Africa Oil Corp

TSX:AOI

Earnings Call Analysis

Company Prioritizes Growth and Efficiency

During the earnings call, the company's leadership shared a robust performance in the past quarter, with a focus on profitability and cash flow. They outlined a clear strategy for investing in growth areas, streamlining operations, and delivering value to shareholders. The call emphasized forward-looking initiatives and the company's commitment to innovation, setting the stage for a productive discussion on their 2024 outlook and strategic priorities.

Stabilizing Foundations and Preparing for Future Opportunities

The company is positioning itself for growth by consolidating current assets and keeping a strong cash reserve, aiming to build a solid foundation for future endeavors. In approximately 4 to 5 months, a review of potential opportunities for expansion or acquisition will be conducted.

Cash Reserves and Investment Income

With a robust treasury management, the company maintains approximately $200 million in cash reserves, including $64 million in high saving accounts, yielding a competitive interest rate between 5.2% and 5.4%. This conservative approach provides stability and supports the firm's investment and operational activities.

Expanding the Team in Pursuit of New Strategy

In response to a new strategic direction approved by the Board last September, the company has increased general and administrative expenses to expand its workforce, which will enable it to execute on its new strategies more effectively.

Sustainable Production and Operational Excellence

External consultants provide assurances that production will not collapse, endorsing the company’s production profiles and supporting the underlying operational assumptions.

Partnerships with Tier 1 Operators and Capital Investment Decisions

The company partners with premier operators like Total, emphasizing the importance of adhering to data release agreements and operator-led communications. Decisions on high-impact ventures such as offshore activities in Namibia are expected to bring significant announcements in due time.

Strategic Decisions and External Influences

Strategic decisions concerning assets like Agbami are closely observed, with the company not exercising preemption rights in certain transactions while attending to the development progression on projects like the Pro way development, which is on track for a final investment decision (FID).

Anticipating Governmental and Regulator Dynamics

Namco's potential push for comprehensive information could influence strategic governmental decisions in Namibia, though the FID for the Bemis project in 2024 remains uncertain.

Share Buyback Considerations and Funding Strategies

While share buybacks remain a consideration, current focus is on growth through acquisition and consolidation rather than returning capital to shareholders. The company is mindful of maintaining ample flexibility with treasury funds for strategic moves without the need for immediate equity raises.

Earnings Call Transcript 2023-Q4

[Operator]

Hello, everyone. My name is Sandra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Africa Oil Fourth Quarter 2023 Results Management Presentation. [Operator Instructions] 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 on to Mr. Shahin Amini, Africa Oil Head of Investor Relations. Please go ahead, Mr. Amini.

[Shahin Amini, executive]

Thank you, Sandra. On behalf of management, I thank you for joining us today for our fourth quarter and full year 2023 results presentation. We appreciate your interest and support. On the call today, we have President and CEO, Dr. Roger Tucker; and our CFO, Mr. Pascal Nicodeme. Roger will start with an introduction and the highlights of the results before Pascal presents the quarter's results in more detail. Roger will then cover Africa Oil's 2024 outlook and outline our strategic priorities before we go into the Q&A session.

But first, as always, I would like to remind you 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's date and time, and Africa Oil assumes no obligation to update or revise this information to reflect new events or circumstances, except as required by law. The company's complete financial statements and related MD&A are available on the company's website and on SEDAR.

Roger, we are ready for you. Please go ahead.

[Roger Tucker, executive]

Next slide, please. Thank you very much for joining us today. Before we get into the beneath of the presentation, what I'd like to do is just reaffirm our strategic principles. And these are principles that have developed since we started to make presentations to the investment community back in September and remain the same. The first thing is that's slightly on the top right, that we want to remain focused on what are effectively world-class assets, both in the production demand in the exploration domain and the development and appraisal demand.

We are currently partnered uniquely with Tier 1 operators and notably Total and Chevron. We wish to maintain equity exposure in the assets that we have at affordable level not challenging our balance sheet. And we wish to try to consolidate our ownership in the core assets we, as I say, consider to be world class. As I've been stated since September, we'll see growth opportunities only within the existing core assets that we have got. And of course, we are targeting near-term rewards for shareholders. And so those are our strategic principles, which remain intact today.

So next slide. In terms of how we have progressed along that line, 2023 highlights that I think are most important to us are, firstly, the renewal of OML130 for a further 20 years, which has, of course, freed up the possibility of making incremental investments in that area.

