| Thu 24 May 2001, 0:00 | | Energy Africa - Preliminary Report For Year Ended |
|
Preliminary report for the year ended 31 March 2001
Energy Africa reports 36% increase in operational cash flow and 12% increase
in operating profit to R316m.
*Average production up 18% to 17,700 bpd (and to over 23,000 bpd by end of
year)
*Net cash inflow from operations (pre working capital adjustments) increased
36% to R738m
*Operating profit increased 12% to R316m
*Cash operating costs decreased by 2% to $3.87 per barrel
*Healthy cash balance of R235 million even after significant acquisition,
development and exploration expenditures.
*Average realised oil price increased by 3% to $25.16 per barrel
*Commercial reserves increased by 30% to 47 million barrels
*Ceiba oil field phase 1 development completed and brought onstream only 14
months after discovery
*Increased interest in our Gabonese assets consolidates position in core
growth area
*Excellent acreage position established in the prospective Tarfaya salt
basin in Morocco.
*Significant potential for further discoveries in Equatorial Guinea.
Adrian Nel, Acting Managing Director of Energy Africa, said:
"It is pleasing to be able to announce another set of excellent results with
large increases in production and cash flow. The successful completion of
the phase 1 Ceiba field development in Equatorial Guinea and the
consolidation of our interests in Gabon were major milestones for the
company. In the coming year we expect average production to exceed 21 000
barrels per day and are well placed to grow reserves through exploration and
acquisitions. "
24 May 2001
Enquiries:
Energy Africa Limited
Tel: +27 21 400 7600
Adrian Nel
Corporate Image, Cape Town
Tel: +27 21 426 1233
Tamra Veley
College Hill, London
Tel: +44 20 7457 2020
Nicholas Williams
Chairman's statement
It is now five years since Energy Africa was listed on the Johannesburg and
Luxembourg Stock Exchanges and it is opportune to review our performance in
that period. In March 1996, Energy Africa produced 6 450 bpd. By March 2001,
this had risen to 23 300 bpd. In the same period commercial reserves have
increased from 36 million barrels to 47 million barrels despite production
over the period of 26 million barrels. Additionally we have added 50 million
barrels to the potentially commercial reserves category. Major milestones
were the commencement of production from the Nkossa field in June 1996 and
from the Oribi field in June 1997. In February 1997 we joined forces with
the Gabon State and a group of African investors to create Energy Africa
Gabon SA ("EAGSA") whose production from various fields has increased from
zero to over 14 000 bpd. In March 2001, we raised our effective interest in
EAGSA from 37.5% to 50%, consolidating our position in what is now a core
area. The discovery of the Ceiba field in Equatorial Guinea in September
1999 and its fast track development which saw first production only 14
months later, is clearly our most notable exploration success to date.
Financially we have consolidated our position with commensurate growth in
the important indicators - cash flow from operations and net asset value.
Indeed we have succeeded in funding the significant development expenditures
incurred (including the first phase of the development of the Ceiba field)
as well as our exploration activities from our own cash resources and pre-
existing loans in respect of the Nkossa development. In addition the Alba
project loan has been repaid and the Nkossa loan is now substantially
repaid.
Our achievements over the past five years have resulted in consistent growth
in reserves and production and I am confident in our ability to progress at
a similar level in the future. However, it remains our objective to make
discoveries and acquisitions of a magnitude that will double or treble the
size of the company. We will maintain our emphasis on participation in high
reward exploration opportunities in under-explored basins but in parallel
with lower risk activities such as acquisition of producing interests and
step-out wells in areas of existing production. By concentrating our efforts
in Africa, we believe we have given ourselves a real opportunity to
capitalise on our growing knowledge and experience and thus convert our
ambitious objective into success.
Turning to the current period, in the twelve months since March 2000, Energy
Africa's excellent results reflect the increase in production and lower
costs, as well as benefiting from sustained high oil prices. Oil prices are
likely to remain volatile despite OPEC's apparently improved ability to
control supply. Whilst the risk of lower oil prices is taken account of in
our business plans we will not permit short term price weakness, or the fear
of it, to constrain the growth of the business. We have a growing production
profile and low unit production costs and are well placed to take advantage
of opportunities even if oil prices should fall.
As you will be aware, John Bentley, Managing Director and Jim Rutland,
Finance Director, resigned as directors of the Company in December. Their
contributions to the formation and development of Energy Africa were very
significant and I wish to thank them most sincerely.
I should also like, on behalf of the company, to thank in particular my
colleagues Peter Elwes, who was appointed in December to serve as Deputy
Chairman until the appointment of a new Managing Director and has provided
much reliable guidance and support in that role since then, and Adrian Nel,
who has so ably stepped in as acting Managing Director during the transition
period prior to the appointment of a new Managing Director. No decision has
yet been taken by the Board about a permanent appointment to this position,
although, of course, this is a matter of priority.
I would finally like to take this opportunity to thank all the management
and staff for their unwavering commitment to the company during the year.
They have shown exemplary character and professionalism throughout what has
been a testing time for the company.
Dato' M Idris Mansor
Chairman
Managing Director's review
The period under review has been a very successful one for Energy Africa,
both operationally and financially.
