Africa Energy (AEC) Q2 2024 earnings summary

Executive summary

• Cash balance decreased from $232M at year start to $185M at Q2 end, mainly due to $51M returned to shareholders via dividends and buybacks.

• Prime's EBITDA for Q2 was $92M, with free cash flow of $77M, reflecting stable performance.

• Net income for the quarter was breakeven, impacted by a $7M impairment from Africa Energy and a $12M negative overlift from Prime.

• Africa Energy reported a $71.9 million net loss for H1 2024, mainly due to a $70.2 million non-cash loss on revaluation of its Block 11B/12B asset, as partners withdrew and the company faces negative working capital and ongoing financing needs.

• Oil sales in Nigeria averaged $89/bbl, consistently above Dated Brent, with 1.5 cargoes net sold in Q2.

Financial highlights

• $39M spent on share buybacks and $11M on dividends in H1 2024; total $143M returned since March 2022.

• Received $25M dividend from Prime in April, the only cash inflow in H1.

• Combined net debt stands at $36M after accounting for Prime's net debt.

• Net loss for Q2 2024 was $47.8 million, compared to $1.3 million in Q2 2023.

• Cash at June 30, 2024 was $2.1 million, with a working capital deficiency of $6.6 million.

Outlook and guidance

• Production guidance for 2024 is maintained, with expectations to improve in the nine-month and full-year periods.

• New dividend policy post-Prime consolidation will set a $100M annual base, plus 50% of excess free cash flow to shareholders.

• Main Street 1549 expects to hold 100% interest in Block 11B/12B after partner withdrawals, subject to regulatory approval.

• Focus remains on obtaining Production Right approval and securing offtake customers for the Brulpadda and Luiperd discoveries.

• Anticipated first oil from Preowei tieback and Venus in 2029, supporting long-term production and cash flow.