In addition, we have received $175 million in dividends from our investments in Prime. And we have, as you will see, met our midpoint predictions for 2023 broken production and cash flow from operations. We have converted OML130 over OML127 to the new Nigerian tax turns, which impact the headline tax rate from 50% to 30%.

In addition, the thing that perhaps you're most interested in, we have had in 2023, a very successful appraisal and testing program in the media, which supports our concept that this is going to be a significant development of a world-class discovery. Along the way, we have maintained a strong balance sheet. We've not overstretched our liquidity in any way. We have been returning dividends and have recommenced share buyback program, and we solely focused our investments on our underlying core assets.

Next slide, please. And then to continue, just reaffirm what we have already achieved in 2024, which I think is a very strong indication that our strategic direction is progressing well. We have completed the farmouts to farm down to Total in impact in the media. And this is a transformational transaction, which results in us being carried completely through all costs, both exploration and development all the way through to first hydrocarbons in that block.

We had initiated the production start-up of cores as a tieback to the FPSO, which stood out over the year up to 14,000 barrels a day of incremental incremental production. In addition then, you will have seen that there has been an announcement that we've appeared to we counted additional hydrocarbons in a totally separate structure in Namibia in Mangetti -- 1X well, which is in turn hydrocarbons in at least 3 different zones, which further supports the decision that we made to continue within Namibia.

And we continued investing in Block 3B/4B, which is a block that we've increased our equity position into 26.25%. It's a block which is a strategic importance in the Orange Basin. And we are in very advanced discussions to farm down backlog over the next coming months, which should allow us to proceed with good activities in that area.

And with that, what I will do, it's pass over now to Pascal to take you through the financial aspects of 2023.

[Pascal Nicodeme, executive]

Thank you, Roger. Well, the first net set of is annual results is the fact that we have successfully met our 2023 guidance. In terms of production, slightly above midpoint in terms of higher production and also in terms of cash flow from operation. slightly below $300 million versus guidance report of $29 million. We can already see the impact of the field campaign that we are carrying out [indiscernible] and note that the Q4 production was slightly down similarly due to an [indiscernible] maintenance. So we expect this to recover in Q1 and Q2 2024.

I think this is the evidence that we are sitting on a world-class assets, which are very predictable and have a very broadest performance and again, in this guidance is the evidence that we feel are having us credit.

Next slide, please. Next slide is the financial highlights for Africa Oil. We are posting this year $87 million of net income, which is a significant improvement compared to last year. But still, this year has been impacted by a few exceptional items, noncash still, but et cetera items. The latest one was in Q4 was an impairment at prime level of $132 million. So we are that impairment, we would have posted basically a $43 million result for the quarter. And this impairment is simply due to an increased discount rate at the prime level due to the lower tax rate, which is applicable in Nigeria

This is a big concern, but when you compute to our weighted average cost of capital, if you decrease your tax rate, you basically lower tax rate over the debt, and therefore, the cost of debt is increasing. So it's a bit of a mechanical effect that we saw in Q4, and we actually saw the benefit of this decreased tax rate in the previous quarters in Q2 and Q3. When we converted to the PIA [ one question I want to say ], we had at that time, the opposite effect where we basically posted about $2 million of credit due to the release of deferred tax liabilities.

So Q4 has been impacted inertia this time, but Q2 and Q3 have been impacted positively again because of this change in tax rate. Otherwise, I haven't said that the performance has been consistent over the year. We still have a little bit of impact from Kenya positive in Q2, the final impairment of the markup of $60 million, but it finally from Kenya, otherwise, there have been no other exceptional items this year.

Next slide, please. So this slide really shows how we have managed our cash this year. We received $175 million in dividends. And what this half showed is basically that we have media means, and we have only spent what we could with the goods care. We spend $29 million [indiscernible] shareholders both with dividends, both $23 million in share buybacks. We restarted the share byback we go back to late end of last year. We stand also in investment activities, in exploration in EG and South Africa for $18 million. We stood at parent to make sure that we will keep our equity stable or going to increase during this exciting as exploration campaign in media.

So we don't have for $40 million. We continue [indiscernible] and we had a few remaining cost, I would say, in relation to exit from Kenya and [indiscernible] overall tax equipment with the care we can have as authorities -- we've also spent ending on the settings on historical cost disputes on our partners in Kenya, which are already one-offs. So on it means that the caps actually increased by share cap to $2 million. We really began in a way to maintain that strong balance sheet while continuing to return part of the cash flow from Kenya.

