Africa Oil Corp

TSX:AOI

Earnings Call Transcript 2022-Q3

[Operator]

Hello, everyone. My name is Nadia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Africa Oil Third Quarter 2022 Results Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press *11 on your telephone keypad. If you wish to ask a question via the webcast, please use the Q&A box available on the webcast link at any time during your conference. Please note that this event is being recorded. The recording will be available for playback on the company's website. I would now like to pass the meeting to Mr. Shahin Amini, Africa Oil, Investor Relations and Commercial Manager. Please go ahead, Mr. Amini.

[Unknown Executive]

For our third quarter 2022 results call. I'm joined today with our President and Chief Executive Officer, Keith Hill; and our Chief Financial Officer, Pascal Nicodeme. Keith and Pascal will present a quarter of highlights and the business outlook before we go into a Q&A session. I would like to remind everyone that remarks made during this session are subject to forward-looking statements, which involve significant risk factors and assumptions and have been fully described in the company's continuous disclosure reports. The information discussed is made as of today date [ and time ], and Africa Oil assumes no obligation to update or provide this information to reflect new events or circumstances, except as required by law. The company's [ strictly ] financial statements and related MD&A are available on the company's website and Cedar. So Keith, we are ready for you. Please go ahead.

[Keith Hill, executive]

Thanks Amini and thanks, everybody, for dialing in. Obviously, another good quarter for us. I think we have met or surpassed most of our financial goals this year. We still have a few more catalysts remaining this year as well. So I think it's still to be an interesting year. I think most of you have seen this slide here where I think we're telling that we've become a full-cycle oil company, not only production and exploration but cash flow and actually returning the money to shareholders for the first time, which I think has been very well received by the market. I think a couple of highlights there on the right side of that slide. We are in the quarter with a significant amount of cash, over $200 million of cash in the bank even after we have done our shareholder returns. I think we're in a very good liquidity position. I also wanted to highlight the -- under the carbon neutral target that we have made before. We have made a pledge to be carbon neutral by 2025, roughly 25 years ahead of what the industry is signed on to in most of the accords. I do want to highlight that we did have a review done by us for our largest shareholder by [ Ecovadis ], and we came out to be in the top 1% of companies of over 80,000 companies. So we're quite proud of that. We are actually the highest ranked oil company in the ESG framework. I think that's something we'll continue to do. As I've said before, I think for those who were good ESG operators and part of the solution, I still [ like ] oil and gas is going to be investable for the foreseeable future. So if we move to the next slide, I really talk about what we've done this quarter and early the first 9 months of the year. Obviously, financials are quite robust. Pascal will give a more detailed account of that. But as I said, we are now debt-free when you look at cash on the balance sheet versus our share of debt in prime. We actually have a net cash position of $42 million and again after we've done our shareholder returns. So again, a very attractive net debt-to-EBITDAX ratio of 0.3%. And you see on the right there, we have started our shareholder returns. We continued the dividend we put in, but we've also launched the 10% buyback that we discussed at our last meeting. As of now, we've spent $35.7 million to repurchase 5.8 million shares, and we intend to continue on with that program throughout the rest of the year. So again, the total shareholder return is $59.5 million, I think is a testament to the amount of cash that we're generating and also our commitment to give money back to the shareholders. Again, it's all driven by prime and prime dividends. We've already had $250 million this year compared to the $200 million we've got in 2020 and 2021, and we're expecting more this year. The amount of additional dividend this year will be somewhat dependent on getting our license extension in Nigeria. But regardless, there will be more dividends coming this year. So, again, I think the barometer of this acquisition, we've already taken $650 million off the table and currently paying $519 million. So I think this has been a great acquisition for us. We've also had some very good exploration successes led by Venus. Venus looks like it could be the largest discovery in Sub-Saharan Africa ever. It's early days. We've only drilled one well at the well that we drilled, but very good reservoirs, 84 meters thick, significantly thicker than we thought. The oil-water contact was significantly below where we thought. So it looks like it could be quite big. Again, early days, but we're getting ready to drill some appraisal wells there and if that can out, it could be incredibly material to the company. So again, the other thing is we've opened up a new petroleum province with that and with the well that Shell drilled next door. So we have a very good position in that province as well. On next slide. Again, we are going to comment on production performance on all of our guidance for this year. We're going to be at the upper or middle part of the guidance, both working interest production and [ title ] and production, we're going to be well over guidance in cash flow and dividends received. So I think everything seems to be ticking along well on that. We will be coming out with guidance at the end of the year forecast. But I think so far, these assets just continue to be the gift that keeps giving. Next slide. So, again, record oil sales since the prime acquisition. I want to spend a few minutes talking about hedging. The hedging is something that we have talked about a lot in the past. I'm going to go back on seeing -- the sales price versus data at Brent, in 2020, we were kind of heroes. We actually had hedged all of our production. When Total hit and the oil price went down to $20, $30 a barrel, we were still getting $60, $70 to $80 a barrel for our crude. So essentially saved the company in 2020 by having a very robust hedging program. Since then, we've given a bit back in 2021 and then 2022, we've been doing our best to un-line some of these hedges and come up with a new way of hedging that basically allows us to take full advantage of the current high prices in oil. I think we've accomplished that. If you look at the progression from the first quarter to the third quarter, we've actually got to the point now in the third quarter where we're getting -- we're realizing above dated Brent prices for our crude. The way we're doing that, if you go to the next slide, is a somewhat strained but very effective hedging mechanism where we actually take 50% to 70% of the next 12 months cargoes, and we set a trigger on those targets at 80% of what Brent is trading for. It's essentially a floor. It's a free floor. We don't pay for it. So what happens is, basically, it just chugs along and if we never have a significant downward event in price, we just sell at spot market, which, of course, we did in November, we just sold 2 cargoes of crew accrued over $100 a piece, the triggers never hit. But I think what it does is it gives us the downside protection if things do go bad if there's a new wave of COVID or some of the economic issues with inflation in the overall world economy structuring bad. We've always got this cushion that basically stops us from going down below these thresholds. So right now, most of our triggers in the $70 range for the first half of next year. So it shouldn't be a big issue for us. My goal is that none of those triggers ever get hit. I think we're still quite bullish on oil price. So I think this is a pretty interesting strategy that allows us to keep the upside but protect the downside and not actually have to pay for it. So far, working very nice. Next slide. Again, Nigeria is really the core of the company. I think when you look at valuations, I think the majority of our valuation is still done on Nigeria. These are the 3 largest deals in Nigeria. They're all performing quite well. They're going to be within guidance. They have low operating costs, they've had 3 operators and Chevron and Total and we see these as our cash flow going forward and really underpinning the value of this company going forward. But they do need investment. If you go to the next slide, I think one thing we will be doing is spending a fair amount of time and some money reinvesting in these oil fields. The primary thing we really want to do is drill development wells on Egina and Akpo. We've unfortunately had a little bit of a delay in the rig. So we're hoping the rig shows up in December or January earliest. We have a rig identified. It's just going through approval procedures in Nigeria. If we can get that rig on location, we plan to drill 9 wells on Egina and Akpo, which will really be key to boost not boosting production and something that we're seeing a bit of a decline in particularly Egina that really needs some development wells to shore it up. We're also going to drill a couple of exploration appraisal wells. There are a number of good targets right around our FPSOs that we want to start developing to bring online and of course, [ Pray away ], the field, it's already basically ready for sanctioning. When we get license extension, we hope to have sanction that fairly quickly as well. I think this is a great asset for us, but it does need some investment. And I think you'll see in 2022, 2023 and 2024, we will be putting some money back into these fields to make sure that they continue to produce at the same level. Next slide. So I'll turn it over to Pascal now and let him kind of run through some of the financial highlights.