Significant operational cash inflows and cash balances have enabled the
company to finance the substantial increase in both exploration and
development expenditures from internal cash resources. These expenditures
included financing the whole of the first phase development of the Ceiba oil
field, the purchase of an additional 12.5% interest in EAGSA and an active
exploration programme. This is a remarkable achievement, and once again
leaves the company in a very strong cash position with negligible debt and
with production at substantially increased rates from those of a year ago.
The operational results show an increase in average daily production from 15
000 bpd in the previous six month period to 17 700 bpd, an increase of 18%.
This was achieved despite the onset of a rapid decline in the contribution
from the Oribi field in South Africa and a steady decline in the Nkossa
field in the Congo. Early in the year, these declines were offset by
increased production from the Tchatamba fields in Gabon, and the tie-back of
Tchatamba West in November maintained overall output. More importantly, the
Ceiba Phase I fast-track development in Equatorial Guinea commenced
production late in November.
We also concluded two significant acquisitions in Gabon. Firstly, EAGSA
acquired Shell Gabon's 40% interest in the Echira field. Although currently
producing at only 3 000 bpd, the field has significant development
potential. In March 2001, Energy Africa increased its effective interest in
EAGSA by a further 12.5%, raising our interest to 50% and adding some 1 750
bpd to Energy Africa's share of production and thus achieving a strategic
objective by increasing the materiality of our Gabon assets. These
developments resulted in record production of 23 300 bpd in March 2001.
This level is expected to decrease through to December when completion of
the second phase development of the Ceiba field will reverse the trend. We
expect average production for 2002 to be approximately 21 000 bpd.
On the development front, it was a very active year with expenditure
totalling $71 million. Of this, $40 million was spent on the Ceiba
development and $27 million in Gabon, including the cost of increasing our
stake in the EAGSA assets, with the remainder mainly being expenditure on
the UK Alba field. The Ceiba Phase I development came onstream with oil
production from three wells in late November 2000 - some 14 months from
discovery. The operator of the field, Triton Energy, is to be congratulated
on this record-breaking achievement.
Our exploration and appraisal drilling had mixed results. In Equatorial
Guinea four exploration wells were drilled, two of which intersected
substantial oil columns in poor quality reservoir. In Egypt, the gas-
condensate discovery in the Matruh Block failed to flow at commercial rates
and in Gabon, two wells in the Kari Permit were unsuccessful as were wells
drilled in Libya, Tanzania and South Africa. On the positive side, three of
four appraisal wells drilled in the Turnix field in Gabon were successful,
and in the Ceiba field, seven of the eight wells drilled to May yielded
positive outcomes.
Turning to the year ahead, we again have a very active development
programme. The major expenditures will once more be incurred in the Ceiba
field, with the second phase development comprising six additional
production wells, four water injection wells and an upgrade of the
facilities to accommodate increased oil and water production. In the Alba
field, project approval for the Alba Extreme South sub-sea development is
expected in July and drilling will commence in the fourth quarter. In the
Congo, an appraisal well is to be drilled in the Bilondo structure prior to
making a final development decision for the Moho-Bilondo complex. However,
it is unlikely that significant capital expenditures will be incurred on
this project in the coming year. In Gabon, expenditures will be incurred in
the Echira and Turnix fields where two wells are planned on each and also in
the Niungo development should the Niungo-5 well be successful. In Namibia,
although no major expenditure is anticipated, the positive results of a
feasibility study of a gas-fired power station in Cape Town have raised
expectations that development of the Kudu gas field will commence in 2003.
Our exploration programme for the coming twelve months will contain fewer
wells but will nonetheless have the potential to add significantly to
reserves. In Equatorial Guinea, we expect to drill two further exploration
wells in Block G and possibly a second well in Block F. The information from
the series of wells drilled in the current year has significantly improved
our understanding of the petroleum system in the Rio Muni Basin and we
remain optimistic that further discoveries will be made. In Angola Block 9,
we are scheduled to drill an Albian rafted structure in shallow water as
soon as a rig becomes available and in the Haute Mer permit in the Congo,
drilling of a large Tertiary channel prospect is contingent on a resolution
of the boundary dispute between the Congo and Angola. In Morocco, we
acquired significant interests in the Cap Draa and Tiznit licence areas,
together comprising 18 000 sq km of the highly prospective and unexplored
Tarfaya salt basin.
Some six important deepwater wells are scheduled in permits in Gabon where
EAGSA has options to acquire interests in the event of success. These will
essentially be the first real test of the deepwater prospectivity in Gabon
and provide significant upside potential for EAGSA. Additionally EAGSA, as
operator of the onshore Ofoubou Permit, is currently preparing to drill in
August and it is likely that a well will also be drilled in the Azobe Permit
where EAGSA holds a direct 35% interest.
Development expenditure for the forthcoming year is estimated to be
approximately $50 million and exploration expenditure approximately $30-$40
million. This expenditure will be funded from cashflow from operations,
cash balances and, if necessary, by bank loans. The Group's position has
continued to strengthen during the year and, with our strong balance sheet,
we are well placed to pursue growth opportunities in the future.