Next slide please. So just a snapshot on the prices we've achieved this year and last year at prime level. So the -- as you know, we've put in place a new our marketing strategy with emanate transit, which continues to actually excellence sale price on to upgrade trends. You might remember a few years ago when we were saying our harbors forward. We were always exposed to potential increase in the oil price, which is not the case anymore. Now we have close by brand. And the reason is that -- the fact is that marketing strategy, we are saving most of our cargo spot, we sold actually all our cargo spot in Q4. We saw most of the capital stocks in 2023 and we've achieved an average price of both 84 are compared to 83 average debt in great last year. At the same time, still trying to protect our downside. And for instance, we bought 100 barrels [indiscernible] was production at a strike price of about $80 per barrel that is going to protect us from March to May this year. So still very conscious of potential outside in the oil prices, but actually at the same time at least the France market.

The next slide is a snapshot of prime financials, which shows stable the performing [indiscernible] have been in terms of EBIT tax on the capital operation. I said almost $100 million of capital from operation last year for time almost $500 million of tax while maintaining a very strong balance sheet. The RPL is on at $750 million gross at the moment, price dips and around $15 million of cash. So very, very stable business and conservative way of managing our [indiscernible ]

Next slide, just to come back on our shareholder return program. Since we [indiscernible] that platform, we get to about $500 million since 2022 and the Board that decided to continue the existing dividend. So we are going to distribute $0.025 a share in March, again, assuming annual dividend. And as you all know, we have restarted our share buypack back in December 2023. So there have been a few questions regarding why we started the buyback last year. Obviously, last year was a sort of transitioning here when -- we have to focus on selling our power and impact to ensure we could continue to fund our phase on an exploration company in media. First thing for us to have a conservative management of our cash balance. Now that we have signed the agreement format just had an impact. We are much more creditable situation. And you know we were starting our share buyback and get portion management, which might going forward.

Next slide, and we will hand over to Roger back to you.

[Roger Tucker, executive]

Thank you very much, Pascal. Well, I think what we ought to do is just quickly go through once again and reaffirm the assets that we consider to be core. And then Nigeria, Ecuador the media and the West Coast of South Africa. These are, as already said since September latest that we have on to [indiscernible] money and intellectual portion to clean the rest of the portfolio. And I've always said that there is enough running on existing in these assets to create significant value.

The next slide, please. The first one, of course, is production based asset you obviously know very well. And the thing that we obviously say that we say to you, this is often forgotten the shares stay with these assets that we're investing in that are currently doing over 300,000 barrels a day at the gross level. Hence, they are not sure they are completed with their production levels and they're very, very reliable and stable and predictable as has been pointed out by Pascal.

We now via the OML 130 extension, have the ability because of the extension in the contract life, to consider our reading and the one that we indeed do it, time as in the first 1 will be [ payaway, ] which hopefully is going to be FID by the end of 2024. So again, world-class assets, very stable, very secure and our foundation of our financial structure at the company.

Next slide. So how did we perform in terms of reserves and how do these assets perform. And we have published our reserve report, which you see -- and we are very happy with what has happened in here. The first base point out, we noticed the third point is that we would be in the assets are relatively mature. We had a reserve replacement ratio of over 50% in reserving these assets. So that means that we actually net to us produced 7.2 million barrels of oil from these assets, but we have replaced by 3.6 million barrels of the reserves.

In terms of our 2P working interest reserves, you can see that we are at 52.2 million barrels now. And then, of course, the same number is the number on the far right, which is our [ 230 NPV10 ] next to us from $1.2 billion. The guidance as shown below. And we are very confident that we will come in on that production guidance. So world-class assets stable and we're still able to do 150% reserve replacement ratio.

The next slide please. And then what we drop down is what we consider this as an incredibly exciting basin that we're in. What I've been saying since September to everyone is that we are here in the midst of what we've done to be an emerging new petroleum products, not just a single discovery. And you can see up in the north, what are highlighted in the Libya and down in the South [indiscernible]. But across on the right, you can see the evolution of the development of these new products. So that Shell discovered the graph back in February 2022, Venous training was discovered in February202 as well, a new very interesting discovery by GAAP not primary January 2024 and then we now bought Magnetti in February 2024. And so this is the way these provinces development it's early to say, but this appears to be a super charge for petroleum province.

Then down in the south, and we'll come on to in a little bit more detail, you'll see as an extension of the base still in the same basin, our block 3B/4B, which we consider to have very significant prospectivity and is on trend with the discoveries that have been made at emergent in Namibia. And we are -- I mean as I said before, actively in discussions with several parties in respect to maybe far into that area.