[Pascal Nicodeme, executive]

Thank you Keith. So I think as you said, it's been a very good quarter. We posted $70 million of net income in this quarter, which is above the average for us since we've made the acquisition in time. It is also an increase compared to Q2. In Q2 we have been affected by a net increase in the net open position and this quarter, we've seen the impact of it. So, there has been a decrease in cost of sales due to the movement in the net of [ exploration ] by roughly $73 million, which expand this very good quarter. Yes, as you mentioned, we are still sitting on $27 million per cap despite the $35 million of share that we have pulled back since we started this buyback. Next slide, please. As I said, this performance has been underpinned by another good quarter from prime. [ Offshore basepoint ] from $78 million this quarter and very strong EBITDA $7 million and our share in cash flow from operations, price sits on a very large [inaudible], more than $600 million ports. So net after parity is prime repaid their net debt to roughly $5 million [ next to us ]. So Prime continues to deleverage. Our net share of that debt is decreasing. Thank you. So since as Keith mentioned, since we made the acquisition, we've moved and we take the consideration -- the initial consideration. We've received the [ $650 ] million of dividends since we made the acquisition, which was $520 million of cash acquisition costs. In the meantime, the net can finance to us within fine also increased by $85 million. So that's something to be taken into account in the variance in the acquisition. I've mentioned, the net debt has continued to reduce $450 million since we made the acquisition. So we see are reversing income capital today. We give a rounding under corporate facility in place with 4 banks, we've agreed with our banks to increase that facility to $200 million actual as we get the license in new one licensing in Egina, so that's another dividend of the banks that are supporting us at the moment. We expect to receive another largely [ even ] from prime as soon as we get the expansion we will also refinance their RBL facility at the same time, and we will employ that we finance [ impact on this cycle to the ] [inaudible]. Keith, I think, over to you. Thank you.

