A major oil producing company, Afren Plc has said that low crude oil prices were already affecting its operations since the beginning of 2015.
The company maintained in its latest report that the development culminated in the review of its capital structure and other activities.
“Lower oil prices significantly impacted the business at the start of 2015 resulting in a review of the Company’s capital structure, liquidity, funding requirements and business plan.”
“Holders of existing notes have provided interim funding of US$200 million by way of new Private Placement Notes,” it indicated.
“Wider recapitalisation programme expected to be completed by the end of July 2015 providing a further US$55 million to US$105 million in net cash proceeds.”
The company noted that year-on-year reduction of 32% due to cost recovery at Ebok and delays with bringing new wells on stream across producing asset base in Nigeria
It disclosed that 2015 capital allocation to be prioritised to existing producing asset base in Nigeria. Forward programme optimised for a lower oil price environment.
The company maintained that production guidance expected to be 23,000 – 32,000 bopd reflecting lower production from Ebok following the end of all cost recovery.
It has it that wide-ranging portfolio review underway, targeting selective divestments and farm-outs in 2015.
Afren maintained that broad programme of cost reductions and operational measures targeted expected to lead to efficiencies and significant cost savings in 2015.
It maintained that unauthorised payments issue discovered in July 2014 which led to the dismissal of former CEO, former COO and two associate directors.
The company maintained that normalised profit before tax is reconciled to statutory profit before tax in note 9 of the attached financial statements.
“The financial performance of the Group has been restated for the year ended 31 December 2013. The effect is to increase cost of sales by US$178.0 million, decrease profit before tax by US$178.0 million and increase income tax credit by US$178.0 million; there is no impact to net assets or profit after tax following the restatement.”
The Interim Chief Executive, Mr. Toby Hayward said, “Afren faced an unprecedented set of challenges in 2014, compounded by a decline in oil prices at the end of the year. Responding to these challenges has not been easy but as a Board we are determined to stabilise and strengthen the Company.”
“We are pleased to have secured the necessary interim funding as a first step to our capital restructuring and we are delighted to welcome as new CEO Alan Linn who has 35 years international experience in the oil and gas industry and brings with him a wealth of knowledge in restructuring businesses in challenging environments,” he said.
He maintained that Afren still has an attractive portfolio of assets, which we believe will provide a suitable platform for the Company to move forward with in 2015 and beyond.
“We understand these have been difficult times for all but we wish to thank our shareholders, lenders, Partners and staff for their patience and reiterate our commitment to regaining the confidence of all our stakeholders.”
“Afren had an extremely challenging year in 2014. Following the unauthorised payments issue discovered in July, the Board initially suspended and then dismissed the former CEO, Osman Shahenshah, and former COO, Shahid Ullah, as well as two Associate Directors, Iain Wright and Galib Virani. Their actions significantly affected the confidence of all our stakeholders,” he added