a
corresponding increase in equity. This expense and adjustment to equity is recognised over the period in which the performance
and/or service conditions are measured (the “vesting period”), ending on the date on which the relevant participants become fully
entitled to the award (the “vesting date”).
The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent
to which the vesting period has expired and the Company’s best estimate of the number of equity instruments that will ultimately
vest. The Income Statement charge or credit for a period represents the movement in cumulative expense recognised as at the
beginning and end of that period.
131Strategic ReportOverviewCorporate GovernanceGroup Accounts Notes to the Financial Statements
Year ended 31 December 2023
The key areas of estimation regarding share based payments are share price volatility and estimated lapse rates, due to service
conditions and non-performance conditions not being met.
No adjustments are made in respect of market conditions not being met. Similarly, the number of instruments and the grant-date fair
value are not adjusted, even if the outcome of the market condition differs from the initial estimate.
Where the terms of an equity-settled award are modified, the minimum expense recognised is the expense as if the terms had not
been modified. An additional expense is recognised for any modification, which increases the total fair value of the share based
payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated
as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the
original award, as described in the previous paragraph.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share.
27. RELATED PARTY TRANSACTIONS
Details of Directors’ remuneration, which comprise key management personnel, are provided below:
Short-term employee benefits
Defined contribution pension
Group
Company
2023
$000
2,684
120
2,804
2022
$000
2,445
114
2,559
2023
$000
212
-
212
2022
$000
174
-
174
Further information on Directors’ remuneration is detailed in the Remuneration Committee Report, on pages 74 - 83.
The Company’s subsidiaries are listed in Note 13. The following table provides the balances which are outstanding with subsidiary
undertakings at the balance sheet date:
Amounts owed from subsidiary undertakings
Amounts owed to subsidiary undertakings
The Group and Company has no other disclosed related party transactions.
2023
$000
45,590
(27,540)
18,050
2022
$000
25,409
(27,541)
(2,132)
132Afentra plc Annual Report and Financial Statements 2023 28. SUBSEQUENT EVENTS
Subsequent to the Balance Sheet date of December 31st, the following business deliverables occurred:
• Afentra submitted bids, as a non-operating partner, for Blocks KON15 (1,000 km2) and KON19 (900 km2) located in the Kwanza
onshore Basin and in January has been informed that it has been selected as the preferred bidder for 45% equity in both Blocks.
•
•
•
•
•
•
•
In February 2024, the Company sold its first 2024 cargo of 450,000 bbls of crude oil. The sales price inclusive of the Brent
premium was $85/bbl, generating pre-tax sales of $38.2 million to Afentra.
In March 2024 conditional share option awards were granted to the Executive Directors of the Company under the terms of the
Afentra plc Founders’ Share Plan.
In March 2024, Afentra with its partners agreed and initialed the PSA for the onshore Block KON19 with Agência Nacional de
Petróleo, Gás e Biocombustíveis (‘ANPG’) and now await the formal approval of the Angolan Government.
In March 2024, Afentra announced that it had received approval from the Angolan Competition Authority for the acquisition
from Azule of a 12% non-operating interest in Block 3/05 and a 16% non-operating interest in Block 3/05A, offshore Angola.
In April 2024, Afentra announced that it had received approval from the Government of Angola for the Azule Acquisition.
In April 2024, Afentra announced that the Government of Angola had declared the Punja Development Area in Block 3/05A a
marginal discovery with improved fiscal terms now applicable for the remainder of its term.
In May 2024, Afentra announced the completion of the Azule acquisition resulting in Afentra holding non-operated interests of
30% in Block 3/05 and 21.33% in Block 3/05A, including the following completion settlement figures:
• Net completion payment of $28.4 million, with Afentra inheriting crude oil stock of c.480,000 barrels.
• Net completion payment to be funded by $4.9 million held in escrow, $17.0 million from the agreed RBL and $6.5 million
from cash resources.
• Further contingent payments payable to Azule include up to $14.0 million over two years for Block 3/05 (subject to oil price
thresholds) and up to $15.0 million (for future developments, subject to oil price thresholds and production hurdles in Block
3/05A).