[Keith Hill, executive]

All right. Thanks, Pascal. So yes, we have a number of catalysts still coming up. A couple of these, I was hoping to be reporting today. Unfortunately, everything in Africa seems to take a little bit longer than we'd like, 2 of them, in particular, the project oil Kenya Farmout and the [ Gubane ] well. We were expecting to see this quarter, but still moving forward, but hope to have those literally in a matter of the next few weeks. So the biggest one is probably the Venus appraisal drilling program. That is going to be next year. Again, we were hoping to have that rate here this year, but it seems to be a lucky rig. It's made a big discovery in Cypress. So they are drilling and testing on that right now and as soon as they're finished, they'll be coming to us, should be there around mid-February, and we'll start drilling the first Venus appraisal well. Total, the operator has stated they are looking to really bring another rig in, I think we could have a 2-well drilling program going by the second quarter of next year. I think, obviously, industry in the interest of our partners is very big on the Venus and Orange Basin area. We are looking at a number of strategic assets producing assets. So I think our criteria is very simple. [ We've got producing cash following assets ]. Our target group is really looking at what majors are divesting. We don't want things that are going to suck up a lot of cash. We want things because we're going to be producing cash. We will be doing exploration, but it will be really following up the exploration we've got. We don't see ourselves doing a lot of new frontier exploration out there, it's mostly taking advantage of the portfolio we've built. And really, if we buy things, it's going to be focused on Africa and primarily West Africa producing assets. Another big [ can ] is this license renewal, as Pascal mentioned, once we have that renewal, we will be able to refinance the RBL and the PX facilities that frees up an awful lot of cash for us to go do things with potentially shareholder returns, potentially acquisitions. So I think we're very close on that. We should know something on that by the end of this month and keep an eye on for that because it is actually is a pretty important thing for us that we get that license remitted. We also are looking to farm out our Block 3B4, I'll show you a little map where that is, but that's kind of right in the heart of this Orange Basin trend, and we've had quite a bit of interest from industry on that. Next slide. So again, exploration, while it might not be the industry mantra, we still see us building value. We want to make sure that we do it in the right way, what we like to call advantaged exploration. We're not going to be probably going and doing the onshore risk-based and type of things that are going to take 8 to 10 years to develop. What we see is looking at areas that could be brought on very quickly, advantaged barrels that are either near infrastructure or offshore where we think we could have fast-track development similar to what they've done in Guyana, so again, the 3 companies that we invest in Africa Energy Impact, EcoAtlantic, a very active drilling program going on in South Africa and a number of very well-placed exploration box. I do think there's a lot of value here. I think our goal in the next year is to basically figure a way to get that value to shareholders. I think at some point, we need to consolidate this position where we don't have these portfolio companies. They're either absorbed or sold or moved forward on. So next slide. Orange Basin continues to be -- I think it is now becoming the hottest place on earth. Not only is the Venus discoveries we made, but the graph discovery made by Shell. Shell is bringing a rig in as well. So there'll be potentially 2 or 3 rigs working full time here for the foreseeable future. We're drilling there and [ Block 2B ] is a slightly different setting effective a retain that's not part of the Orange basin and Delta proper. We hope to have results, well, we will have results on that before the end of the year. Drillings get a little slower than we'd like there. But good news is we were able to spud the rig and spud the well and keep it moving. I think we did a very good job on our ESG compliance to make sure that we weren't shut down by environmental groups there. I think as long as you do things in the right way and you do your consultation, your ESIA and prove that you're a good operator. I think you still can operate almost anywhere in the world if you do things correctly. I do want to point out [ Block 3B4B ], we're very keen on this block just bought has a number of prospects that we think are very similar to the craft and even the leanest discoveries, and we are in a farmout process to bring in a partner. I always like pointing out that little inside map on the bottom left. We've got an area that's roughly 7x the size of the Guyana trend. So we've drilled 2 wells and that 2 billion barrel discoveries. So I think this is about as good as you get from an exploration standpoint. Next slide. Don't forget my good friend, Kenya. I've been telling you about Kenya for 13 years. I know patience has won them and I think probably most of the market doesn't give us much value there. We still think it's a very good plan, and we still think we've got a very reasonable chance to get a strategic partner and get those farmed out. So again, I think this is one of those believe it to see it, but watch the press. I think there's a good chance that we will have an announcement on our partnership before the end of the year. Next slide. So again, I think you've probably seen this slide before. I mean, to me, this is why we buy Africa Oil. I think you buy it because you've got Nigeria as the core value. You're getting Nigeria a pretty significant discount depending on what oil price you want to use. If you use today's oil price, you're going it at more than a 50% discount, you use a longer-term price $60, $70, you're still getting a pretty significant discount on just the Nigerian [ force ] and you get everything else for free. Not everything is going to come good on the bright side of that slide. As Venus on itself could be almost the same value as our market cap if it comes the appraisal wells prove up the work. Kenya is worth -- that's a risk Kenya [ Value ], the risk [ Kenya ] value is worth at least a couple hundred million, maybe as much as $500 million to us in the long run. Then we get this portfolio investments [ Ecolac ] is not only drilling a well now, but they've put together an ice of portfolio. They have some interesting stuff in Guyana across the water. I think actually to me it's very interesting because I think it's got a lot of upside exploration potential. Obviously, the discoveries we've made in South Africa with Africa Energy, Total is working hard to push those forward and monetize those. They also have a lot of upside in undrilled parts of the basin potentially even oil upside. So I think Venus is probably the most interesting thing on the right side of that slide. But I think there's quite a few other things that are quite interesting as well. I think that's kind of at the end of the day, why am I a big shareholder of Epic Oil and why would I buy more it because I think the optionality you get from all of the stuff on that right side and the very low risk you got from all the stuff on the left side makes a very attractive investment thesis. I think that's all we want to say in the presentation. I think we let you read the advisories at your leisure, and I think we're to deal some questions.

