Afentra, an independent oil and gas company, has signed a Sale and Purchase Agreement (SPA) with Azule Energy Angola’s largest equity producer of oil and gas for Block 3/05 and Block 3/05A, offshore Angola. The deal will see Afentra acquire a 12% and 16% stake in Block 3/05 and Block 3/05A, respectively.
The transaction includes a firm consideration of $48.5 million, as well as deferred contingent payments of up to $36 million, subject to various factors such as oil price, production, and development conditions.
Paul McDade, CEO of Afentra, expressed his delight about the agreement, stating, “We are delighted to have agreed terms with Azule and signed the SPA increasing Afentra’s interests in the high-quality producing Block 3/05 and a material increase in our Block 3/05A interest, offering access to existing discovered resources. This highly accretive transaction further demonstrates the company’s commercial discipline and focus on robust cash flow.”
To fund the acquisition, Afentra will utilize a combination of existing debt facilities arranged with the Mauritius Commercial Bank and Trafigura, as well as existing cash flow from Afentra’s balance sheet. This comes after a separate deal was signed earlier this year with Croatian multinational oil company INA-Industrija for a 4% interest in Block 3/05 and Block 3/05A, respectively.
As part of the agreement with Azule Energy, Afentra and Angolan National Oil Company Sonangol have agreed to revise Afentra’s interest in Block 3/05 in order to support the additional transaction and maintain an appropriate balance of interests in the offshore block.
The revision will reduce Afentra’s interest from 20% to 14% in Block 3/05, with the SPA terms remaining unchanged from the 2022 deal, except for the acquisition consideration, which will be reduced on a pro-rata basis. Consequently, firm and contingent considerations will decrease from $80 million to $56 million and from $50 million to $35 million, respectively.
With these agreements in place, Afentra’s material equity in Block 3/05 will be 30%, and in Block 3/05A, it will be 21.33%, enhancing the firm’s exposure to the upside potential and near-term development of the blocks.
McDade further commented, “We view the combined acquisitions as an attractive step forward for the business, given the relative value at which we are acquiring the combined interests.”
