Africa Energy Reports Second Quarter 2019 Results

Source Company Press Release
Company Africa Energy Corp.
Tags Corporate: Corporate Results, Guidance, Overview/Strategy, Country: Canada, Namibia, United States, Financial - Costs & Metrics: Capital Expenditures
Date August 14, 2019

Africa Energy Corp. (TSX Venture: AFE) (Nasdaq First North: AEC) ("Africa Energy" or the "Company"), an oil and gas company with exploration assets offshore South Africa and Namibia, announces financial and operating results for the three and six months ended June 30, 2019. View PDF version.

Garrett Soden, the Company's President and CEO, commented, "We continue to analyze the coring and sampling results from the recent Brulpadda oil and gas discovery on Block 11B/12B in South Africa.  We look forward to interpreting the 3D seismic data shortly and advancing to the next phase of drilling expected to start in Q1-2020.  The joint venture partners on Block 11B/12B are pleased to have secured the Deepsea Stavanger rig again to drill up to three exploration wells in 2020 for the follow-on prospects that have been significantly de-risked by Brulpadda."

HIGHLIGHTS AND OUTLOOK

In the first quarter of 2019, the Brulpadda well was drilled in approximately 1,400 meters of water by the Odfjell Deepsea Stavanger semi-submersible rig. The well targeted two objectives in a deep marine fan sandstone system within combined stratigraphic/structural closure. Following the success of the main objective, the well was deepened to a final depth of 3,633 meters and was successful in the Brulpadda-deep prospect. The well encountered a total of 57 meters of net gas condensate pay over two Lower Cretaceous high-quality reservoirs. The well also encountered oil pay in the upper reservoir. Core samples were taken in the upper reservoir, and a comprehensive logging and sampling program was performed over both reservoirs. The success at both the Brulpadda primary and secondary targets significantly de-risks other similar prospects on Block 11B/12B.

In the second quarter of 2019, the joint venture partnership for Block 11B/12B completed the first phase of the 3D seismic acquisition program with the Polarcus Asima vessel. The joint venture partnership continues to assess the Brulpadda well results and will focus its efforts on integrating these results with the recently acquired 3D seismic in advance of the upcoming drilling program.  Drilling is expected to commence in the first quarter of 2020 with the spud of the Luiperd Prospect and will include up to three exploration wells.

The Company exited the quarter with $2.9 million in cash. In addition, Main Street 1549, an entity owned 49% by Africa Energy, held $2.6 million (gross) in cash and $17.1 million (gross) in escrow at June 30, 2019 in order to cover Main Street 1549's portion of future cash calls and exploration expenditures on Block 11B/12B.

FINANCIAL INFORMATION
 (Unaudited; thousands of US dollars, except per share amounts)

  Three  Three  Six  Six 
  months  months  months  months 
  ended  ended  ended  ended 
  June 30,  June 30,  June 30,  June 30, 
  2019  2018  2019  2018 
Operating expenses  1,109  1,913  3,377  2,962 
Net loss  (1,064)  (1,882)  (3,303)  (2,936) 
Net loss per share (basic and diluted)  (0.00)  (0.00)  (0.00)  (0.01) 
Weighted average number of shares outstanding (basic and diluted)  683,788  550,170  683,611  435,318 
Number of shares outstanding  683,889  681,586  683,889  681,586 
         
Cash flows provided by (used in) operations  (706)  (1,173)  (2,148)  (2,769) 
Cash flows provided by (used in) investing  (79)  (90)  1,958  (119) 
Cash flows provided by (used in) financing  45  43,896  60  43,897 
Total change in cash and cash equivalents  (712)  42,574  (102)  40,937 
         
Change in share capital  78  43,896  104  43,899 
Change in contributed surplus  300  616  1,056  652 
Change in deficit  1,064  1,882  3,303  2,936 
Total change in equity  (686)  42,630  (2,143)  41,615 
         
  June 30,  December 31, 
    2019    2018 
Cash and cash equivalents    2,907  (1)  3,009 
Total assets    42,174    44,300 
Total liabilities    95    78 
Total equity attributable to common shareholders    42,079    44,222 
Net working capital    2,924    3,197 

   
(1)  At June 30, 2019, Main Street 1549, an entity accounted for as an Investment in Associates and owned 49% by Africa Energy, held $2.6 million (gross) in cash and $17.1 million (gross) in escrow to cover Main Street 1549's portion of future cash calls and exploration expenditures on Block 11B/12B. 

The financial information in this table was selected from the Company's unaudited consolidated financial statements for the three and six months ended June 30, 2019 (the "Financial Statements"), which are available on SEDAR at sedar.com and the Company's website  africaenergycorp.com.

EARNINGS TREND AND FINANCIAL POSITION
(Unaudited; US dollars)

Operating expenses decreased by $0.8 million for the three months ended June 30, 2019 compared to the same period in 2018. Stock-based compensation decreased by $0.3 million due to 17.6 million stock options being granted during the three months ended June 30, 2018 compared to nil stock options being granted during the three months ended June 30, 2019. Stock exchange and filing fees decreased $0.2 million due to one-time fees in the second quarter of 2018 related to the secondary listing on the Nasdaq First North Stockholm. Consulting fees decreased $0.1 million due mainly to a long-term consulting contract that expired June 30, 2018.

Operating expenses increased $0.4 million for the six months ended June 30, 2019 compared to the same period in 2018. Salaries and benefits increased by $0.5 million primarily due to annual bonuses being paid during the first quarter of 2019. Stock-based compensation increased by $0.4 million due mainly to the increase in stock options vested during the period. Consulting fees decreased $0.2 million due mainly to a long-term consulting contract that expired June 30, 2018. Stock exchange and filing fees decreased $0.1 million due to one-time fees in the second quarter of 2018 related to the secondary listing on the Nasdaq First North Stockholm.

As at June 30, 2019, the Company had cash of $2.9 million and working capital of $2.9 million compared to cash of $3.0 million and working capital of $3.2 million at December 31, 2018. In addition, Main Street 1549, an entity owned 49% by Africa Energy, held $2.6 million (gross) cash and working capital of $3.5 million (gross) at June 30, 2019. Working capital in Main Street 1549 included $17.1 million (gross) in escrow (other current assets) in favor of Total and CNRI to cover Main Street 1549's portion of future cash calls and exploration expenditures for Block 11B/12B, and current liabilities included a $5.0 million (gross) obligation to fund Total's and CNRI's portion of the 3D seismic costs and $5.0 million (gross) of Total's and CNRI's portion of the drilling costs for the next exploration or appraisal well.

NEXT EARNINGS REPORT RELEASE

The Company plans to report results for the three and nine months ended September 30, 2019 on November 8, 2019.

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