• Following the Azule acquisition, the total RBL drawn is $47.3 million, the total working capital facility drawn is $13.7 million,
and the cash balance is $14.8 million, resulting in a net debt of approximately $46.2 million.
• After completing the Azule acquisition, the company holds a stock of c. 840,000 barrels, that can be valued at $63.0
million (based on $75 per barrel) on a pre-tax basis.
• The company expects to sell its next cargo of crude oil (around 450,000 barrels) in June 2024.
• Mauritius Commercial Bank continues as the lender to the company. Trafigura retains an interest in the RBL facility and will
continue as offtake provider.
29. COMMITMENTS
The Parent Company has provided Letters of Support to its subsidiaries Afentra (UK) Limited, Afentra (Angola) Limited, and Afentra
Overseas Limited, confirming that it does not intend to recall intragroup loans should these companies not have the financial
capability to settle them. The Parent Company will continue to support these companies in meeting its liabilities as they fall due, for a
period of not less than 12 months from the date of signing of the respective companies’ financial statements.
The Parent Company (Afentra Plc) has provided a guarantee to Afentra (Angola) Limited in relation to the debt facilities, no fee has
been charged for providing the guarantee.
133Strategic ReportOverviewCorporate GovernanceGroup Accounts Definitions and Glossary of Terms
$
2D
2C
2P
AIM
AGM
ALNG
ANPG
Articles
Block 3/05
Block 3/05A
Block 23
Board
bbls
Bopd
Bwipd
CCRA
US dollars
Two dimensional
Denotes best estimate of Contingent Resources
Denotes the best estimate of Reserves. The sum of Proved plus Probable Reserves
AIM, a SME Growth market of the London Stock Exchange
Annual General Meeting
The Angola LNG project
Agência Nacional de Petróleo, Gás e Biocombustíveis (holder of the mining rights of
Exploration, Development and Production of liquid and gaseous hydrocarbons in Angola)
The Articles of Association of the Company
The contract area described in and covered by the Block 3/05 PSA
The contract area described in the Block 3/05A PSA
The contract area described in and covered by the Block 23 PSA
The Board of Directors of the Company
Barrels of oil (‘k-’ / ‘mm-’ / ‘bn-’ for thousand / million / billion)
Barrels of oil per day (‘k-’ / ‘mm-’ for thousand / million)
Barrels water injection per day
Climate Change Risk Assessment
Companies Act or Companies Act
The Companies Act 2006, as amended 2006
Company
CPR
Directors
E&E
E&P
EBITDAX (Adjusted)
EITI
Entitlement Reserves
EOR
ERCe
ESP
Farm-in & farm-out
FID
FSO
G&A
GBP
G&G
Genel Energy
GHG
GOR
Afentra plc
Competent Persons Report
The Directors of the Company
Exploration and evaluation assets
Exploration and production
Earnings before interest, taxation, depreciation, total depletion and amortisation,
impairment, share-based payments, provisions, and pre-licence expenditure
Extractive Industries Transparency Initiative
Entitlement production/reserves refers to the share of oil/gas that a company is entitled
to receive based on fiscal and contractual agreements governing the specific asset.
Enhannced Oil Recovery
ERC Equipoise Limited (author of the Competent Person’s Report)
Eletrical Submersible Pumps
A transaction under which one party (farm-out party) transfers part of its interest to
a contract to another party (farm-in party) in exchange for a consideration which may
comprise the obligation to pay for some of the farm-out party costs relating to the
contract and a cash sum for past costs incurred by the farm-out party
Final investment decision
Floating storage and offloading
General and administrative
Pounds sterling
Geological and geophysical
Genel Energy Somaliland Limited
Greenhouse gases
Gas Oil Ratio
134Afentra plc Annual Report and Financial Statements 2023
Group
H&S
HSSE
The Company and its subsidiary undertakings
Health and Safety
Health, Safety, Security and Environment
hydrocarbons
Organic compounds of carbon and hydrogen
IAS
IFRS
INA
IOC
IPCC
JV
JOA
k
km
km2
KPIs
lead
Lifex
LNG
International Accounting Standards
International Financial Reporting Standards
INA-Indstrija Nafte d.d
International oil company
Intergovernmental Panel on Climate Change
Joint venture
Joint operating agreement
Thousands
Kilometre(s)
Square kilometre(s)
Key performance indicators
Indication of a potential exploration prospect
Life extension capex
Liquefied Natural Gas
London Stock Exchange or LSE
London Stock Exchange Plc
LTI
LTIP
LWI
M&A
m
NFA
NOCs
O&G
OECD
Op.