So if we go now to the next slide and have a look at our acreage in the media, the Board is [indiscernible] So we've got it correctly pole. So you can see in the lens field. There are now being 3 successful wells on the Bemis structure. And this is the risk this as a world-class light oil discovery. The operator has high confidence in the development of Bemis by the statements that they have that they made. And we've always said that there is very significant, [indiscernible] the reason we want to relocate there is very significant follow-on exploration cost activity [indiscernible] which has already been developed by the first indications of success of Mangetti -- 1X, sizing is the southern part of what is not covered at the moment by 3D seismic is underway of some parts of the block and you should get access to that phraser, which will allow us to remunerate further cost activity towards the end of this year.

Now the fantastic thing about the deal that we have done with Total, in Panama is that there's no further cost on our balance sheet of this asset is world-class assets until first production is established whenever that is.

On the next slide, please, is just a little update on EG. This is a very different situation, and we call this infrastructure that exploration in Equatorial Union because the principal asset is located lives around allergy facility, which has got significant outage and we've signed the broken, which has got significant prospectivity. It's previously only ever been explored really for oil. And so we are trying to target gas prospectivity and Matlock in order to immediately tie back to the LNG facility, which has got significant [indiscernible] discussions in that block are ongoing, and we have an objective of achieving and completed a deal by the end of 2024, but as early as possible.

Next slide, please. So go back then to what we're going to try to achieve in 2024, and we've made a good start. We're going to consolidate and streamline and financially derisk the portfolio. That can take a series of routes. We want to maintain our financial flexibility in order to accelerate the growth. We want to maintain our shareholder capital returns and we want to maintain the balance sheet to give maximum flexibility.

In terms of what we achieved, we've got the finance and full carry in media. We have a promoted additional interest and that's gone through increasing. We have launched the share buyback program again, and you'll see that we initiated that program again because the important of it and directly after the day that we announced the Total transaction in impact. We will maintain the base dividend policy and we will achieve finance or for down in food left and EG 31. And we will pursue if we can further consolidation of our core assets and those are our strategic priorities in a very late and clearly defined portfolio of core assets, which, as I keep repeating part of the world class.

Thank you very much. And that with our presentation.

[Shahin Amini, executive]

Before I go back to the operator, Sandra, and she can remind everyone on the instructions of how to submit questions. I would like to set some boundaries. So I do apologize, but this has got to happen. Management will not comment on the ongoing farm down processes for block screen EG31 and EG18 other than what's already been said. I trust you can appreciate, these are commercially sensitive matters and it would be inappropriate to comment at this time. We will update you on this in due course when there is material update to be shared.

We also note media reports regarding third-party legal and commercial disagreements related to Block EG 31. The company will not comment on such third-party matters. So with those points, now I would like to go back to Sandra, who will remind everyone on the Q&A process. Sandra, please go ahead.

[Operator]

[Operator Instructions] We will now take the first question from the line of Alex Smee from Investec.

[Unknown Analyst]

A couple of quick questions for me. I think first, just a step up in CapEx at Prime. Is this driven primarily from the underspend in '23? Or is it more activity from infill drilling. And maybe just a picture on kind of what steady state capital investment looks like? And then second of all, just given the balance sheet strength and the goal to kind of increase shareholder returns and starting the buyback program. Is there a preference for more dividends or more buybacks in the medium term? It would be good to kind of get some clarity on that as well, please.

[Roger Tucker, executive]

So let me start with the CapEx especially the actual CapEx compared to guidance in 2023. I mean you're perfectly correct that the drilling campaign started late and so we didn't spend a full budget in 2023. We expect to catch up in 2024 on this infill [indiscernible] this explained relative bit lower CapEx stands in 2023. In terms of dividend versus buyback, we decided to state a dividend some years ago, which we want to keep in place to show commitment in the long-term shareholder returns. And the share buyback is really the adjustment that we want to dial up or down when the conditions are ideal.

Obviously, at this stage, it's what we believe should be a very depressed share price and incentive points to increase the share buyback, and we've been in discussion with our board to do so. So please bear with us.

[Operator]

We will now take the next question, one moment please, from the line of Matt Cooper from Peel Hunt.

[Matthew Cooper, analyst]

I don't know if you're able to give any color on the scheduling options being considered for the rigs currently operating on Bemis.

