- Africa Oil holding Prime Oil & Gas has renewed oil mining license (OML) 130 in Nigeria for 20 years
- The renewal enables continued production and development of high quality reservoirs, as well as enhanced debt access for both companies
- Africa Oil is an oil and gas company with production and development assets in deepwater Nigeria and an exploration/appraisal portfolio in west and south of Africa, as well as Guyana
- Africa Oil (TSX:AOI) last traded at $2.93 per share
Africa Oil holding Prime Oil & Gas has renewed oil mining license (OML) 130 in Nigeria for 20 years.
The renewal means that the high-quality Akpo and Egina and undeveloped Preowei fields will operate under the terms of the new Petroleum Industry Act. It also enables Prime to close its $1 billion debt financing, reset its tenor to 6 years, increase its near-term liquidity capacity, and potentially distribute dividends to shareholders during this year.
The renewal will also allow Africa Oil to increase standby corporate credit to $200 million from $100 million, which is available in its entirety until October 20, 2023. This is in addition to the company’s $158.2 million in cash at the end of Q1 2023.
“This license is the core of our Nigerian investment and accounts for most of Prime’s production and cashflows. It also includes attractive growth opportunities such as the undeveloped Preowei oil discovery, which we can now take forward towards a final investment decision. Additional opportunities include step-out exploration and appraisal drilling, that should support production rates over the coming years,” stated Keith Hill, AOI’s President and CEO.
The company holds an 8-per-cent interest in OML 130 through its 50-per-cent holding in Prime Oil & Gas. The Prime investment’s initial cost of $519.5 million in January 2020 has been paid back in under three years, including $650 million in dividends.
Africa Oil is an oil and gas company with production and development assets in deepwater Nigeria and an exploration/appraisal portfolio in west and south of Africa, as well as Guyana.
The company (TSX:AOI) last traded at $2.93 per share.
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