[Operator]

Dear participants. As a reminder, to ask a question, you will need to press *1 1 on the telephone keypad and wait for name to be announced. Alternatively, if you wish to ask a question via the webcast, please use the Q&A box available on the webcast link the studies will take a few moments -- Now we're going to take the first question. The first question comes from the line of [ Ted Beet Nielsen ] from [ Spare Bank One Markets ].

[Unknown Analyst]

Congrats on a strong capital Q3 numbers. Many questions, but I think a limit ourself to 3 now. First one is on just the production trend. I noticed I mean the recent decline during the year, at least the third quarter production is substantially lower than first quarter production. I just wonder, should we expect this trend to continue into 2023? Or should we expect then the new Egina wells to offset some other decline you see in recently? Second question on a [ throwaway ]-- exciting development, when should we expect [ throwaway ] to commence production? Then my third question is on just the overall structure of Africa Oil, Africa Energy to impact, of course, you're the largest shareholder of all, direct or indirect in some of these companies -- Do you see this structure going also forward? Or should we expect some kind of [inaudible]? I kind of missed the middle question... In the production...throwaway is it?...

[Unknown Analyst]

That's correct. [ throaway ] timeline going forward? And when should we expect production on [Throwaway ]?

[Keith Hill, executive]

Okay. Well, I'll take them in order. Yes, decline is -- we hate that check. The only reason it's declining is as normally, we would have been out there drilling wells in March of this year to shore up that production, arrest a decline for sure and have a very minor decline and with a little luck, maybe even have an increase in production. So it all came down to the rig that we had identified was we couldn't -- the operator couldn't come to an agreement with a local partner to get that rig up and running. So they had to go into the market and get another rig. So we've got a rig identified that already under contract at Total, and we're just going through the approval. If we get that and we get drilling, I think we'll be able to stem that decline and level that off, maybe even increase to where the [ current ] production is. So the history of these fields, all 3, especially the 2 older field [ Bakpo and Itami ] is that every 18 months, they drill 3 to 5 development wells and that's what keeps the platform going. So unfortunately, we haven't had the opportunity to do that. But I think once we do that, I'm pretty confident we'll be able to stem that decline because the field is operating just about the way we expect it to under the reservoir models. There are places in the field that have untapped [ call ] box that haven't even got development wells in them yet, those are what are really earmarked for the first program. We feel confident about that. [ Throwaway ] is really kind of waiting on this license renewal. Even though license renewal is automatic in Nigeria, there's never been a license that hasn't been renewed once if you fulfill your work commitments and pay your taxes, both of which we have done license renew automatically. But I think given that we're going to be putting a significant investment in, we won't see production until after the license extension date. I think the partnership feels more comfortable going out and spending the money on [ Pralay ] after we have that license extension. Like I said in my talk, I think there's a very good chance we'll have that done by the end of the month, but nothing's done until it's done. So I think if you see that announcement on the license extension, I think you will see us also moving very aggressively forward on [ Prayway ]. So we've done the field development plan. We've done all the engineering studies. We're pretty ready to pull the trigger. We just want to see that license extension before we do that. Once we pull the trigger, we're talking about 2 to 2.5 years for production. And then last one, I do think it's unsustainable this portfolio approach that we have with our exploration companies. I think we set it up as a matter of convenience to get into some very good exploration plays and it worked. We are in some of the hottest [ plains ] certainly in Southern Africa and even in Guyana. But I think at some point we need to put this on a regular basis. We're not a portfolio company. We're an oil company. So I think the key well drilling right now is [ Gazania ]. It is held by both Eco and Africa Energy. Between the 2 of them, they've got 87.5%. So I think that one, we need to see the results on that before we see -- know what we want to do if we've got a development project going forward on our appraisal project of [ Gazania ] that I think we may have one equation. [ Unfortunate on Gazania ], I think it's maybe another path. I think my [ voters ] has told me, by the end of next year, we need to get that sorted out and get away from being a portfolio company and holding those blocks. So as I said, I think there's 3 options you either absorb them, which is something we would look at all 3 of those companies and buying out the interest we don't have. We divest them, selling them off to someone else in the cases of projects that have been discovered and developed like [ Blue Prada ] and potentially even Venus once we drill the appraisal wells and outright sale of those prospect projects. Or leave much of spinning out some of these into exploration vehicles. So I think it's too early to make that judgment until we see what happens in Venus, what happens with the development project in [ Lupferupata ], what happened in [ Gazania ]. But once we have that data, I think the goal is by the end of next year to have those no longer the portfolio investments in Africa Oil.