[Pascal Nicodeme, executive]

We don't come as a huge amount of information on that because it's obviously operators to it. However, I think that it is interest as I'm sure you see like the fact that the Total acquired 75% of the time an explorer from Vantage drilling, which is now a 10-year contract -- is that most talent's a very clever deal, which will give you an indication of the scale of [indiscernible] that is anticipated for the Orange Basin. We anticipate that there will be both reactive on the media for the foreseeable future, but then one of them may go off and into different in areas. But that's basically all I can say just pointed to an interesting development from our wonderful operator, which sort of points to the scale of activity as well, is that helpful?p

[Matthew Cooper, analyst]

Yes. No, no, I understand you are limited on what you can say, but that's helpful. I also wanted to ask on the $182 million prime impairment. You mentioned that was partially due to a change in technical assumptions at OML 130. I don't know if you have any able to give any more details on that?

[Pascal Nicodeme, executive]

There are 2 other changes on top of -- I mean the main change, as I said, the one that has largest impact is the opportunity in this contract and price assumptions Yes. And they are also looking at the price assumptions well and change in technical year, [indiscernible] up production profiles, which actually has lowered the NPV, but nothing more change in reserve actually.

[Matthew Cooper, analyst]

Okay. So that's a minor effect is primarily work scope as opposed to --

[Roger Tucker, executive]

The largest impact is back from the change in this contract, which is now 12.5% [indiscernible] to be around 10%.

[Matthew Cooper, analyst]

Okay. That's helpful. And then I just wanted to ask on the 5 new wells drilled in so far. I just wondered if the well rates and also the time taken to drill those wells, are those kind of tracking pre-drill expectations?

[Roger Tucker, executive]

We are satisfied with it.

[Matthew Cooper, analyst]

Okay. I'll sort the one in there with a quick answer. So if you could give maybe an update on your M&A strategy? how attractive you see the M&A environment in West Africa at the moment.

[Roger Tucker, executive]

I don't think we're continuing specifics on that. as we are talking about 2023 results, but we are constantly reviewing opportunities in and around our assets. But as I said, the stuff don't expect us to leave into a or anywhere else. And we're only focused on the countries and around the assets that we already own.

[Matthew Cooper, analyst]

Okay. And looking for production assets are at a reasonable scale.

[Roger Tucker, executive]

Yes.

[Operator]

Thank you. There are no further questions on the audio at this time. Please continue with the web questions.

[Shahin Amini, executive]

Yes. Well, we've got plenty of questions from -- but before I go to those, I'd like to apologize because we have received a few comments that the quality of audio isn't good enough. I do apologize. We did test the system, but clearly, the gremlins have got in the way today. So I apologize for that we do our best to improve the quality as we make progress. Hopefully, it has got better.

So -- going to the webcast, Roger, Pascal, a large number of questions about shareholder capital returns. Most of those are about buybacks. I'm not going to go through each one because some are repeat -- repetition. But really the gist of the inquiries is what is the policy on the share buybacks? Why did we reduce the share buybacks during the month of February by 75%. And could we potentially consider doing a substantial issue a bid on top of the normal course issue a bit, so if I may, I'm going to put this to Pascal first, and then Roger can chime in.

[Pascal Nicodeme, executive]

Yes. So I mean you need to keep at a moment, buyback is always subject to the forecast that the company is making and the optimization of our cash question. I mean, last year, we've been in a capital a very long period of time due to the drilling company in media. Again, recently, we have been in blackout because we were drilling on market. So you need to know that during this back half year, we are unable to change the instructions we are leading to our focus. So we need to be extremely conservative when we start when we had the Blackout, which was the case in February when we decided to slow down a little bit.

Now we are out of blackout because in [indiscernible], we are going to be a of due to the financial statements released in communication, the core, we will be able to change our section to our focus again. So please bear with us on that.

[Shahin Amini, executive]

Roger?

[Roger Tucker, executive]

I think the -- what I will say is a general question. We hear everywhere on the share buybacks. The interesting thing about this company is it is very active. And as Pascal said, we think it is prudent to be conservative to the share buybacks as we go into blackout. The problem with that is that if the company is so active, we spend an ample lot of time like I know in blackout [indiscernible] and everyone. But as Pascal states once you really like out, you cannot modify the terms of your buyback program. And so I'm afraid that you will continue to reduce as you go to into bout. And so on the positive side, you've got a company that is actively doing stuff and it's got subtenant. On the side, we do have to reduce to maintain prudence as we go into these blackouts. And it's a function of the fact that we are anticipating in terminating potential transactions and drill. Pascal, do you want to add anything to that? p

[Pascal Nicodeme, executive]

Well, I just want to mention that the new share price is particularly depressed you think logic to continue the aniline to maybe to increases in the [indiscernible]

[Shahin Amini, executive]

I think that's actually a good opening for the next question, Roger, something that you said. I think we need to tackle this. There was a question about the G&A costs. and the fact that they've gone up. And the question is, well, can you justify this? Could you achieve the same with fewer people?

