The Board of Afren plc announces results for the year ended 31 December 2011. In 2011, we achieved the major milestone of first oil on the Ebok field development and progressed our Nigerian growth strategy. We also expanded our geographical footprint through the acquisition of assets in Nigeria, East Africa and the Kurdistan region of Iraq. Looking forward, we have a balanced portfolio combining production and development assets that we can leverage to internally fund our high impact exploration activities, underpinned by a capital structure that will support long term inorganic growth.
Osman Shahenshah, Chief Executive of Afren plc, commented:
“The 2011 results reflect the growing maturity of our business, with record net profit of US$125 million, up 172% on 2010 and an increase of 2P reserves by 132% to 185 mmboe. We have a made a successful start to our multi-well exploration campaign for 2012 with a significan new discovery offshore Nigeria. We have a visible production trajectory to 100,000 boepd by 2017 and a mature capital structure that will internally fund both organic and inorganic opportunities. Since the Company was listed in 2005, we have demonstrated strategic foresight and taken significant positions in Nigeria, East Africa and the Kurdistan region of Iraq, at a cost of entry highly accretive to our shareholders, coupled with a strong track record of operational delivery.”
Frontier areas with major play opening potential
Our portfolio of 11 East African assets covers an extensive surface area of 111,460 km2 on a gross basis, and all are located in basins with strong evidence of working hydrocarbon systems being present. Afren East Africa Exploration is focused on onshore rift basins and the deepwater Cretaceous/Tertiary play systems, which are geological settings that have yielded significant discoveries in Uganda, Sudan, Tanzania, Madagascar and Mozambique. A number of prospects have already been defined to date across the acreage, where the potential also exists to establish new hydrocarbon plays and additional prospectivity.
Block 1 is located on the western margin of the Mandera-Lugh basin in north-eastern Kenya bordering both Somalia and Ethiopia, where it is connected to the Ogaden basin. The Upper Triassic and Jurassic formations that have been identified are considered to be the primary zones of oil prospectivity. An oil seep close to the Tarbaj-1 well in the south-west corner of the block confirms the presence of hydrocarbons. Analogous data with the Ogaden basin also suggests there may be other potential source rocks and reservoirs. The Bur Mayo and the Kalicha-Seir formations in the Mandera-Lugh basin appear comparable to the Lower and Upper Hamanlei (Jurassic) formations in the Ogaden basin. If analogous, these formations should have high total organic content (TOC) source rocks and good quality reservoirs.
Several major structures have already been mapped on the block, that currently has 850 km of existing 2D seismic coverage. During the first half of 2011, the partners successfully acquired airborne gravity and magnetic data, the results of which have been encouraging and have been used to target an additional 1,800 km of 2D seismic data on the block.
The partners on Block 1 have commenced the acquisition of the planned 1,800 km of 2D seismic data and are targeting completion of this and further seismic interpretation during 2012.
Block 10A is located in the Anza Basin onshore northern Kenya, which is part of the Central African Mesozoic rift system that also includes the Muglad Graben in Southern Sudan, and the Lamu Graben in Kenya. The block covers a total of 14,747 km2. Three exploration wells were drilled by Amoco in Block 10A (Sirius-1, Bellatrix-1 and Chalbi-3) throughout 1988 and 1989, in the southern part of the block. The presence of oil and gas shows and the high maturity level of organic rocks in wells Bellatrix-1 and Sirius-1 are evidence of a working hydrocarbon system on the block. The latter well notably established the presence of an Upper Cretaceous lacustrine source rock that may have generated low-sulphur/paraffinic oil.
Having satisfied all seismic work commitments with the acquisition of 750 km of 2D seismic over the block in 2011, the operator (Tullow Oil) will commence the drilling of one exploration well on the Paipai prospect. The drilling rig is now scheduled to arrive at the field location later than planned, which means that the well is expected to spud in mid-2012.
Blocks L17 and L18 are located in the Lamu Coastal Basin, offshore south-east Kenya, covering an area of approximately 1,275 km2 and 3,630 km2 respectively. They are situated in water depths varying from a few metres along the shoreline to up to around 500 m.
There are several potential source rocks for the Cretaceous plays in the southern areas of the basin including the Premo-Triassic Karoo interval and sections within the Lower to Middle Jurassic. There are oil seeps in the Lamu Basin and Pemba Island linked to a Jurassic source which implies that the structures in Blocks L17/L18 are most likely oil bearing. Although there may be additional potential in clastic reservoirs within the Tertiary, the main reservoir targets are in the Upper Cretaceous. The hydrocarbons are expected to have been generated in the deep Pemba trough south of Block L18.
Following completion in 2010 of a 400 km short offset shallow 2D seismic acquisition programme in the Shimoni area of Block L18 and in the Mombasa area of Block L17, a number of newly defined prospects and leads have been identified on the acreage.
The Group has completed the acquisition of additional 2D seismic data targeting the deepwater region of the block and plans to drill one exploration well targeting the coastal play in the second half of the year, and is currently trying to source an appropriate rig.