[Unknown Analyst]

Okay. And just if I may have a fourth question here, the timing of [ Gazani ] announcement. Is that like shortly, should you expect anything this week?

[Keith Hill, executive]

I'm not sure. We're still drilling. I think it's probably going to be... Probably that will be this week.

[Unknown Analyst]

Okay. Understood. Perfect.

[Operator]

Thank you. We’re going to take our next question. The next question comes from line of James Hosie from Barclays.

[James Hosie, analyst]

Maybe you can talk a bit more about the OML 130 conversion and renewal. Just what's standing to secure this. Can you also quantify the scale, the step-up of investments that you follow that conversion, guessing drilling infill wells, plus [ prayway ] plus you mentioned exploration as well. Just trying to get an idea of how much more you're going to be spending on that asset in the next few years.

[Keith Hill, executive]

Yes, I think the renewal is down to one factor. I mean there is a fee that we're willing to pay and a fee that the government is willing to get and there's still a little bit of gap between those two. But I'm hoping that, that closes off before the end of the month and we get that done. As far as our decision to invest, I would say, in the core fields do not really depend upon that at all. So all of the wells that we drill at all the appraisal, all the development wells at the Egina, Akpo, all the -- even the near field appraisal exploration wells will be drilled regardless of whether we get extension. The only thing that's really dependent is [ prayal ]. And even on that, I think we will continue to move that project forward as much as we can. So I think the spending the [ MakeB ] dollars on it, we won't do until extension. But I think we have put so little capital into these projects since we bought them, and we do need to take care of these fields. So I think the drilling the 8 to 9 development wells is credit -- so those will be done as soon as we can get [ Arabian ] and we may even extend that program to keep production up. I think as far as license exception, the only one that's really dependent is [ Praylay ].

[James Hosie, analyst]

Okay. And as you talked about the, I guess, the fee being the standing issue, is that to be determined by formulas and I guess, you're negotiating around the impact of that formula? Is that the case?

[Keith Hill, executive]

Yes. There's -- It is fairly standard and it's already been done on several licenses in Nigeria. So we're not breaking new ground. If it comes down to what you use is essentially a percentage of the NPV going forward that we pay for license renewal. So how do you calculate that NPV? What reserves do you use? What oil price you use ? All the parameters go in that, that's the negotiation. So it's fairly standard and we're not that far apart to be honest with you. So I think we African Oil [inaudible] let's just finish this and move on and that we can get after [ prayaway ] and really start developing these fields.

[James Hosie, analyst]

And then just as a second question, how we just round about supply chain capacity and really have you now secured all the rig capacity and other sort of, let's say, long redline you need for what you plan to do in 2023? Are you at [ equivalent ] market and some of that still...

[Keith Hill, executive]

Yes, assuming we get this rig under contract to Total. I think we're fine on both. then I can't give you a detailed answer on all the supply chain stuff casing and we had some things like that, but the Total is a pretty good operator, and I'm sure that they have that sorted out. The second rig going down to Venus, I think, is one that so needs to be a bit sort of about. I think they've got some candidates and they're out to tender, but that hasn't been secured yet.