Finally, on a sad note, I have to report the death in December, after a long
illness, of Markus K bler. Markus was our highly respected Commercial
Manager, based in our London office. He will be very sadly missed and our
heartfelt sympathies are extended to his wife and family.
W A Nel
Acting Managing Director
Financial and operating review
RESULTS FOR THE YEAR ENDED 31 MARCH 2001
The 2001 results reflect the year ended 31 March 2001 whereas the 2000
results reflect the six months ended 31 March 2000.
SUMMARY
Energy Africa continued to strengthen its position during the year. A
record level of production and a sustained high oil price have enabled the
group to pursue an active exploration and development programme funded by
its strong operational cash flow and existing cash resources.
INCOME STATEMENT
Turnover increased to R1 014.5 million for the year compared to R363.4
million over the comparative six month period, a monthly average increase of
40%. Production increased by 18% to 17 700 bpd in 2001 from 15 000 bpd in
2000; the realised oil price increased 3% and the Rand-Dollar exchange rate
fell by 18%. Turnover is after hydrocarbons delivered to host governments
under the terms of Production Sharing Agreements, which increased to 0.9
MMbbl for the year compared to 0.3 MMbbl for the 2000 six month period.
Production sold during the year was 5.5 MMbbl (2000: 2.4 MMbbl).
Cost of sales in 2001 was R372.0 million compared to R136.2 million over the
2000 six month period. On a per barrel basis, total cost of sales decreased
to $7.86 per bbl (2000: $7.98 per bbl), operating cost was $3.87 per bbl
(2000: $3.95 per bbl), a decrease of 2% on 2000 and the depletion charge
decreased 13% to $3.60 per bbl (2000: $4.13 per bbl).
Exploration costs written off in the year were R261.4 million (2000: R58.6
million) reflecting the much more active exploration programme.
Administration charges of R77.4 million in the year were higher than the
2000 six month period of R28.1 million mainly due to non-recurring charges.
Operating profit in 2001 was R316.5 million compared to R141.9 million in
2000.
Taxation increased to R146.7 million in 2001 from R51.5 million in 2000.
The current year tax charge includes for the first time a provision for
deferred UK Petroleum Revenue Tax. The increase in the effective tax rate
was primarily due to the increased exploration expenditures in areas in
which expenditure could not be set off against income from producing assets.
Profit after taxation for 2001 was R184.0 million (2000: R93.2 million).
CASH FLOW
Net cash inflow from operations prior to working capital adjustments was
R738.1 million (2000: R270.8 million), a monthly average increase of 36% on
2000. Net cashflow from operations after working capital adjustments was
R685.4 million (2000: R368.5 million). The working capital adjustments in
2001 reflect the effect of oil sold immediately prior to the year end for
which payment will be received after the year end, whereas the adjustment in
2000 reflects cash received in respect of oil sold in a prior period.
Exploration expenditure amounted to R289.3 million (2000: R57.0 million).
Development expenditure totalled R523.5 million (2000: R21.6 million), and
comprised mainly R197.0 million in Gabon, which includes expenditure in
respect of increasing the group's interest in EAGSA, and R289.5 million on
the development of the Ceiba field in Equatorial Guinea. Net cash outflow
before financing was R231.1 million (2000: inflow R264.8 million).
Financing activities resulted in a net cash outflow of R21.6 million (2000:
R16.4 million). Proceeds from the issue of shares was R10.3 million (2000:
R nil) and increase in bank loans was R6.7 million (2000: R nil). Loan
repayments were R38.7 million (2000: R16.4 million). The resulting net cash
outflow after financing was R252.7 million (2000: inflow R248.4 million).
Loan facilities are currently being put into place for future funding
requirements, if required, arising from planned and possible developments.
BALANCE SHEET
Fixed assets at the year end were R1 142.2 million (2000: R610.4 million)
which largely represent the net book value of the producing fields.
Current assets included cash of R234.9 million (2000: R410.6 million).
Loans were R36.8 million (2000: R58.6 million) mainly comprising the project
loans to finance Nkossa. Thus at the end of the period Energy Africa had
net cash of R198.1 million (2000: R351.9 million).
OPERATIONS
Production and development
Energy Africa's working interest share of production for the period ended 31
March 2001 was 6 460 000 bbls of oil and LPG, an average of 17 700 bpd
compared with 15 000 bpd for 2000. The 18% increase in the daily rate
reflected the initial contribution from the Ceiba field which came onstream
in November 2000 and increased production from the fields in Gabon. These
increases were offset by declining production in South Africa and the Congo.
The average benchmark Brent oil price for the period was $28.22 per bbl, a
10.6% increase on the $25.52 per bbl for 2000. The average price realised
was $25.16 per bbl (2000 : $24.39) and reflected a 10.8% discount to the
Brent price (2000 : 4%). The significant rise in the discount reflects
greater competition for markets for heavier grades such as Alba and Ceiba,
the latter also suffering an "introduction" penalty.
