Anglo African O&G (AIM:AAOG) Secondary Completion of Petro Kouilou


Completes acquisition of a 56% interest in the producing Tilapia oilfield

Anglo African Oil & Gas plc, an independent oil and gas developer, is pleased to announce that “Secondary Completion” of the acquisition of Petro Kouilou S.A. (‘Petro Kouilou’ or ‘PK’) has now taken place and AAOG is the legal and beneficial owner of 100 per cent of the issued share capital of PK.

Petro Kouilou is the operator and holder of a 56 per cent interest in the producing Tilapia oilfield (‘Tilapia’), located in the Republic of the Congo, alongside Société Nationale des Pétroles du Congo (‘SNPC’), which holds the remaining 44 per cent. 

 On 15 March 2017, the Company announced the “Initial Completion” of a 49 per cent interest in the issued share capital of PK for a cash consideration of US$2.5 million from Sister Holding S.A.S (“Sister”).  At the time, AAOG retained the right to acquire the balance of the shares in PK via the “Secondary Completion”.  This was subject to a number of conditions, all of which have now been satisfied.

 Accordingly, and as further described in paragraph 11.16 of Part VIII of the Company’s Admission Document, Sister has now exercised Warrants issued to it on Initial Completion. Pursuant to such exercise, the Company has today issued to Sister 16,354,015 ordinary shares of five pence each in the capital of the Company (“Ordinary Shares”) at a price of twenty pence per Ordinary Share. As a result of such issuance, Sister now holds 23.529 per cent of the Company’s issued share capital.

 In anticipation of Secondary Completion, and as announced on 24 July 2017, the Company has already commenced a multi-well programme focused on unlocking the potential of Tilapia, which in addition to the currently producing horizon of R1/R2, has an undeveloped discovery in the Mengo horizon and exploration potential in the deeper Djeno horizon. 

 In line with this, the Company is completing the tender process with respect to drilling a new well, TLP 103, which will target production from R1/R2 and the Mengo horizon and will appraise the potential from the Djeno horizon.  The rig is due on site by 30 September 2017 and drilling TLP 103 should take approximately 45 days to complete.

David Sefton Executive Chairman of AAOG said, “AAOG now owns 100 per cent of Petro Kouilou and thereby 56 per cent of Tilapia, an oil field which, being located in a highly prolific hydrocarbon region, has an excellent location.  From the outset, our objective has been to scale up production and reserves at Tilapia through the development of existing producing reservoirs and the Mengo, a proven discovery, and then to assess the prospect of producing from the potentially high-impact Djeno horizon.  We have a defined and fully funded work programme already underway, which is being managed with due care with respect both to operational performance and costs. In carrying out this programme, we will continue to work closely with our partner SNPC as we look to deliver on our objectives through the rest of the year.”

Voting Rights and Admission

Application has been made for the 16,354,015 Ordinary Shares issued to Sister (the “Secondary Completion Shares”), which will rank pari passu with the existing Ordinary Shares, to be admitted to trading on AIM (‘Admission’).  It is expected that Admission will become effective and dealings will commence at 8.00 a.m. on 9 August 2017.

Following Admission, the total issued share capital of the Company will consist of 69,504,565 Ordinary Shares.  The total number of voting rights in the Company will be 69,504,565 Ordinary Shares.  This number may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA’s Disclosure and Transparency Rules.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.


Anglo African Oil & Gas (LON:AAOG) March 2017 IPO – Interview

The company also aims to conduct exploration and appraisal of proven deeper reservoir targets to raise production to in excess of 5,000bbl/d in the medium term.

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We talk about Anglo African Oil and Gas asset acquisition based in the Republic of Congo. Highlight the asset work over program and how they plan to become cash generative in the short time with well work overs and look forward looking drill program in the hopes of drilling in the summer into the prolific Mengo and Djengo horizions.


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The acquisition

 AAOG is proposing to buy Petro Kouilou (PK) – an oil and gas operator that has been active in the Congo since 2012.

 The purchase comprises: US$2.5m in cash plus 20% of the fully diluted enlarged capital.

 PK owns 56% of the Tilapia licence with the National Oil Company SNPC owning the remainder. All of the necessary licences and permits are in place for the current production and for the proposed workover and appraisal and exploration activity.

 SNPC has already agreed upon the budget for the proposed work programme and granted the authorisation for expenditure (AFE) with PK and for its share of capex.

 The Tilapia field already has surface infrastructure installed with an underutilised capacity of more than 4,000bbl/d.

 Post-acquisition, the company will undertake workover activities on existing wells in order to increase base-level production. It will then go on to drill one new multi reservoir well, development/appraisal/exploration targeting known and identified reservoirs. Following this first well a second well is planned and is expected to be funded from cash flow. The aim of these two wells is to increase the reserve base as well as increase production to in excess of 5,000bbl/d, as has been seen in wells in adjacent acreage. 

Republic of Congo – a snapshot In 2015: Domestic production in the Congo was c.277,000bbl/d, down from a peak of c.314,000bbl/d in 2010. The country is estimated to have c.1.6bn bbl of proven oil reserves and 3.2tcf of gas. Most of the gas produced is re-injected due to the lack of infrastructure with c.20% flared. The majority of oil production is exported, again mainly due to the small local market but to also support the country’s wider economy.

Given the importance of the oil industry to the Congolese economy, the government has been very supportive with good fiscal terms and low levels of interference historically. We understand that the government has been proactive in terms of its discussions and planning for the work programme and licence extension with AAOG.

Sector driven by majors Unsurprisingly, and given that the Congo was a French colony, Total is one of the key participants in the oil and gas sector. Since 1968, Total has drilled 50% of the exploration wells, which have discovered 65% of the reserves and brought 16 fields onstream. The company is active throughout the supply chain, including a 63% interest in the only oil-export terminal.

Eni is another key player, again active in the country since 1968, and produced c.103,000boe/d in 2015. Eni is more upstream-focused than Total with exploration, appraisal and production assets.

The country also benefits from a well established, highly experienced and qualified local service and support industry.

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