[James Hosie, analyst]

Okay. Thank you.

[Operator]

Thank you, dear participants. As a reminder, if you wish to ask a question over the phone, please press *11 on your telephone Keypad. Now we will take our next question. The next question comes from the line of Matt Cooper from Peel Hunt.

[Matthew Cooper, analyst]

Thank you, and thanks for the presentation. So a bit of a follow-up to an earlier question is, I wonder if you could quantify how much the delay to Egina drilling has impacted your 2022 production? How much this is offset by the 4 well interventions. That's my first question.

[Keith Hill, executive]

Yes. So we did the 4 well interventions and 3 of them turned out pretty well, which kind of helped stem some of that decline. We are looking at doing some more interventions as well to try to do that. But we're not -- it's not like we're losing production. We're just delaying production. So not drilling those wells, the reserves remain the same, and we will get those barrels. But obviously, especially in our [ nice high ] oil price environment that we had in the second half of 2022, we would love to have those barrels coming sooner than later. I can't give you a number off the top of my head of what it's cost us. Again, it's really more of a delay than an actual cost. Of course, we didn't spend the CapEx. So we did enjoy the cash flow out of that. But it is -- the things that keep me up at night. That's kind of one of our biggest ones. We need to get a rig in there. We need to start drilling these wells and make sure we keep that production going to but that is kind of the lifeblood of the company.

[Pascal Nicodeme, executive]

I mean is important to [inaudible] sorry, Mat, I just wanted to reiterate that our expectation is to end the year with inhale 2022 management guidance. [inaudible ]

[Matthew Cooper, analyst]

Sorry, I guess maybe on a lot of that production from the Egina wells was maybe going to come in at the back end of this year and into next year. So hence, why it's maybe not had a massive impact on this year's production and why you're still within guidance, well within guidance.

[Keith Hill, executive]

Yes. An [ Akpo ] field has always been an overachiever. So it's definitely -- it's producing about 109% of target. And then the [ gbammi ] has actually had a pretty good year [ Pammi ], which we had a little trouble with in previous years, especially with gas, the gas handling capabilities have actually done much better this year. So I think if we can get in with that rig and drill development, we'll be back on track.

[Matthew Cooper, analyst]

Okay. Great. I just wondering if you could give a little bit more color on why the design well result has moved back slightly?

[Keith Hill, executive]

Yes, I've got 2 reasons. I don't know I guess I shouldn't go into too much detail, but there was a weather delay at the beginning, and then the drilling has been taken longer than expected. So we're about 15 to 20 days behind right now to on. So far, operations are ongoing. There's no serious promote well, and it's just taking a bit long ago.

[Matthew Cooper, analyst]

Okay. That's great. Thank you.

[Operator]

Thank you. The speakers, there are no further questions at this time on audio lines. Mr. Amini, please continue.

[Operator]

Thank you very much, Nadia. Yes, we do have a lot of questions through the webcast I'm mindful that we don't have a lot of time. So we'll try and get through as many of these as we can. Keith, there's been a number of [inaudible]. And it really is about applicable growing cash part? And also, what are the -- where are the kind of an update on our business development activities. So perhaps if you could just share your views on what is your plan?

[Keith Hill, executive]

Yes. I mean, the 2 are kind of hand in hand. I mean we've got quite a bit of cash on hand, and we've got at least $200 million once we get the life of extension, we have $200 million of undrawn debt as well. So we do have a good cash pile to go hunting with. But -- and then we do have, I would say, a half a dozen, what I think are pretty attractive acquisition opportunities. But as we've talked before, we will always compare those against buying our own shares back. I can tell you when our shares were priced at $2.30, $0.40, things like levels like that, it was pretty hard to find anything that was better than buying our own shares. We've got a little bit more new potential in the market. We got our share price up to $3.30, $3.40 even though it's dropped back just a little bit in the last few days. But I still think it's a argument at that price. I still think if you look at that NAV slide that we put up in your math calculation, I still think even what we paid our maximum price, I think, was about CAD 38 per share, it's still a target at that price. So we are continuing our buyback program, and we still think it's that it's a good deal at that price. But when we look at these acquisitions, it will always be; are these accretive or not? I think that's an important fact. We also want to look at production assets that are going to infill going forward. We are in Nigeria on a declining asset base. Even with Kreo coming in, we would like to see some longer-term robust producing assets to kind of fill in. Shall we say our cash flow from 24, 25 to 26 only. So there are still deals to be made. There are still more sellers than buyers. I think you have to be prudent and careful in this market. We're not going to be out there paying $70, $80 oil price for these assets, but that's not what the majors are looking for. They carry these on their books at $50. So as long as they don't have to write down and they can get out of a nonstrategic asset and have cash to use on their more strategic assets. I do think there's deals to be done, and that will be a big focus. So for us, as a management team, if you say kind of one of the 3 things I would really push forward in 2023. One is a strategic acquisition of a producing asset. Two is getting the Venus results; and three, is continuing to return money to shareholders as appropriate.