EXPLORATION AND APPRAISAL
Fourteen exploration wells were completed of which four were non-commercial
oil or gas discoveries. Three of the wells were in Angola, two in Gabon,
four in Equatorial Guinea, two in Libya, and one each in Egypt, South Africa
and Tanzania. Appraisal/development drilling was more rewarding. Three out
of four wells in the Turnix field and five of six wells in the Ceiba field
were successful whilst the results of a well on the N'Soko field in the
Congo are still being evaluated.
Exploration activities also included the assessment of the results of the
large number of wells drilled and the firming up of new prospects,
particularly in Equatorial Guinea and Gabon. Numerous new opportunities were
evaluated, resulting in the acquisition of interests in two licences in the
Tarfaya salt basin in Morocco.
RESERVES
At 31 March 2001, the net commercial reserves attributable to Energy Africa
totalled 47.3 MMboe of oil (2000: 36.5 MMboe), the increase principally
reflecting increases in reserve estimates for Ceiba and the recognition of
additional reserves in the Alba field where the plans for the development of
the extreme south of the field are well advanced. Additional increases came
from the larger interest in EAGSA (see Gabon review), from the Turnix and
Echira fields in Gabon and from the Nkossa field in the Congo. Potentially
commercial reserves increased slightly to 52.1 MMboe
(2000: 51.1 MMboe).
ANGOLA
Despite discovering hydrocarbons in several wells in Angola, to date our
efforts there have not met with commercial success. Our single remaining
interest is Block 9 (Energy Africa 15%, operator Texaco) and a well to test
an Albian raft structure in shallow water is scheduled for the fourth
quarter of 2001. If successful, several similar structures provide
significant upside potential.
CONGO-BRAZZAVILLE
Gross production from the Nkossa field (Energy Africa 4%, operator
TotalFinaElf) averaged 53 100 bpd of oil and 12 250 boepd of LPG (2000: 56
300 bpd and 11 600 boepd). The modest decline experienced in 2000 was thus
sustained and is expected to continue in 2001 at a similar rate. An
appraisal well was commenced on the N'Soko satellite structure in March but
results have not been encouraging. An appraisal well in the extreme south of
the Nkossa structure may be drilled later in 2001.
A well, planned to test a large Tertiary channel in structural closure in
the Haute Mer Permit (Energy Africa 4%), was postponed at the request of the
Government as the proposed location is close to the maritime boundary with
Angola, the exact location of which is currently being negotiated by the two
Governments. It would appear that the issue may be resolved by the
declaration of a joint development area. Given the delay, the Congo
Government has agreed to extend the term of the Haute Mer Permit to December
2002.
Feasibility studies for the development scheme selected for the Moho-Bilondo
discoveries are still in progress and have identified the need for a pre-
development well in the Bilondo accumulation. A development decision will
thus be delayed pending completion of the well and the acquisition of a high
resolution 3-D seismic survey. It is expected that the well will be drilled
in the third quarter of 2001.
EGYPT
The test of the JC18-1 well in the Matruh licence (Energy Africa 20%,
operator Shell) was undertaken in December 2000, but the gas-condensate
bearing intervals flowed only at sub-commercial rates. Nevertheless
significant potential, both in the onshore and in the offshore, remains to
be tested and the licence was renewed after the year end for a further two
years.
Energy Africa participated in the 2000 Egyptian bid round and would have
been successful in respect of the acreage we applied for had the bid round
not been cancelled. Consideration is being given to participation in the
2001 bid round and a number of opportunities to participate in existing
licences are under review.
EQUATORIAL GUINEA
Energy Africa has 15% interests in Block F and Block G (operator Triton
Energy). Following the successful appraisal of the Ceiba discovery on Block
G, the Phase I development - comprising the completion and tie-back of the
first four wells to the Sendje Berge floating production, storage and
offloading facility (FPSO) - was brought onstream in late-November 2000.
This was some 14 months since the discovery was made in September 1999 and
is a record for a field in water depths in excess of 700m. Peak production
of approximately 46 000 bpd was achieved in February when all four wells
were online. A fifth well was brought online in April 2001, but in the
absence of pressure support, the production rate will decline through the
remainder of 2001. However, the rate will rise significantly as the Phase
1a production and injection wells are brought online in January 2002. Phase
1a, comprising an additional six production wells and four water injection
wells, is in progress with excellent results from the three wells drilled to
end-April (Ceiba 8, 9 and 10).
The exploration drilling programme has, to date, been rather less
successful. Of three wells in Block G and one well in Block F, two
intersected substantial oil columns in poor quality reservoir and two were
dry. However the additional data acquired has allowed a more precise
calibration of seismic responses and further detailed mapping has identified
attractive targets, the first of which is scheduled to be drilled in May
2001. It is likely that at least one, but possibly a further two wells will
be drilled by March 2002, depending on rig availability.
GABON
Energy Africa's interests in Gabon are held through EAGSA. In March 2001,
Energy Africa increased its beneficial interest in EAGSA from 37.5% to 50%
through the acquisition of the Gabon State's holding. It has been a
strategic objective to increase the materiality of our Gabon assets and the
transaction has provided a significant increase in both production and
reserves.
Energy Africa's share of EAGSA's production for the period averaged 4 900
bpd (2000: 3 300 bpd). This reflects only one month of the increased
interest in EAGSA and is thus mainly attributable to increased production
from the Tchatamba complex and the acquisition of a 40% interest in the
producing Echira field.