[Roger Tucker, executive]

So the G&A has gone up and the reason it's gone up actually on the other side of the equation, the advisers cost extras, et cetera, has gone down. And back in last September, the Board approved the strategy that we are now pursuing and that required us to beef up the team. And so we have had a couple of extra people come on board, namely Oliver Quinn, who is our Chief Commercial Officer; and Joanna Key, who is our General counsel [Technical Difficulty] which was generated by Africa Oil, Total term Likewise, the management of the farm down processing through the EG is now entirely position of the strategy is the [indiscernible] using a Ascot mix of the by the -- it's a few [Technical Difficulty] extra people. Could we do it with less people. You could if you didn't want to try to grow the top and the Board has emitted to trying to grow the company, hence, the transactions that we're doing at the moment

[Shahin Amini, executive]

Thank you, Roger. One for Pascal. Hopefully, easy one. There's a question on our short-term deposit yields. Could you just give a ballpark figure for what we're getting for those

[Pascal Nicodeme, executive]

Yes. So we -- at the moment, we sit on roughly $200 million of cash. We have $64 million deposited with an high saving accounts. We also have about $12 million of time deposits over 1 month or 3 months or over. So only reinvestment, so quite a conservative way of managing the treasury of the management to get us between 5.2% and 5.4% at the moment, which I think is is quite competitive by taking relatively small risk in May period. So of course, one parameter that we want this [indiscernible] remain available. We don't want to invest into exact products or committed to long investment time line.p

[Shahin Amini, executive]

Thank you, Pascal. One on prime production. -- the observation is that the 2024 guidance is down and there's increasing gas production. Are we concerned about the production about to collapse. Well, I'm not but then it's not a question to me. So Roger, what do you think?

[Roger Tucker, executive]

No, we're not concerned the production is going to collapse. I mean there's there are 2 reserve reports that have been written by external consultants, all of whom support the production profiles that we think we put together. So as I said right at the start, the law of attraction, I think, of Africa oil in these assets is that they will not fall open because they are so large.

[Shahin Amini, executive]

Very good. And I suppose I would add to that. We've actually got a good track record of with our guidance. We keep hitting the midpoint. So I think that goes to the predictability of these assets. And let's face it, in the last 4 years, we've got so much money out of this or the reserves, and we saw our material reserves that have been absolutely fantastic assets. I'm going to go to a number of questions from one of our long-standing private investors in Sweden, Michael. So there is one on buybacks. And I think we've tackled that, Michael, I hope you accept the answer we've given you to that. There's one on communication strategy. Obviously, there's a degree of frustration over what has been disclosed so far on our high-impact catalyst offshore Namibia. And the question is, well, when can we expect to hear more when are you in a position to provide those critical technical data.

[Pascal Nicodeme, executive]

Well, I'll take that one. The -- we are, as I said at the start, associated with Tier 1 operators. And Total is an incredible operator, both for us in Nigeria and the Namibia Chevron [indiscernible]. However, we are restricted under the terms of our agreements in going out and more information than the operator is actually currently issuing into the public markets. And obviously, we have access to the raw to certainly we have our own opinions and we make our own decisions on the basis of that data. But currently, we are sticked in exactly what we can face the market and you must unfortunate, we must follow what the operator says. But as drilling goes on and [indiscernible] we start to see that there is going to be a test online get to you and all the rest of it. There will ultimately be a time for a significant announcements on just what the potential of these assets are. When that is and when we can start putting pressure on that is something that obviously, we're working on at the moment.

But we are determined to be a good partner with Total. And we don't want any leaks if you like. But there's an awful lot of data that you can get, which comes from the man pole and I think at some point, now or will start to just state oil company in Namibia. Now for will start to put pressure on the operators -- by the way, it's exactly the same in the back so releasing an awful lot of information on their block as well. And this is sort of normal, if you like, for the majors hold things until they're absolutely ready to rebuild the entire story. So we hear you, and we are doing our best to work our way through this.