[Operator]

[inaudible] A question for Pascal.

[Pascal Nicodeme, executive]

Once we have 130 losses renewal and [ undeclined ] expectations in terms of [inaudible] license expansion. And while currently the RBI slightly below EUR 700 million on the cases. So Japan is not to generate a massive amount of new winning with the section. So we will probably sign a single [ Audia ] refinancing about EUR 1 billion, billion. And so we are not going to generate much of the money, but the whole purpose of this refinance, [ reexpanding ] the maturity invested -- and of course, to defer all the [inaudible] facility. So we are going to [inaudible] the maturity of the debt is mid-2024.

[Operator]

Thank you, Pascal. There are a number of questions on Kenya and Keith perhaps I should put this to you. The question is how the negotiations progressing in Kenya and obviously, you probably [inaudible] in the presentation. But there's a follow-up question about this SDP approval and what is the timing for that?

[Keith Hill, executive]

Yes, I'm not sure I can say too much more about negotiations than I have. We had 2 interested parties. We're moving forward with 1 of the 2 interested parties. No deal done, but we feel we're fairly close. I think there's a -- each person can put his on percentage of chance of success on that, but I think we have a fairly high chance to get a deal done there. The SDP process is something different. We're working with the government. As you know, there was an election there. So there's a little changeover of some of the administration there. But I don't see that as a big issue. We've submitted an FPP and it's in approval, and we're just going through the normal course of getting that field development plan approved.

[Operator]

So shifting gears to exploration. The question again is [inaudible], but I'm sure it's something that you could show you is one. The comment is that Akpo has a great exploration portfolio rate prospects but has a tactical oil can facilitate speeding of the developments, which have presences to be rather slow.

[Keith Hill, executive]

I guess you have will take them one at a time. I mean, the South Africa [ Lifford ] group is really a negotiation about monetizing that gas and getting gas prices and getting guarantees and the operator is very focused on that. The CEO, Patrick [ Pune ] was recently in South Africa discussing this issue. I think that's the key to unlocking that value on at least the existing discoveries. We're also quite keen on some of the exploration on the eastern side of the block, which we think has oil potential, which was oil will always be easier to monetize than gas. So I think at some point, we'd love to see some wells drilled in the eastern part of the block as well. I think for Venus, I think it can go very fast once we prove it. Right now, we have 1 well that's not tested when we have at least 2 wells that are tested and proving not only the lateral continuity of those reservoirs, but the deliverability of those reservoirs, I think you'll see Total and move very quickly into an early production phase. I think on both of those, it's a question of do we want to stay in or not. I think we'll just have to look at that at the time, check our balance sheet, take the timing of that. But I think what we see is both of those are potential fast track developments. If you look at what we've done in Guyana, 3 to 5 years from discovery to first production is not an unrealistic target for either one of those projects. So I think it sounds like the [ Blue Pada ], the only delay is getting all the gas terms set and doing the commercial agreements but I think we're in a good position to move those forward. Then it's really a question of how long do we want to stay in those projects? Or do we seek to monetize them early.

[Operator]

Very good. There are a couple of other questions specific on the [inaudible], I don't think it's appropriate for us to comment on that. And I'm sure that the operating standard partners into cost give updates on that well. So let's move on. Another question on our share buyback program. First one is the announcement of the Canadian government is looking to impose a new tax on share buybacks. The question is, well, how is that going to impact on our program? If I can actually wearing into this maximize and we give updates in cost, I think we are aware of. But at this present time, we're just looking at the details. Keepublic investors are asking about the potential for a substantial issue at this. So to go above and beyond on loose issues. Do you have any views on that?

[Keith Hill, executive]

Yes. And just to follow up on that first point, too, that the tax they're talking about wouldn't take effect until 2024 anyway. So we don't really see it as there's a big issue right now, the tax on buybacks. Yes, I mean we would look at that. I mean, I think our it company, [ ITC ]has been very successful doing that. And at the end of the day, it's looking at the amount of money we've got and what we want to spend it on. But again, certainly is on our laundry list of ways to spend that money is to potentially do a larger tenant issuer buying back more shares. I think we also have to keep in mind that the M&A opportunities that we have and where best to spend our money is the big question.