The Tchatamba complex remains our most significant asset in Gabon,
contributing some 3 600 bpd (2000: 2 600 bpd) of Energy Africa's net
production. The increase is attributable to increased production from
Tchatamba South following a successful horizontal well to drain reserves in
a reservoir above the main producing interval and the tie-back of the
Tchatamba West field in November 2000. The complex is currently at peak
production of approximately 40 000 bpd and the rate is expected to decline
from this level through 2001. However, consideration is being given to
development of a third reservoir interval in the Tchatamba South field
which, if successful, will reverse the decline in 2002.
In the Turnix field, located in the shallow offshore (Energy Africa net
13.75%, operator Perenco Gabon), three of four appraisal/ development wells
were successful and gross productive capacity has been raised to
approximately 7 000 bpd. A further development well is scheduled for the
fourth quarter of 2001.
In the onshore area of Central Gabon, Energy Africa holds net 20% interests
in four fields operated by Perenco Gabon. These are Echira, recently
purchased from Shell Gabon, Moukouti, Niungo and Ganga. Of these, Echira is
the most important, producing at 3 250 bpd in March 2001, but with
significant development potential. Two horizontal wells are scheduled for
2001, one of which was completed in April. Depending on field performance,
further development drilling may occur in 2002.
The Niungo field, some 40km east of Echira, has a 70m oil column and
potentially significant reserves. The high level of hydrogen sulphide in
the oil has previously discouraged development but an economic process to
remove this has been devised. The Niungo-5 well is currently drilling and
if reserves and productivity are confirmed, a full field development with
production of up to 8 000 bpd is envisaged by end 2001.
The Moukouti field, currently producing 2 000 bpd and the Ganga extended
well test (400 bpd) are not expected to continue producing beyond mid-2001,
although development of the Ganga field at a later date remains a
possibility.
The Limande field (Energy Africa net 10%, operator Agip), located in the
vicinity of the Turnix field, continues to produce at about 3 000 bpd with a
very low decline rate. The viability of further development wells is being
investigated but the scope for significantly increased production is low.
EAGSA retains options to acquire various levels of interest in the event of
discoveries in 10 offshore licences. In the Kenguerie Permit, operated by
Shell Gabon, EAGSA's interest was reduced from 40% to 15% as part of the
acquisition of Echira. Only one well was drilled in these licences in the
period, this being in the Etame Permit where a modest discovery has been
confirmed. However, the development is unlikely to be of significant value
to EAGSA given its low participating interest of 7.5%. More importantly, a
batch of wells in the deepwater areas of Chaillu, Mpolo, Tolo, Kenguerie and
Akori are scheduled to be drilled later in 2001 and discoveries could impact
significantly on EAGSA.
In exploration areas where EAGSA holds direct exploration interests (Energy
Africa has net interests of 17.5% in Azobe, 30% in Ofoubou, 20% in Nziembou
and 20% in Kari) two exploration wells were drilled in the Kari Permit.
Neither was successful. In the coming year, only one well is budgeted, this
being the Ofan-1 well in the Ofoubou permit where EAGSA is the operator. A
rig has been contracted and the well is expected to be drilled in August
2001. In the Azobe Permit, new and previously acquired 3-D seismic surveys
have been integrated and a well may be drilled in the fourth quarter of
2001.
LIBYA
As reported in mid-year, the two exploration wells in Blocks NC184 and NC185
(Energy Africa 20%, operator PanCanadian) were unsuccessful and little
prospectivity remains in the blocks. However the Libyan authorities have
recently released new acreage and Energy Africa and its partners have
undertaken a full review and a bid has been submitted for selected blocks.
MOROCCO
Following ratification of the Cap Draa licence (Energy Africa 20%, operator
Enterprise) by the Moroccan authorities, acquisition of 4 000 sq km of 3-D
seismic was commenced in February and is expected to be completed by mid-
2001. Energy Africa consolidated its acreage position in the Tarfaya Basin,
securing an exploration licence over the adjoining Tiznit area where it has
retained a 63.75% interest and operatorship. A contract has been awarded for
the acquisition of 3-D seismic in this area and the survey is expected to
commence in mid-2001. Energy Africa believes there is considerable
potential for significant discoveries in the essentially unexplored Tarfaya
salt basin but given the lead times for seismic processing and
interpretation, it is unlikely that wells will be drilled before 2003.
MOZAMBIQUE
A decision was taken by the partner group not to proceed into the next
period of the Rovuma Basin exploration licence (Energy Africa 30%, operator
Lonropet), which was relinquished in April 2001. This reflects the failure
to define viable prospects on the 2-D seismic data previously acquired.
TANZANIA
In September 2000, Energy Africa entered into an arrangement with Dublin
Oil, holder of a 100% interest in the onshore Mandawa licence, to fund 25%
of the costs of a well with the option to earn a 25% interest in the licence
by participating in a second well. The first well was completed in February
2001 and was plugged and abandoned. Oil saturations were recorded in low
porosity siltstones, confirming oil generation in the salt basin. Energy
Africa retains its option to participate in a second well and the
information from the well will be integrated into a re-evaluation of the
prospect inventory.