Opex
Lost time Injury
Long-term incentive plan
Light Well Intervention
Mergers and acquisitions
Metre(s)
No Further Activity - forecast without new Capex invested
MNational oil company
Oil and gas
Organisation for Economic Cooperation and Development
Operator
Operating expenditure
Ordinary Shares
ordinary shares of 10 pence each
Petroleum
Petrosoma
Prospect
PSA
QCA Code
RBL
Reserves
Oil, gas, condensate and natural gas liquids
Petrosoma Limited (JV partner in Somaliland)
An area of exploration in which hydrocarbons have been predicted to exist in economic
quantity. A group of prospects of a similar nature constitutes a play.
Production sharing agreement
Corporate Governance Code for Small and Mid-Size Quoted Companies 2018
Reserve-Based Lending
Reserves are those quantities of petroleum anticipated to be commercially recoverable
by application of development projects to known accumulations from a given date
forward under defined conditions. Reserves must satisfy four criteria; they must be
discovered, recoverable, commercial and remaining based on the development projects
applied. Reserves are further categorised in accordance with the level of certainty
associated with the estimates and may be sub-classified based on project maturity and/
or characterised by development and production status
135
Definitions and Glossary of Terms
continued
RTO
SPA
Seismic
SOFR
Shares
Shareholders
Subsidiary
Sonangol
Sonangol EP
TCFD
Third and Fourth Period
Trafigura
TRIF
United Kingdom or UK
Working Interest or WI
Reverse takeover (pursuant to Rule 14 of the AIM Rules)
Sale and Purchase Agreements
Data, obtained using a sound source and receiver, that is processed to provide a
representation of a vertical cross-section through the subsurface layers
Secured Overnight Financing Rate
10p ordinary shares
Ordinary shareholders of 10p each in the Company
A subsidiary undertaking as defined in the 2006 Act
Sonangol Pesquisa e Producao S.A.
Sociedade Nacional de Combustíveis de Angola, Empresa Pública
Task force on Climate-related Financial Disclosure
Exploration terms: Third Period is to May 2025 with a work commitment of 500km
2D seismic acquisition; Fourth Period is to October 2026 with a work commitment of
1,000km 2D seismic acquisition and one exploration well
Trafigura PTE
Total Recordable Incident Frequency
The United Kingdom of Great Britain and Northern Ireland
A Company’s equity interest in a project before reduction for royalties or production
share owed to others under the applicable fiscal terms
ZRF
Zero Routine Flaring
Afentra plc Annual Report and Financial Statements 2023
136
Professional Advisors
Nominated Advisor and
Joint Corporate Broker
Peel Hunt LLP
100 Liverpool Street
London
EC2M 2AT
Joint Corporate Broker
Tennyson Securities
65 Petty France
London
SW1H 9EU
Financial PR
Buchanan
107 Cheapside
London
EC2V 6DN
Corporate Bankers
The Royal Bank of Scotland Plc
1 Albyn Place
Aberdeen
AB10 1BR
Auditors
BDO LLP
55 Baker Street
London
W1U 7EU
Legal
Pinsent Masons LLP
30 Crown Place
Earl Street
London
EC2A 4ES
PLMJ Advogados, SP, RL
Av. Fontes Pereira de Melo, 43
1050 119
Lisboa
Portugal
Registrars
Link Group
10th Floor Central Square
29 Wellington Street
Leeds
LS1 4DL
Registered Office
High Holborn House
52-54 High Holborn
London
WC1V 6RL
Designed and produced by Blueasterisk Design
www.blueasterisk.design
137
Afentra plc
High Holborn House
52-54 High Holborn
London WC1V 6RL
+44 (0)20 7405 4133
info@afentraplc.com
www.afentraplc.com
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TitleSub Title