[Operator]

Very good. There was actually a question on the daily dynamic at daily orders for share buybacks. And people will long[inaudible]. I just want to remind everyone that Africa Oil is in a blackout period. During the blackout period, we had this [ automatic share flower ], which allowed our 2 brokers to continue repurchasing shares on our behalf, and we cannot actually change those promises until we come out of back out period. Question for Pascal and Keith, [ latecomers ] of Black house, what is the medium to [inaudible] the share buyback.

[Pascal Nicodeme, executive]

Keith, you want to take the other question? I can answer.

[Keith Hill, executive]

Go ahead Pascal.

[Pascal Nicodeme, executive]

Yes. So I think the first important that there are daily units in the motion buyback bank. So we are limited by that liquidity. I think [ in proven ] this program has proved to be very successful. So as we define continue to keep that in mind in terms of return to shareholders. I think it's important also to know that we want to keep flexibility going forward, especially in M&A handling acquisition of assets. So we want to keep flexibility and keep our options open going forward. As Keith mentioned, we sit on more than [ $100 ] million of cash. We have this no of facility. All this is will be useful if we do the acquistion. And so we are contour options between doing more M&A or continuing the share buyback for the resin that we did in September.

[Operator]

Thank you, Pascal. That's a good question, if you may also set this long -- can you just provide some color on the differentials that price comment getting on top of brands for production. Any views on that?

[Keith Hill, executive]

Yes. So far, we've had a couple of nice big spikes. We have like I think it was $9 premium to Brent on one of our Egina [ crews cargoes ] but we've averaged about $4 to $5. So the market really likes these crews in Akpo and Egina. So generally, I think that's what we would plan to get in that $4 plus or minus range premium to Brent.

[Operator]

Well it is. There's a couple of questions about what is your share of outstanding balance with provided share capital updates. You can see the press release with a number on our website. There is a question, is distinctly since the markets offered this morning, share price is down 7% in -- and well, Keith, we've been discussing this over the last couple of hours. I don't know whether you have any comments or...

[Keith Hill, executive]

Have decent a bit of a history for me that you can put out these good numbers and that you are front. So obviously, I have been very quickly going through the trade base that's available since the markets opened. I've also been speaking to a couple of expert friends in Scandinavia and modified purposes, which we're looking into more detail and that is that positive investments in Scandinavia may have been taking liberate warrants in order to have average exposure to Africa will show to performance. And those positions is a technical trading may have softer to unwind. That's why effect out, we had this quite frankly unreasonable, irrational reactions to our results. That is a long hypothesis which we are looking at. But certainly, management in Africa do not see anything of results or anything else to explain that solid drop as the trading starts. So that's our hypothesis for now. So on that is, let's see if there are any other questions A number of questions on time, which we have responded. So there's one question on tax Pascale and it's talking about the tax rate at time seems to be going up. Can you just cover that with quickly for us?

[Pascal Nicodeme, executive]

Yes. I think the main reason is that actually, that we try to bring real is that we have existing investment [ asctate ] in Egina. So we are not able to access if with this [inaudible]. So going forward, we are going to pay a larger effective digital rate, and that's the main [inaudible].

[Operator]

Very good. And if I may just bring one point into this as Keith can also comment on it. Is it possible to have the conversion to the new PIs without [ a sent of ] last year, or longtime market is the core for us to benefit from a lower tax rate under the [ Majors ] Petroleum Industry Act. We are [inaudible] I think we need maintain to be able to refinance all the effect at prime level.[inaudible] So it's an institution to get license extension of course, if we can't get a license to function immediately or whether leading we would consumers switching to the PIA.

[Pascal Nicodeme, executive]

And you attraction of switching to the PIs that headline tax rate from 50% to say better than moving to fewer corporate factors, while we are in the PVC it is --

[Operator]

Well, I think we've tackled most of the question we last time. I just want to thank anyone for join us. Keith you have any final comments?

[Keith Hill, executive]

No. I mean, I'm feeling very good about the company. I think is going to be some exciting wells next year, especially at Venus. Fingers crossed, we've got Kenya over the line and put some money back into our investments in Nigeria and I think I'm still a big oil goal. I think the transition is moving forward. We're going to be part of that transition, and we're going to be in the top quartile or decile of ESG performers. That's our goal. But the transition is going to take 30, 40 years, and I think there's still a lot of room for oil and gas as long as you do your business right. Appreciate everyone taking the time today and very excited about moving ahead.

[Unknown Executive]

Well, thank you, everyone, and I'll hand back to the operator.

[Operator]

Thank you. Participants that that concludes our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.