[Shahin Amini, executive]

I think the final one we'll take from Mikael. Can you provide more color or elaborate on your valuation thinking when you did the impact Pharma bill? Is there anything you can provide. I can have a first thought if you. All right. Let me start, and then you can correct my mistakes. So we do have very detailed discounted cash flow models. We look at the whole range of scenarios, technical scenarios. But as you can imagine, this is a very fast-moving story, which really reflects the great opportunity we have here. And it is fast moving. So obviously, we had that detailed analysis when we sort of, as a shareholder, an impact made a decision in relation to that strategic farm out. But again, to Roger's earlier point, the fact that we had this Mangetti success post the farm-out just goes to show what a good decision it was. There's a lot of running room on this block, and I finis very important. -- and it's all plateful well, will be paid for on the completion of the deal, but they're currently picking up the tabs already. So there is no upfront cost. And so yes, it's -- we're very, very pleased with that. Roger?

[Roger Tucker, executive]

Yes, it is -- we obviously know what we think the value of it is today. I've also said, and I said that the Pareto conference in London, that should the opportunity arise, we maybe buy as of additional equity in this asset and should that occur, should it occur. We may well see what our minimum internal value that this asset is. There's nothing in discussions at the moment. but we have a very, very clear idea of what the value of the NPV of this asset is both the existing in discovery, potentially get the exploration potential on the block.

[Shahin Amini, executive]

Thank you. Next question. again, on valuation, but one step, one level higher. Any views on valuation of Africa Oil. With all your respect, gentlemen, I'll tackle this one as well. Obviously, as a Canadian issuer, we can't tell you what the value is. That would be a red line that we will never cross. What I'd point you to is our statement of reserves and our year-end numbers. So you can take the statement of reserves. You know what the independent valuation of the prime assets are. And then you need to look at our combined net debt with Prime. So that is take you a long. I think the bottom line is that we are probably trading at a ridiculously low value now where there's -- well, I would say, 0 value for bemis. So anyhow, that will be your starting point. So I don't know, Roger, Pascal, if you want to add anything to that.

So I will point you to the statement of reserves as the starting point for valuing the company. A couple of strategic ones that I have here for you, Roger. One is, in the past, Africa Oil had guided to have the aspiration to buy producing assets. Is that still part of the plan? Or have we stopped -- that this is a development endeavor.

[Roger Tucker, executive]

By additional production I didn't answer the question earlier on. We are not going to into -- we've got so much potential in the existing core assets, another producing asset in [indiscernible] and I'm just saying on the top to it more specific rise in [indiscernible] or somewhere -- we will look at opportunities around the existing assets. And once we've stabilized and maximize the provider of the existing core assets. We will then take a strategic decision of what we do with the company in the next phase of growth. But what we're trying to do at the moment is tick off all of the consolidation opportunities that we have and get ourselves into a position that we have a strong foundation to look at other opportunities, and we'll be having that to date in the next 4, 5 months in the [indiscernible].

[Shahin Amini, executive]

There is a question on Agbami. It is obviously well known, well reported in the media that Equinor and [ Sapa ] had agreed a deal. Do you have any comments on the status of this?

[Roger Tucker, executive]

We can say that in has decided not to execute its preemption rights in respect of the Chapa-Equinor transaction, and we will stand on the sidelines just watching as that deal progresses through its trutification.

[Shahin Amini, executive]

There's a question on the Pro way development. Can you elaborate on the parameters that would be used for a final investment decision for this project? Is there anything holding it back?

[Roger Tucker, executive]

No, there's nothing holding it back at all is as or its internal economical and it is now going to progress through to FID.

[Shahin Amini, executive]

Actually, I think we still continue to have a bit of issue with this audience. So what I'm going to do is actually, hopefully, this might help bring this forward to you as a self and we have an issue with that speaker, yes, possibly. So maybe I have that one as well. So hopefully, that helps, if you could just come closer to this. Thank you, Roger. Sorry about this. There is -- someone has made the observation that Mangetti -- the petroleum commissioner in Namibia had said recently that the Namibian government and Lanco expect to have appraisal reports on all these discoveries option in Namibia. So on the [ shelf local ] and obviously, the Total operated 293. And basically, people are now speculating whether we are getting very close to having more information on Bemis. And could there be an FID in 2024.

I think the -- hopefully, this is now -- this audio is now better. And I apologize as I don't know whether any of you are aware, but today is the day that we are moving offices and we're in a sort of borrowed office, which hasn't really worked terribly well. So I apologize for the poor audio.

[Roger Tucker, executive]

Yes, in a previous question, I asked about when can you expect more information on Namibia. I did point towards there are other sources of information namely at Namcor. And I think that this question is pointed right to it. I do think that Namco are going to start to push for more fulsome, if you like information to be submitted because after all, there's some fairly significant strategic decisions that the government have of Namibia needs to make.