NAMIBIA
The possible development of the Kudu gasfield (Energy Africa 10%) took a
major step forward with the completion of a feasibility study undertaken by
independent consultants on behalf of the Kudu Gas Group and the Cape
Metropolitan Area Local Authorities in December 2000. The study confirmed
the viability of a gas-fired power plant in the Western Cape in circa 2005
and the operator, Shell Namibia Exploration, has actively pursued the
realisation of this opportunity in conjunction with a smaller power
generation facility in Namibia. In respect of the latter, Shell have
requested indications of interest from independent power producers for the
development of a 400 megawatt plant in Oranjemund. In respect of a power
plant in the Western Cape, many regulatory hurdles remain but the ultimate
development of the Kudu gas resource would seem to be very much in the
national interests of both South Africa and Namibia given the potential size
of the Kudu gasfield and the environmental advantages of gas-fired power
plants.
SOUTH AFRICA
With the onset of significant water production in the Oribi field (Energy
Africa 20%, operator Soekor) production declined to an average of 12 000 bpd
(2000: 14 100 bpd) and the rate of decline is expected to accelerate in
2001. Nevertheless, the field has performed well above expectation and the
ultimate recovery of 25 million barrels will be some 68% higher than the
original estimate for the most likely reserve.
As reported at mid-year, the well in Block 17 offshore Durban (Energy Africa
20%, operator Phillips) showed no indications of a working petroleum system.
Following a full review of the technical data, it was concluded that the
probability of discovery of commercial hydrocarbon accumulations in the
Durban basin was so low that continued exploration could not be justified.
Consequently both Blocks 17 and 18 are being allowed to expire in May 2001.
UNITED KINGDOM
The Alba field in the central North Sea (Energy Africa 8%, operator Chevron)
averaged 74 800 bpd (2000: 77 500 bpd). Production was impacted by a 15 day
shut-down of the field for maintenance, inspection and installation of
upgraded instrumentation. The field was also shut-in for shorter periods
for operational reasons, but good overall performance reflects the continued
success of exploiting flanking sand bodies identified by the 3-D sea bed
seismic survey conducted in 1998. A similar level of production is expected
in 2001.
The Alba Extreme South development, using sub-sea wells and flowlines to the
Alba North platform, entered into the detailed planning stage. It is
anticipated that final project approval will be achieved by end-July 2001
with first oil in October 2002. The project economics are robust and it is
expected that the development will allow Alba to continue production at
current rates for several more years.
In respect of the Caledonia field (formerly Parliament, Energy Africa
10.06%), a small Paleocene oil accumulation located 6km to the north of the
Alba platform, a phased development is planned with sub-sea tie-back options
for crude processing and export at Alba or Britannia. The target for final
project approval is August 2001 with first oil in August 2002. Production is
expected to be in the order of 10 000 bpd.
FUTURE ACTIVITY
In the year to March 2002, Energy Africa's net production from existing
fields is expected to be approximately 21 000 bpd and to increase further as
Phase 1a of the Ceiba field development comes on stream. Modest additional
contributions are also possible from the potential development of the Niungo
Field and further wells in the Turnix and Echira fields in Gabon. As
described elsewhere, Ceiba Phase 1a, Alba Extreme South and the Caledonia,
Moho-Bilondo and Kudu fields constitute our main future developments at this
time.
Exploration drilling currently scheduled or anticipated includes one well in
Angola, one well in the Congo, two wells in Gabon and three wells in
Equatorial Guinea. Expenditures associated with this programme amount to
some 50% of the level of exploration expenditure incurred in the past 12
months. A number of other opportunities are being evaluated, several of
which meet our investment criteria, and it is expected that ultimate
exploration expenditures will therefore be at broadly similar levels to
those incurred in the year to 31 March 2001.
COMMUNITY AND ENVIRONMENT
Energy Africa recognises its responsibilities to its shareholders,
employees, companies and the governments with whom it does business and to
society generally. To fulfil its responsibility to society, Energy Africa
conducts its business as a responsible corporate member of society, brings
benefits to communities in the countries in which it operates and gives
proper respect to the natural environment.
Energy Africa continues to provide economic benefit in the countries in
which it operates through training, job creation and participation in
community projects. For example, the Company is one of the founders and
continues to be one of the principal sponsors of the Petroleum Geology fund
established at three universities in the Western Cape. This programme is
aimed at promoting petroleum geology and producing locally trained geo-
scientists. The Company is also one of the main corporate supporters of the
Community Chest in the Western Cape. In Gabon, Energy Africa is
participating in a project to provide rural communities with drinking water.
On the environmental front, Energy Africa participates principally as a non-
operating partner in joint ventures, almost all of which are operated by
large international companies who conduct these operations in accordance
with high standards for the protection of the environment. The company
participates in the joint ventures' operating committees which in turn
ensure that such environmental matters are regularly and continually
addressed. In the exploration licences in which Energy Africa is the
operator, appropriate measures are taken to ensure similar levels of
environmental responsibility.
