INTERVIEW: Afentra aims to double Angola oil output, acquire new projects

London-listed Afentra, a company founded by the former head of Africa-focused Tullow Oil, hopes to double production at its Angola licenses to around 40,000 b/d within half a decade and add further barrels through West African acquisitions in the second phase of its growth, the company's CEO said.

In an interview with S&P Global Commodity Insights after closing the last of three deals on blocks 3/05 and 3/05A in Angola's Congo basin, Paul McDade said the company was eyeing three avenues for growth: a production boost on its current acreage, acquiring additional licenses in Angola and entering new African jurisdictions.

"We said we want to be a multi-jurisdiction operated and non-operated portfolio of tens of thousands of barrels per day. And that remains the same today," said McDade, who left Tullow in 2019 after more than 18 and a half years at the company. "Phase 1 of that is done and phase 2 is that combination of organic growth...as well as going and acquiring other fields.

London-listed Afentra – short for Africa Energy Transition – was first formed in 2021 after McDade took over Sterling Energy and rebranded it.

Its first step was to acquire the pair of offshore Angolan blocks, first through deals with state-owned Sonangol and Croatia's INA in mid-2022 and then with Azule Energy, the joint venture between Italy's Eni and BP, in July 2023, which closed in May.

Today, Afentra holds a 30% non-operated interest in producing Block 3/05 and a 21.33% interest in adjacent 3/05A, an exploration block. "The asset is enormous. Over 3 billion barrels in place," McDade said. After concluding the deal, Afentra has 6,800 b/d of net oil production from the blocks, according to a recent investor presentation, after gross output increased from 17,500 b/d to 23,000 b/d in 2023.

McDade said Afentra and its partners Sonangol and France's Maurel & Prom, who recently renewed the license to 2040, would boost production on the assets in several ways, including by stepping up water injection, conducting heavy workovers, replacing gas lift with electronic submersible pumps and drilling new wildcats.

"There are over 150 wells of which only 60 are active. So we're working our way through the well stock," he said. "There haven't been any wells drilled on any of these fields for over a decade. There are lots of infill well locations, but also...four discoveries sitting there ready to be developed."

"If you were to do all those things over the next 5-7 years, we think this asset could get up towards 40,000 b/d," he added. That would represent roughly 13,000 b/d net for Afentra.

Other acreage held by Afentra includes a 40% non-operated interest in the prospective Block 23 offshore Angola, while the company is negotiating terms for onshore blocks KON 19 and KON 15 in the Kwanza Basin, after being awarded non-operated stakes by upstream regulator ANPG in January. Afentra has partnered with Acrep and Enagol on KON 19 and Sonangol on KON 15.

"We joined with them and our idea was they would operate, we would be an active technical partner for them, and that partnership landed quite well with ANPG." McDade said.

Finally, Afentra holds a 34% non-operated interest in the Odewayne Block onshore Somaliland. "Frontier East African acreage is not central to our radar screen. It's really not what we do," said McDade of the Somaliland license, where Afentra is carried by operator Genel. "Really it's a value item for our shareholders."

Angola climate

Afentra's operating philosophy is based on the view that West Africa is in a position that the UK North Sea was in during the 1990s, with majors handing mature and marginal fields to independents and smaller companies focused on achieving maximum output with short lead times. To that end, it is constantly on the hunt for new oil and gas assets across the region, McDade said.

"We have screened 30-40 different opportunities, some quite small, some more material," he said. "We are always scanning assets, and even making unsolicited approaches." However, he would not be drawn on specific jurisdictions.

Nevertheless, few countries reflect the shift better than Angola, which has won plaudits from oil CEOs in recent months for its improved investment climate and openness to smaller players – and has been rewarded with a smattering of new discoveries and projects, including a Chevron deal in June and a recent ExxonMobil find.

It comes at an important moment for Angola – a longstanding oil producer blighted by civil war until 2022 and which quit OPEC in January in a dispute over its production quota. The country has seen crude output fall from 1.9 million b/d in 2010 to just 1.07 million b/d in April, according to the last ANPG update.

A major step was the formation of ANPG in 2019 by the country's new political regime, McDade said, which took the regulatory role away from Sonangol. "They are very professional and have a clear view of what they are trying to do," McDade said. "Negotiating in the best interest of the country, but not to the extent that they are stopping investment – quite the opposite."

Particularly popular among executives is ANPG's flexibility on fiscal terms. McDade said Afentra directly negotiated improved fiscal terms for 3/05 and got marginal field fiscal terms, which are even better, for 3/05A because the block has gone years without development.

"There is a strong level of maturity in the thinking about the oil and gas environment," he said. "I'd like to hope [these] efforts...will see a national production increase." The onshore Kwanza Basin, where activity stopped in the 1980s and 1990s due to the civil war, is particularly ripe for new oil and gas development, McDade said, thanks to advances in seismic technology.

Namibia competition

Improvements to the Angolan investment environment have come as billions of dollars have poured into neighboring Namibia, arguably the world's most exciting exploration setting following vast discoveries in the Orange Basin in 2022 by TotalEnergies and Shell.

That had "focused the mind" for Angola, McDade said. "Angola is the oil and gas country and has been since the 80s. Suddenly your neighbor next door, who has never had any oil and gas, is the flavor of the month."

It "came at a time when there was a more enlightened approach being enacted in Angola, and it probably just reinforced it," McDade added. "The competition helps, but only if you have a government and an agency who are smart enough to look around and see what is happening and work out how they fit into that slightly more macro environment. That's what ANPG have done incredibly well."