In terms of FID on venous in 2024. Personally, and I'm not speaking for Total, I would doubt it because I think there is some more work to be done. And as the CEO of Total said, what we need to do is identify the sweet spots in this huge geography in order to place the first FPSO in the correct place. and that is quite a complex thing to do at these water depths, which requires both seismic and integration of well data. It's not impossible. They go for FID in 2024, but personally as regional geoscientists, I would doubt it.

[Shahin Amini, executive]

Thank you Roger.

We've just got a few minutes left. I just want to give 1 final opportunity if there's anyone out there that want to submit a question over the conference call line and speak to us. So Sandra, would you be able to just have a look, see if anyone that wants to raise their hand?

[Operator]

[Operator Instructions] No questions at this time. Please continue. p

[Shahin Amini, executive]

Okay. A strategic one that Roger could tackle. Is the company considering broadening its investment area outside of Africa?

[Roger Tucker, executive]

Right at the moment, we've got -- as I said, we've got a very very nice set of core assets which have got plenty of running room in them to maintain the strategy. And as I said, we are going to have to make a strategic decision on what we do next in the next 4, 5 months or so. We will consider all options. But at the moment, we are going to be focused purely on the assets that we have got.

[Shahin Amini, executive]

Very good. George has just confirm we have better audio. So great. That's good. And there was 1 someone just texted me. It's great as getting questions, tax everything what's up. But the text question is that apparently, the point was missed on the substantial issue a bit. you kind of tackled it Pascal, but it keeps on coming and coming. Would you be able to just wrap things on around the share buybacks, but specifically in FID?

[Pascal Nicodeme, executive]

Yes. So yes, at the moment, so we have this NCI being placed where we are kept at 10% of our prefiled so we are targeting by a significant portion of that 10% true growth. we still want to be conservative and keep our cash position to prepare for potential other deals. Ads, as discussed potential consolidation of our investments into our virus companies. So that's something we are considering at the moment, which means that we need to stick to part of the $250 million that we on the balance sheet as of today. So I think the immediate answer would be not for the moment until we have clarity on this consolidation. And I think Roger had a few ideas in terms of impact on prime potentially. So that's something we keep in mind. But at the same time, we have ample flexibility with D&C, the to increase the speed of the NCIB, which we are definitely considering at the moment.

And so that's a decision that is going, of course, to be revisited at least by the Board on a quarterly basis. So we had a boring yesterday. We will have another 1 in the core to make sure that the level of the NCIB set at the right level.

[Shahin Amini, executive]

Okay. Two questions on the strategic for deal between the impact on Total. One is an impact and by extension Africa oil carried on all the activities now are we covered on Mangetti?

[Pascal Nicodeme, executive]

Yes. So the carry covers exploration and appraisal expenditures on both blocks until production starts.

[Shahin Amini, executive]

And that's from the beginning of this year.

[Pascal Nicodeme, executive]

That's for now beginning it's package of the first of January, back let the first of Jan, the first cash call to be received by Total this year is basically to the automobile. So this is the first time that the can's going to pay cash flow on. So they are going to pay all the cash flows going forward. But I think that's what the key point to make is that we will not have to send a corner in equity raises for impact going forward. Okay, which is a key point for us. As you know, we spent $44 million last year. standing or corner and this year could have been much -- and there's no interest on the cap and there is no interest p

[Shahin Amini, executive]

Yes. So just to reaffirm that we talk about the 2 blocks. We do have 2 pieces of acreage but the carry covers activity, including, say, Mangetti, including the next exploration well, which is it's going to be somewhere else in the block, and it accumulates over the work on both of these blocks until first hydrocarbons. So it includes development as well. everything Yes. We're running it well. We have run out of time. I'm going to go a script here and share some of my own personal experience, if I may.

I've had the privilege of being involved with the Africa Oil story for 13 years now. Some of you know, I used to cover it as a sell-side analyst, and I joined the company 4 years -- well, 4.5 years ago. The company is in absolutely great shape and hopefully, you can see that in our year-end results. I'm very happy, and I have to say that the recent changes that Roger has implemented are very good, and we are in an excellent shape, and we have a great platform to take the next steps. And we will see this volatility in the markets, and we will get through this as we always have. That is my view, and that's my position, I feel very strongly about it. On that, Roger, over to you for any concluding remarks.

[Roger Tucker, executive]

Yes. And all what I will say is I do apologize for this audio. It wasn't anticipated to be like this. And the next one we will be in our new offices. And you've probably seen me on screen here. We're absolutely freezing cold in here because not only is the audio bad, but the heating in the room isn't working. So we do need to get off fairly soon. But thank you very much for participating in this, and we'll see you next time.