Share Transactions Totally Electronic ("STRATE")
As required by the Johannesburg Stock Exchange, electronic trading in shares
in Energy Africa under the STRATE system commenced from 23 April 2001. As
previously notified, shareholders are reminded that share certificates which
have not yet been converted into an electronic record cannot be sold until
this conversion or dematerialisation has taken place.
For and on behalf of the Board
Dato' M Idris Mansor
W A Nel
23 May 2001
Directors:
Dato' M Idris Mansor (Chairman) (Malaysian), P J G Elwes (British), A A
Maule, W A Nel (Acting Managing), L M Nyhonyha, F M J L Poimboeuf (French),
A Said (Malaysian)
ENERGY AFRICA
LIMITED
Group income
statement
Year Six months
ended ended
31 March 31 March
2001 2000
Notes R'000 R'000
Total 1,039,990 371,859
revenues
Turnover 1,014,534 363,439
Cost of 3 (371,969) (136,170)
sales
Gross income 642,565 227,269
Exploration (261,361) (58,567)
expenditure
written off
(77,432) (28,086)
Administratio
n expenses
Other 12,756 1,239
operating
income
Operating 316,528 141,855
profit
Interest 25,456 8,420
income
Interest 4 (11,315) (5,577)
expenses
Profit on 330,669 144,698
ordinary
activities
before
taxation
Taxation 5 (146,711) (51,548)
Profit on
ordinary
activities
after
taxation and
attributable 183,958 93,150
to ordinary
shareholders
Earnings per
share - cents
Basic 182.0 92.4
Diluted 180.9 91.9
Headline
earnings per
share - cents
Basic 182.0 92.4
Diluted 180.9 91.9
Weighted
average
number of
ordinary
shares in 101,056 100,799
issue ('000)
ENERGY
AFRICA
LIMITED
Group
balance sheet
31 March 31 March
2001 2000
Notes R'000 R'000
Employment
of capital
Fixed assets 1,142,165 610,421
Current
assets
Inventories 37,148 19,207
Debtors 149,491 51,400
Cash and bank 234,897 410,570
deposits
421,536 481,177
Current 6 (200,090) (142,686)
liabilities
Net current 221,446 338,491
assets
Total assets 1,363,611 948,912
less current
liabilities
Long term 7 - (24,048)
interest
bearing
project loans
Deferred (65,135) (33,547)
taxation
(133,354) (69,709)
Decommissioni
ng provision
1,165,122 821,608
Share 10,173 10,080
capital
Share 426,678 416,432
premium
account
Retained 262,587 78,629
income
Other 465,684 316,467
reserves
1,165,122 821,608
Shareholders'
interest
Net book
value per
share - cents
Basic 1,145.4 815.1
Diluted 1,140.4 810.3
Number of
ordinary
shares in
issue at
period end 101,726 100,799
('000)
ENERGY
AFRICA
LIMITED
Group cash
flow
information
Year Six months
ended ended
31 March 31 March
2001 2000
R'000 R'000
Reconcilia-
tion of
operating
profit to
net cash
flow from
operations
Operating 316,528 141,855
profit
Exploration 261,361 58,567
expenditure
written off
Depreciation 172,997 71,598
Profit on (22) -
disposal of
fixed assets
Exchange (12,756) (1,239)
gain
Net cash
inflow from
operations
prior to 738,108 270,781
working
capital
adjustments
Working (52,697) 97,765
capital
adjustments
Net cash 685,411 368,546
inflow from
operations
Group cash
flow
statements
Net cash 685,411 368,546
inflow from
operations
Returns on
investments
and servicing
of finance
Interest 25,827 8,055
received
Interest paid (6,211) (3,775)
Tax paid (123,268) (29,395)
Investing
activities
Exploration (289,343) (57,008)
expenditure
Payments to (523,536) (21,606)
acquire
tangible
assets
Proceeds from 30 -
sale of fixed
assets
Net cash (231,090) 264,817
(outflow)/inf
low before
financing
Financing
Issue of 10,339 -
ordinary
shares
Increase in 6,714 -
bank and other
loans
Repayment of (38,705) (16,426)
loans
Net cash (252,742) 248,391
(outflow)/inf
low after
financing
Cash flow
from
operations
per share -
cents
Basic 678.2 365.6
Diluted 674.0 363.5
ENERGY
AFRICA
LIMITED
Group
statement of
changes in
equity
Share Exchange
Share premium Retained Trans-
lation
capital account profit/ reserve Total
(loss)
R'000 R'000 R'000 R'000 R'000
At 1 October 10,080 416,432 (14,521) 262,793 674,784
1999
Profit - - 93,150 - 93,150
attributable
to ordinary
shareholders
Exchange - - - 53,674 53,674
adjustment
At 31 March 10,080 416,432 78,629 316,467 821,608
2000
Profit - - 183,958 - 183,958
attributable
to ordinary
shareholders
Exchange - - - 149,217 149,217
adjustment
Arising on 93 10,246 - - 10,339
issue of
shares
At 31 March 10,173 426,678 262,587 465,684 1,165,12
2001
ENERGY AFRICA LTD
Notes to the financial statements
1. Accounting policies
Basis of preparation
The financial information is expressed in South African Rand and has been
prepared under the historical cost convention, in accordance with accounting
policies which conform with International Accounting Standards ("IAS") and
South African Statements of Generally Accepted Accounting Practice. These
accounting policies are consistent with those used in the previous period.
Exploration and development expenditure
The Group follows the successful efforts method of accounting for
exploration costs. Exploration costs are initially capitalised for each
prospect within exploration and appraisal assets pending determination. On
determination such costs are written off unless commercial reserves have
been established. As development commences such costs are transferred to
fields in production and under development.
2. Currencies and exchange rates
The majority of the Group's turnover, costs, assets and liabilities are
denominated in United States dollars. Dollar amounts have been translated
into Rand using the following exchange rates:
2001 2000
Income statements and cash
flows (R/$1) 7.3245 6.2167
Balance sheets (R/$1) 8.0101 6.5450
3. Cost of sales
2001 2000
R'000 R'000
Operating costs 183,065 67,479
Movement in underlift (8,679) (2,904)
Royalty paid in cash 27,203 1,058
Depreciation 170,380 70,537
371,969 136,170
4. Interest expense
2001 2000
R'000 R'000
Interest payable on loans 6,329 3,775
Finance charge - unwinding of discount 4,986 1,802
11,315 5,577
The finance charge represents the unwinding during the period of the
discount on the decommissioning provision.
5. Taxation
2001 2000
R'000 R'000
SA taxation
Normal -current 41,467 21,999
-prior period (1,471) 950
Deferred (1,635) (2,404)
Foreign taxation
Normal -current 81,505 31,998
-prior period (2,010) 3,301
Deferred 28,855 (4,296)
146,711 51,548
The foreign deferred tax charge includes provision for deferred UK Petroleum
Revenue Tax.
6. Current Liabilities
2001 2000
R'000 R'000
Current portion of borrowings 36,774 34,586
Corporation tax payable 58,296 58,669
Other creditors and accruals 105,020 49,431
200,090 142,686
7. Borrowings
2001 2000
R'000 R'000
Total interest bearing borrowings
Secured loan repayable after more
than one year - 24,048
Secured loan repayable within one year 36,774 34,586
36,774 58,634
8. Capital commitments
2001 2000
R'000 R'000
Contracted and approved 401,009 185,987
Status of financial information
The above information does not constitute statutory financial statements. It
has been extracted from the 2001 Group financial statements that have been
approved by the directors but not yet delivered to the Registrar of
Companies.
ENERGY AFRICA LIMITED
Oil and gas reserves and production
2001 2000
Oil Oil
equivalent equivalent
MMboe MMboe
Reserves
Commercial Reserves
Movement in Group net
remaining Proven+Probable Reserves
At beginning of year 36.5 27.8
Revisions of previous estimates 12.9 2.4
Acquisitions of reserves in place 4.4 -
Discoveries, extensions and other
additions - 9.0
Production (6.5) (2.7)
At end of period 47.3 36.5
Proven+Probable reserves by type of field
Fields in production 46.4 25.4
Fields under development - 9.1
Fields awaiting development 0.9 2.0
47.3 36.5
Reserves by category
Proven 24.5 24.4
Proven+Probable 47.3 36.5
Potentially commercial reserves
Group net remaining Proven+Probable reserves
at end of period 52.1 51.1
Production
Group share of production 6.5 2.7
Delivered to host governments (0.9) (0.3)
Movement in underlift (0.1) -
Group production sold 5.5 2.4
Production by location of field
Africa 4.3 1.6
UK 2.2 1.1
6.5 2.7
ENERGY AFRICA LIMITED
Summary group results translated into United States dollars - unaudited
6 months
2001 2000
$'000 $'000
Income statement
Turnover 138,512 58,462
Cost of sales (50,784) (21,904)
Gross income 87,728 36,558
Exploration expenditure written off (35,683) (9,421)
Administration expenses (10,572) (4,518)
Other operating income 1,742 199
Operating income 43,215 22,818
Net interest income 1,930 458
Income on ordinary activities before
taxation 45,145 23,276
Taxation (20,030) (8,292)
Income attributable to ordinary
shareholders 25,115 14,984
Cash flow statement
Net cash inflow from operations 93,578 59,283
Net interest received 2,678 688
Tax paid (16,829) (4,728)
Investing activities
Exploration expenditure (39,504) (9,170)
Payments to acquire tangible
assets (71,477) (3,475)
Proceeds from the sale of fixed
assets 4 -
Net cash (outflow)/inflow before
financing (31,550) 42,598
Financing
Issue of ordinary shares 1,411 -
Increase in bank and other loans 917 -
Repayment of loans (5,284) (2,643)
Net cash (outflow)/inflow after
financing (34,506) 39,955
Balance sheet
Employment of capital
Fixed assets 142,591 93,265
Inventories and debtors 23,224 10,788
Cash and bank deposits 29,325 62,730
Current liabilities (24,903) (21,800)
Long term interest bearing project loans
Wholly owned subsidiaries - secured - (3,674)
Deferred tax and other provisions (24,780) (15,777)
145,457 125,532
Capital employed
Shareholders' interest 145,457 125,532
